TLCVision Reports Third Quarter 2008 ResultsST. 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
