ST. LOUIS, MO -- 11/06/2008 -- TLC Vision Corporation (NASDAQ: TLCV) (TSX: TLC), North America's premier eye care services company, today reported operating results for the quarter and nine months ended September 30, 2008.
Jim Wachtman, President and Chief Executive Officer of TLCVision, commented, "During the third quarter, our adjusted EBITDA was up 26% and our gross margin increased by 90 basis points from the prior year period even though we experienced a 31% decline in our total centers procedure volume. This performance reflects on-going cost reduction efforts in our refractive centers organization and corporate office combined with a strong 11% revenue growth in our remaining non-refractive businesses. We've accomplished this while making significant improvements in our patient acquisition strategy and building the TLC brand to the consumer, which will position us well for the long term.
During the third quarter, our non-refractive businesses contributed 40% of our revenues. These businesses are less susceptible to economic pressures, and continue to provide a strong counterbalance to our LASIK business during these challenging economic times.
We generated positive adjusted EBITDA in the third quarter, bringing our year-to-date adjusted EBITDA to $22.5 million. This is a decline of 6% in the face of a refractive market that has contracted 23% year-to-date and impacts nearly 60% of our business. Our cash flow has also been strong, enabling us to pay down debt as we target a more balanced long-term capital structure to complement our business strategy."
Third Quarter 2008 Results
- -- Revenue for the third quarter was $57.5 million, compared to $69.7 million for the prior year period, a decrease of 17%. -- Refractive Centers revenue was $28.5 million, down 29% due to weakening industry demand. Total center procedures for the quarter totaled 19,800, a 31% decrease from the prior year period. Average revenue per center procedure increased to $1,748, up 4% from the prior year period. -- Doctor Services revenue of $22.6 million decreased 4% as mobile refractive revenues offset growth in non-refractive segments. -- Eye Care revenue increased 5% to $6.4 million as a result of increased franchises and revenue per franchisee. - -- Total operating expenses of $18.4 million decreased $4.8 million from 2007 due principally to lower marketing and sales spending (down 18%) and lower general and administrative expenses (7% decrease). Operating expenses for the current period include a $1.5 million non-cash impairment charge to reduce the investment in certain majority and minority owned ambulatory surgery centers to better reflect current market valuations. - -- Consolidated net loss for the third quarter was ($6.7) million, or ($0.13) per diluted share, compared to net loss of ($22.6) million, or ($0.45) per diluted share, for the prior year period. Adjusting both periods for impairment and restructuring charges, and income tax expense, pro forma net loss was ($5.2) million, or ($0.10) per diluted share, compared to ($5.1) million, or ($0.10) per diluted share for the prior year. - -- Adjusted EBITDA was $2.8 million (or $0.06 per diluted share) for the third quarter, $0.6 million or 26% ahead of prior year performance. - -- Operating cash flow for the quarter ended September 30, 2008, was ($0.5) million, or ($0.01) per diluted share. - -- Total debt was reduced during the third quarter by $1.2 million.
Nine Month 2008 Results
- -- Revenue for the nine months ended September 30, 2008 was $222.0 million, compared to $232.1 million for the prior year period, a decrease of 4%. -- Refractive Centers revenue was $126.5 million, a decrease of $12.2 million from the prior year period. Total center procedures for the nine months totaled 87,500, a decrease of 13% from 2007 due to weak economic conditions. Average revenue per center procedure increased to $1,721, up 4% from the prior year period. -- Doctor Services revenue was essentially flat at $73.2 million, as weaknesses in the mobile refractive business were offset by growth in non-refractive businesses. -- Eye Care revenue increased 12% to $22.2 million. - -- Total operating expenses of $56.7 million were 11% below prior year levels, representing lower levels of general and administrative expenses offset in part by higher marketing spending. - -- Consolidated net loss for the nine months ended September 30, 2008 was $(2.8) million, or ($0.06) per diluted share, compared to net loss of $($18.2) million, or ($0.29) per diluted share for the prior year period. Adjusting both periods for impairment and restructuring charges, and income tax expense, pro forma net loss was ($1.3) million, or ($0.03) per diluted share, compared to net income of $2.8 million, or $0.06 per diluted share for the prior year. - -- Adjusted EBITDA for the first nine months of 2008 was $22.5 million (or $0.45 per diluted share) compared to $24.0 million (or $0.39 per diluted share) for the prior year. - -- Operating cash flow for the nine months ended September 30, 2008, was $22.1 million, or $0.44 per diluted share, compared to $29.8 million, or $0.48 per diluted share, in 2007. - -- Total debt was reduced during the first nine months of 2008 by $9.1 million.
Use of Non-GAAP Measures
Pro-forma results are presented to facilitate a comparison of current year and prior year results. The calculations of pro-forma results are not specified by United States generally accepted accounting principles ("GAAP"). Our calculations of pro-forma results may not be comparable to similarly-titled measures of other companies. A reconciliation of reported net income to pro-forma net income for both the quarter and nine months is included in the attached Consolidated Statements of Operation.
Adjusted EBITDA is a non-GAAP financial measure. It is used in addition to and in conjunction with results presented in accordance with GAAP. This non-GAAP financial measure reflects an additional way of viewing aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business. A schedule detailing the calculation of Adjusted EBITDA is attached to this release.
Non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with generally accepted accounting principles.
Third Quarter 2008 Earnings Call
TLCVision invites all interested parties to participate in a conference call during which time the financial and operating results will be discussed. The company will host a conference call and live web cast with investors and analysts on Thursday, November 6, 2008 at 4:30 p.m. (EST). To access, please dial 888-233-8011 or 913-312-1404 (international callers) and enter the pass code 5528447. The call will be broadcast live on the company's web site at www.tlcv.com under the "Webcasts" link in the Investor Relations section.
A replay of the conference call will be available until November 20, 2008. To access the replay, dial 888-203-1112 or 719-457-0820 (international callers) and enter the pass code: 5528447. The call will also be archived on the company's web site at www.tlcv.com under the "Webcasts" link in the Investor Relations section.
Forward-Looking Statements
This press release contains certain forward looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934, which statements can be identified by the use of forward looking terminology, such as "may," "will," "expect," "intend," "anticipate," "estimate," "predict," "plans" or "continue" or the negative thereof or other variations thereon or comparable terminology referring to future events or results. The Company's actual results could differ materially from those anticipated in these forward looking statements as a result of numerous factors, including the timing of expenditures, effects of competition, changes to pricing, acquisitions and expansion opportunities, any of which could cause actual results to vary materially from current results or TLCVision's anticipated future results. See the Company's reports filed with the Canadian Securities Regulators and the U.S. Securities and Exchange Commission from time to time for cautionary statements identifying important factors with respect to such forward looking statements, including certain risks and uncertainties, which could cause actual results to differ materially from results referred to in forward looking statements. TLCVision assumes no obligation to update the information contained in this press release.
About TLCVision
TLCVision is North America's premier eye care services company, providing eye doctors with the tools and technologies needed to deliver high-quality patient care. Through its centers' management, technology access service models, extensive optometric relationships, direct to consumer advertising and managed care contracting strength, TLCVision maintains leading positions in Refractive, Cataract and Eye Care markets. Information about vision correction surgery can be found on the TLC Laser Eye Centers' website at www.lasik.com. More information about TLCVision can be found on the Company's website at www.tlcv.com.
TLC VISION CORPORATION CONSOLIDATING STATEMENTS OF OPERATIONS (UNAUDITED) (In thousands, except per share amounts) Three Months Ended Three Months Ended September 30, 2008 September 30, 2007 ---------------------------- ---------------------------- Results Results Before Before AMD AMD Total AMD AMD Total Segment Segment TLCVision Segment Segment TLCVision -------- ------- -------- -------- -------- -------- Revenues: Refractive centers $ 28,516 $ - $ 28,516 $ 39,992 $ - $ 39,992 Doctor services 22,634 - 22,634 23,639 - 23,639 Eye care 6,384 - 6,384 6,062 - 6,062 -------- ------- -------- -------- -------- -------- Total revenues 57,534 - 57,534 69,693 - 69,693 Cost of revenues (excluding amortization): Refractive centers 22,245 - 22,245 30,626 - 30,626 Doctor services 16,618 - 16,618 17,610 - 17,610 Eye care 2,596 - 2,596 2,624 - 2,624 -------- ------- -------- -------- -------- -------- Total cost of revenues (excluding amortization) 41,459 - 41,459 50,860 - 50,860 -------- ------- -------- -------- -------- -------- Gross profit 16,075 - 16,075 18,833 - 18,833 -------- ------- -------- -------- -------- -------- General and administrative 6,848 - 6,848 7,387 - 7,387 Marketing and sales 9,448 - 9,448 11,468 - 11,468 Amortization of intangibles 799 - 799 852 - 852 Impairment 1,500 - 1,500 3,109 - 3,109 Other (income) expense, net (147) - (147) 417 - 417 -------- ------- -------- -------- -------- -------- Total operating expenses 18,448 - 18,448 23,233 - 23,233 -------- ------- -------- -------- -------- -------- Operating loss (2,373) - (2,373) (4,400) - (4,400) Interest income 122 - 122 246 - 246 Interest expense (2,577) - (2,577) (2,280) - (2,280) Minority interest expense (2,132) - (2,132) (1,851) - (1,851) Earnings (loss) from equity investments 467 - 467 (199) (2,692) (2,891) -------- ------- -------- -------- -------- -------- Loss from continuing operations before income taxes (6,493) - (6,493) (8,484) (2,692) (11,176) Income tax expense (218) - (218) (2,427) - (2,427) -------- ------- -------- -------- -------- -------- Loss from continuing operations (6,711) - (6,711) (10,911) (2,692) (13,603) Loss from discontinued operations, net of tax - - - (8,981) - (8,981) -------- ------- -------- -------- -------- -------- Net loss $ (6,711) $ - $ (6,711) $(19,892) $ (2,692) $(22,584) ======== ======= ======== ======== ======== ======== Loss per share - diluted $ (0.13) $ - $ (0.13) $ (0.40) $ (0.05) $ (0.45) ======== ======= ======== ======== ======== ======== Weighted average number of common shares outstanding - diluted 50,345 50,345 50,345 49,758 49,758 49,758 Calculation of Pro Forma Net Income and EPS Net loss, as reported $ (6,711) $(19,892) Add: Impairment and restructuring charges 1,500 12,755 Adjust income tax expense - 2,066 -------- -------- Pro forma net loss $ (5,211) $ (5,071) ======== ======== Pro forma loss per share $ (0.10) $ (0.10) ======== ======== Calculation of Adjusted EBITDA Net loss, as reported $ (6,711) $(19,892) Add: Income tax expense 218 2,427 Depreciation and amortization 4,968 4,693 Interest expense, net 2,455 2,034 Non-cash compensation 390 229 Impairment and restructuring charges 1,500 12,755 -------- -------- Adjusted EBITDA $ 2,820 $ 2,246 ======== ======== Adjusted EBITDA per share $ 0.06 $ 0.05 ======== ======== Note: The AMD segment includes the Company's interest in OccuLogix, Inc. TLC VISION CORPORATION CONSOLIDATING STATEMENTS OF OPERATIONS (UNAUDITED) (In thousands, except per share amounts) Nine Months Ended Nine Months Ended September 30, 2008 September 30, 2007 ---------------------------- ---------------------------- Results Results Before Before AMD AMD Total AMD AMD Total Segment Segment TLCVision Segment Segment TLCVision -------- --------- -------- -------- -------- -------- Revenues: Refractive centers $126,540 $ - $126,540 $138,782 $ - $138,782 Doctor services 73,225 - 73,225 73,489 - 73,489 Eye care 22,221 - 22,221 19,849 - 19,849 -------- --------- -------- -------- -------- -------- Total revenues 221,986 - 221,986 232,120 - 232,120 Cost of revenues (excluding amortization): Refractive centers 89,011 - 89,011 97,567 - 97,567 Doctor services 53,439 - 53,439 53,070 - 53,070 Eye care 10,109 - 10,109 9,059 - 9,059 -------- --------- -------- -------- -------- -------- Total cost of revenues (excluding amortization) 152,559 - 152,559 159,696 - 159,696 -------- --------- -------- -------- -------- -------- Gross profit 69,427 - 69,427 72,424 - 72,424 -------- --------- -------- -------- -------- -------- General and administrative 22,201 - 22,201 26,212 - 26,212 Marketing and sales 31,308 - 31,308 30,590 - 30,590 Amortization of intangibles 2,432 - 2,432 2,554 - 2,554 Impairment 1,500 - 1,500 3,109 - 3,109 Other (income) expense, net (703) - (703) 982 - 982 -------- --------- -------- -------- -------- -------- Total operating expense 56,738 - 56,738 63,447 - 63,447 -------- --------- -------- -------- -------- -------- Operating income 12,689 - 12,689 8,977 - 8,977 Gain on sale of OccuLogix, Inc. stock - - - - 933 933 Interest income 548 - 548 1,394 - 1,394 Interest expense (7,467) - (7,467) (3,408) - (3,408) Minority interest expense (8,024) - (8,024) (6,942) - (6,942) Earnings (loss) from equity investments 365 - 365 1,110 (6,823) (5,713) -------- --------- -------- -------- -------- -------- (Loss) income from continuing operations before income taxes (1,889) - (1,889) 1,131 (5,890) (4,759) Income tax expense (950) - (950) (5,031) - (5,031) -------- --------- -------- -------- -------- -------- Loss from continuing operations (2,839) - (2,839) (3,900) (5,890) (9,790) Loss from discontinued operations, net of tax - - - (8,440) - (8,440) -------- --------- -------- -------- -------- -------- Net loss $ (2,839) $ - $ (2,839) $(12,340) $ (5,890) $(18,230) ======== ========= ======== ======== ======== ======== Loss per share - diluted $ (0.06) $ - $ (0.06) $ (0.20) $ (0.09) $ (0.29) ======== ========= ======== ======== ======== ======== Weighted average number of common shares outstanding - diluted 50,292 50,292 50,292 62,243 62,243 62,243 Calculation of Pro Forma Net Income and EPS Net loss, as reported $ (2,839) $(12,340) Add: Impairment and restructuring charges 1,500 14,474 Interest expense from Dutch tender - (3,308) Adjust income tax expense - 3,949 -------- -------- Pro forma net (loss) income $ (1,339) $ 2,775 ======== ======== Pro forma (loss) earnings per share $ (0.03) $ 0.06 ======== ======== Calculation of Adjusted EBITDA Net loss, as reported $ (2,839) $(12,340) Add: Income tax expense 950 5,031 Depreciation and amorti- zation 14,845 13,828 Interest expense, net 6,919 2,014 Non-cash compen- sation 1,101 960 Impairment and restru- cturing charges 1,500 14,474 -------- -------- Adjusted EBITDA $ 22,476 $ 23,967 ======== ======== Adjusted EBITDA per share $ 0.45 $ 0.39 ======== ======== Note: The AMD segment includes the Company's interest in OccuLogix, Inc. TLC VISION CORPORATION CONSOLIDATING BALANCE SHEETS (In thousands) September 30, 2008 December 31, 2007 ---------------------------- ---------------------------- Results Before Results AMD AMD Before Segment Segment AMD AMD Total (Unaudi- (Unaudi- Total Segment Segment TLCVision ted) ted) TLCVision -------- -------- -------- -------- -------- -------- ASSETS Current assets Cash and cash equivalents $ 8,495 $ - $ 8,495 $ 12,925 $ - $ 12,925 Accounts receivable, net 17,881 - 17,881 18,076 - 18,076 Prepaid expenses, inventory and other 15,846 - 15,846 14,882 - 14,882 -------- -------- -------- -------- -------- -------- Total current assets 42,222 - 42,222 45,883 - 45,883 Restricted cash - - - 1,101 - 1,101 Investments and other assets 16,724 - 16,724 17,524 - 17,524 Goodwill 101,023 - 101,023 94,346 - 94,346 Other intangible assets, net 16,876 - 16,876 17,020 - 17,020 Fixed assets, net 54,893 - 54,893 61,936 - 61,936 -------- -------- -------- -------- -------- -------- Total assets $231,738 $ - $231,738 $237,810 $ - $237,810 ======== ======== ======== ======== ======== ======== LIABILITIES Current liabilities Accounts payable $ 19,124 $ - $ 19,124 $ 17,177 $ - $ 17,177 Accrued liabilities 30,018 - 30,018 28,115 - 28,115 Current maturities of long-term debt 7,846 - 7,846 11,732 - 11,732 -------- -------- -------- -------- -------- -------- Total current liabilities 56,988 - 56,988 57,024 - 57,024 Long-term debt, less current maturities 93,230 - 93,230 98,417 - 98,417 Other long-term liabilities 5,581 - 5,581 5,023 - 5,023 Minority interests 15,523 - 15,523 15,224 - 15,224 -------- -------- -------- -------- -------- -------- Total liabilities 171,322 - 171,322 175,688 - 175,688 -------- -------- -------- -------- -------- -------- STOCKHOLDERS' EQUITY Common stock 310,473 28,501 338,974 308,972 28,501 337,473 Option and warrant equity 745 - 745 837 - 837 Other comprehensive income (1,060) - (1,060) (784) - (784) Accumulated deficit (249,742) (28,501) (278,243) (246,903) (28,501) (275,404) -------- -------- -------- -------- -------- -------- Total stockholders' equity 60,416 - 60,416 62,122 - 62,122 -------- -------- -------- -------- -------- -------- Total liabilities and stockholders' equity $231,738 $ - $231,738 $237,810 $ - $237,810 ======== ======== ======== ======== ======== ======== Note: The AMD segment includes the Company's interest in OccuLogix, Inc. TLC VISION CORPORATION CONSOLIDATING STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands, except per share amounts) Nine Months Ended Nine Months Ended September 30, 2008 September 30, 2007 -------------------------- --------------------------- Results Results Before Before AMD AMD Total AMD AMD Total Segment Segment TLCVision Segment Segment TLCVision -------- ------- -------- -------- ------- -------- OPERATING ACTIVITIES Net loss $ (2,839) $ - $ (2,839) $(12,340) $(5,890) $(18,230) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 14,845 - 14,845 13,828 - 13,828 Impairment of goodwill and investments 1,500 - 1,500 12,400 - 12,400 Deferred taxes - - - 3,511 - 3,511 Minority interests 8,024 - 8,024 7,275 - 7,275 (Income) expense from equity investments (365) - (365) (1,111) 6,823 5,712 Gain on sales and disposals of fixed assets (397) - (397) (91) - (91) Gain on sale of Occulogix, Inc. stock - - - - (933) (933) (Gain) loss on sale of businesses (139) - (139) 184 - 184 Non-cash compensation expense 1,101 - 1,101 960 - 960 Other 459 - 459 370 - 370 Changes in operating assets and liabilities, net of acquisitions and dispositions: (132) - (132) 4,821 - 4,821 -------- ------- -------- -------- ------- -------- Cash provided by operating activities 22,057 - 22,057 29,807 - 29,807 -------- ------- -------- -------- ------- -------- INVESTING ACTIVITIES Purchases of fixed assets (2,785) - (2,785) (11,062) - (11,062) Proceeds from sales of fixed assets 774 - 774 1,038 - 1,038 Proceeds from sale of Occulogix, Inc. stock, net - - - 2,000 - 2,000 Distributions and loan payments received from equity investments 1,682 - 1,682 2,368 - 2,368 Acquisitions and equity investments (8,332) - (8,332) (4,815) - (4,815) Divestitures of business 1,128 - 1,128 584 - 584 Proceeds from sales of short-term investments - - - 17,375 - 17,375 Purchases of short-term investments - - - (5,800) - (5,800) Other (72) - (72) 187 - 187 -------- ------- -------- -------- ------- -------- Cash (used in) provided by investing activities (7,605) - (7,605) 1,875 - 1,875 -------- ------- -------- -------- ------- -------- FINANCING ACTIVITIES Restricted cash movement 1,101 - 1,101 (52) - (52) Principal payments of debt financing and capital leases (25,818) - (25,818) (4,506) - (4,506) Proceeds from debt financing 13,784 - 13,784 85,317 - 85,317 Capitalized debt costs (534) - (534) (1,951) - (1,951) Distributions to minority interests (7,724) - (7,724) (7,199) - (7,199) Purchases of treasury stock - - - (117,533) - (117,533) Proceeds from issuances of common stock 309 - 309 2,422 - 2,422 -------- ------- -------- -------- ------- -------- Cash used in financing activities (18,882) - (18,882) (43,502) - (43,502) -------- ------- -------- -------- ------- -------- Net decrease in cash and cash equivalents during the period (4,430) - (4,430) (11,820) - (11,820) Cash and cash equivalents, beginning of period 12,925 - 12,925 28,917 - 28,917 -------- ------- -------- -------- ------- -------- Cash and cash equivalents, end of period $ 8,495 $ - $ 8,495 $ 17,097 $ - $ 17,097 ======== ======= ======== ======== ======= ======== Operating cash flow per diluted share $ 0.44 $ - $ 0.44 $ 0.48 $ - $ 0.48 Note: The AMD segment includes the Company's interest in OccuLogix, Inc.
Contact: James J. Hyland VP Investor Relations (636) 534-2369 Email: investor.relations@tlcvision.com