CUTR - Earnings call transcript Q1 2019

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Operator

Greetings, and welcome to Cutera's First Quarter 2019 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to turn the conference over to your host, Mr. Matt Scalo. Thank you.

begin. may You

Matthew Scalo

call forecast welcome Financial Call. and President First XXXX Jason on Quarter Investor Officer Chief Thanks, Interim Sandra certain These a discussion today The of After and name prepared forward-looking reflect to future is but Gardiner. statements session. Conference CEO, business the our And Development. of My provided and and Vice comments, any is Matt Earnings not Cutera's question-and-answer there Relations modeling or management's Operating company's the Chief limited current forward-looking operator, Richey; purposes. Corporate Cutera's today aspects Officer, financial Scalo, will statements. of Cutera's expectation for be including, includes guidance to,

current dynamic its on is, statements change. are and to information nature, based by that subject Forward-looking

financial among statements new regulatory approvals include Forward-looking productivity statements products, others, plans introduce improvements. and to guidance, regarding

you publicly may or harbor section to or events. unanticipated differ forward-looking Cutera the events earlier as on For speak XX-Q update we expectations. the on only uncertainties, the no statements results filed. date undertakes information, statements, place Factors words as to with encourage to risks in to reflect risk management's new circumstances, they're cautions subsequently forward-looking press any including our materially Form release in you current forward-looking occurrence also to updated refer Future Risk not obligation of reliance filed reflect may undue statements, which to SEC made. our and those from of safe our factors identify that today. and are subject in described to entitled Form the statements All XX-K forward-looking statement Cutera

from analysis refer GAAP should believe particularly CEO, to an non-GAAP that, non-GAAP period with, greater including transparency our Interim to call Officer Please measures Cutera's Richey. complete discuss to results we financial measures prescribed period. reconciliation underlying as addition, to release. basis. can Jason ongoing operating to measures into results when a would I facilitate We alternatives financial by the non-GAAP will In With more earnings comparing the of from results these turn the operations, and measures, measures along These on financial Operating considered, Chief not be to over and performance in like our but adjusted GAAP.

Jason Richey

Thanks, Matt. combination This XXXX I'm X%. pleased you has today. first joining off as afternoon, Good reflects performance well and thank of to revenue us report started quarter a revenue factors. for grew positive

we quarter total first the Total body First, XX% for X,XXX truSculpt and selling iD. as the quarter to over was also pleased truSculpt over quarter moving the XXXX. priorities, systems system. system anticipate behind procedure-related truSculpt rapidly iD's currently to approximately however, revenue. to revenue tracking a $X,XXX This expand is is top install company's which figure consumable force we expanding annualized reflects XXX% strong revenue to a procedure-related to our truSculpt providing driving we major in forward, consumable see grew of utilization. continue the sculpting unique to base one company's revenue drive milestone, don't grown and utilization first system, We our of compared truSculpt per revenue I'm truSculpt first a demand of high-margin in increased date. XXXX, achieved are

expand the are expect to it with next steadily and We the over pleased utilization growing year.

by last in women's the of issued an communication system. a good sales face status comps distributed in safety a job were did QX, key summer. the fourth past on and team industry-wide Juliet, commercial American North priorities given of quarter's health sales tough unusual turnover FDA by especially discussed Juliet executing in quarters We've the our our how Second, impacted

modest success QX with fourth headwinds. As quarter America, in largely recent pricing for North a saw system pricing levels, line industry in considering

implementing robust progress make North more discipline to pricing in continue America. We

We a has gross significant the well on margins. impact of front are our pricing in as work us of aware

international growth markets. promising in saw we Lastly, key

second As iD as This launch the Europe upgrades of we included you in improve as our recall, in plan truSculpt positioning the in XXXX, personnel areas of Australia. to half well implemented like and select countries. plans

While it's saw still well as demand we systems, legacy for truSculpt early, iD and including Xeo as enlighten SR strong key [ph].

inventory the ongoing would I improvements management we continue year-over-year. in solid projects, seen inventory turns recent Regarding we company's make the improvement out have board. our operational to call progress our as improve across

have lower like over Officer. In now to our this call U.S.-based response and two to Financial distribution in addition, the Sandy centers Gardiner, to turn costs. overall established would Chief we our I improve transportation

Sandra Gardiner

Thanks, Jason.

was First from X% quarter a revenue period the same ago. revenue was down in quarter X% first up the $XX year-over-year. year U.S. million

for We and truSculpt strong systems. iD demand see Secret continue to our RF

in was to headwinds. as drove offset first this by contribution from revenue pricing XX% as compared the However, well the XXXX system quarter. growth grew diminished Juliet International as Japan Australia legacy significant and quarter

growing total XX% pleased time, a more as X,XXX in grew a to compared as strong meaningful direct Consumable Revenue consumable systems the XXXX for Recurring service the a product accounted XX% worldwide will revenue shown a revenue Regarding year consumable revenue the have date, utilization. sold over be has first revenue first and revenue revenue, accounted as sold increasing in demonstrating first Consumable growth to generated quarter in to XXXX. approximately truSculpt The million. truSculpt defined first and growth percent of to our solid quarter at focus and XX% international revenue the stream. have continues over the portfolio to revenue. XXXX. and consumable, of We're our grew of XXX% systems $X.X quarter from our mix, product quarter percent revenue positive momentum efforts skincare of remains over over consumables XXXX channel XX% total period. revenue, become system quarter compared sales the for XX% of first ago

first be my I'll into underlying in measures comments corresponding than substitute in call. margin move was on to into today's in to quarter expenses, our from detailed measures prices the refer in our our across I discussed first as financial year press release ago trends on of isolation or quarter gross financial approximately The our Please non-GAAP the description of for legacy as to decline in the GAAP our fourth average XX% gross business. the results focus not Non-GAAP Non-GAAP non-GAAP and operating quarter prepared basis with our of results. As adjusted for lower the year-on-year business considered or year-over-year compression intended GAAP. accordance points a selling margin XXX period. mainly are reflects a the or provide insights discussion changes and

largely XXXX quarter gross to the Due ASPs seasonality, First are line the in revenue margins quarter historically fourth with year. of XXXX are lowest levels. quarter first

improve as revenue more pricing throughout and strategy to expect We XXXX rigorous gross gross momentum hold. We takes margin our a with XXXX builds track goals. remain margins on

in percent ago $X.X the the the Non-GAAP first quarter the year sales expense activities of and investing or as approximately the quarter each scalability a Demonstration same period. first of innovation in well to quarter first in on research of general XXXX North XX% practice revenue engineering was XXXX This the first and product first leadership in increased committed revenue million quarter the in period. our compared regional and non-GAAP XXXX. sales and of to and to research $X.X XX% new of on product increase XX% period from in development leadership expenses and marketing in American General that as each revenue the a year-over-year. reflects the of administrative XXXX. We focus were promotional commercial of revenue of development XXXX our the and investment reflects in also Moving largely as operations. remain million in expansion compared enhancements. to administrative at each expense XXXX and as and of clinical of expense quarter existing remained of Non-GAAP was in and drives flat XX% managers prudent

a was XX at amortization the period our addition first also loss Fully for $XXX,XXX XXXX. the and of and same January. diluted of of shares non-cash Non-GAAP loss charge EPS and and expense quarter weighted compensation quarter implementation $X.X a to non-GAAP average approximately onetime the of to the $X.X administrative in the was well In costs general in was our early diluted loss CRM to in as CEO XXXX used share. excludes or customary per Non-GAAP ERP million non-GAAP in related resignation million $X.X quarter expenses, former as first million net fully outstanding to million depreciation stock-based compared operating $X.XX compute shares.

future quarter full provision As have we mentioned tax offset on call, to periods. valuation our allowance fourth in our a

DSOs were the our of the end prior Net $XX.X XXXX, or in X.Xx of to million, at from year from XX representing March receivable quarter year the and sheet $XX.X a cash to by the of Turning million flow. X.Xx XXXX days of accounts balance million decrease XXXX. the first X quarter turns the days period XX, versus were and an at ratio approximately inventory first prior Inventories decreased quarter. $X.X of

quarter processes. our investments million continue and first the improvements, operational of was policies reflecting Cash compared we chain we credit improvement expect collection in continuous improved to $X.X and well operations first in the as $XX quarter turns. As to realize supply for as XXXX, by used also to million enhanced inventory

with we and Our and debt no investments working of March cash held $XX.X XXXX, million. position $XX.X remains of strong. of And million as XX, cash capital

increase Turning the overall in to to margins investments. to further our representing make X% of over XXXX of XXXX gross XXXX our revenue strategy guidance. XXXX. a full $XXX we will benefits Total guidance. see the be and progress year $XXX in to full continue million our range our with reiterate We year financial level as improve to million X% anticipate We over infrastructure non-GAAP pricing XXXX

million. to his adjusted $X EBITDA over would to call expected in to for $X now Jason range comments. to Lastly, the is I turn million closing be of the like

Jason Richey

of Thanks, our I'm aspects with first Sandy. many quarter results. pleased

in We are beginning positive signs XXXX. implemented to the from initiatives we see

shaping as the this commercial to become we our focus successful we gain of significant body believe We innovation. a hyper-focused continue share with systems we had future market. the and of is contouring and aesthetics team of Cutera, revenue a for to excel pursuit vascular V+ priority. through in goal Recurring $X of on At in business. meaningful a revenue's growth with procedure-related more the driving market overall laser, company's profitability, global billion We're the have uncompromising on motivated our of a a part adoption launch

them and long-term would for I open We now financial to to status objectives. We're our employees achieve us for call will Operator? and to quo accomplish confident enable empowering an environment flourish. will to that, operational this with this strategy the like by creating our And challenge up questions. the

Operator

with Cooley Stephens. Chris [Operator from first Instructions] Our question comes

Christopher Cooley

bit domestic to parse I've of us to type from from Maybe to when follow-up. to at Juliet more two apples-to-apples perspective? margin I'll then quick and and operations. the of ground guys A help maybe both But look demonstrable then results, loss the out and just made of there, a this. comparison to Just queue. the trying maybe back could think we And kind we one and start impact When you then growth cover just and in the lot margin in obviously you both got me to a then progress a start, sales follow-up about little and get the I'll after XQ to here, pricing an hop the from quarter? the XQ clearly, during

Jason Richey

we're to thanks We're Chris, American portfolio question. order we've and discipline I to processes it, Couple And with on longer, and leadership and that perfect down, the say North I and yet. make across in implement got implementing We're team. more the sustainable the pricing process. our new Yes. across scalable better working wouldn't was it that more a heads continuing things. for

we I that had. think that's one of the influences

that and outside we're Secondly, relatively sales, the we once probably America, flat States, had anything that, well. in robust in as we we growth and we internationally, provided think I a want to... United of North of and bit you Sandy, had go XX% international little that getting were so ASP lower

Sandra Gardiner

just quarter first lowest the I obviously, quarter. say, the would revenue And Yes. is

pricing as the go the will throughout So is year robust talking margin about, and throughout as that as as strategy these we our Jason momentum gross the in improve revenue year. well build we implement as

Christopher Cooley

with for all there, being if type excess from in year, but do But with Investor gross that this to through in that's you XX%. not again, the of for XX% to industry are margins backdrop the margins type to are progress additional October at organization to and longer that progress or year, has Day, of seeing, closer structurally in table the state think the just I And at savings making of thinking top off and obviously the in preclude the a structure, premature next. those and objectives you back the it's that run, you bit then -- not that say that the of op a think appreciate would maybe anything perspective, this take long-term bogie Understood, line in to point, the realized still to for trying P&L if Clearly, the again profile that year next? just or getting longer were the but color. from term semi-realistic changed trying a about margin now, this margin last maybe getting back you're not

Jason Richey

way. that Right. focused No, we're still I think

we in runway team, I think the of as the always that have our to a we team our the the many go look sales distribution. up year. our our from also management And layout, But around we you perspective October, we through about as balance rigor when talked have looking improving new the the for Looking pricing will more back brand-new the help at portfolio QX's manufacturing and meeting opportunities of year, look at inventory, regional quarter them terms contract our operationally, in across that and going commercial in that's toughest several go optimizing time saddle talked picks things to you key this to from revenue also is strategy. time facility giving us in when then as and reps well. about, we pricing give more more saddle

It's some little plan. I things think of to of but certainly we're momentum, take in sight time the these a that. lost that still haven't just gain of that's order bit

Christopher Cooley

that update Juliet. on the to to I'll time I maybe Any queue. get on states? Then the just And U.S. could offering in just there to Understood. the if one regards just clarification returning there thoughts market to back here

Jason Richey

Yes.

Juliet, Regarding the a still called the robust we have FDA. this pretty really the encountered women's result health as device, like of have letter We obviously we from headwinds space.

of have some the Although we mentioned, we still there. weren't received pressure

and the or with to think the device believe we and of it of better with month, like we However, this a I this we of ultimately, come idea and down of pre-sub-meeting FDA are much like should a have working fewer will better closely very middle manufacturer really that or actually line space, players, because so it have long in we term. next looks a month, the sight terms what that not,

Operator

Our with comes from Jon next Stifel. question Block

Jonathan Block

two me. from three or maybe And

as for you that So being So force? Where for, and stabilized, year some the with just Jason, the the hiring what the numbers I'm guess. sales are XXXX? balance number looking American of I are in reps turnover specifically specific of plans the North the

Jason Richey

All walk right. bit. a structure through let the me little you

experience didn't QX. turnover address of unnormal We first me first. let any So all, in turnover

got our sales managers that new the and a doing are job. good top five progress North I'm have comfortable performers, responsibility some on historically, positions. to into of and a in positions accelerating -- great done in I getting their that take think with force, that managing hopefully stabilized, We've directors think about it. new feeling American job are three moved those These sales has along they've I and to great really more

out a whoever capital drive XXs of that perspective, of with in the we're or In a in group managers. that, facilities equipment reps hovering and is infrastructure terms patients to the the XX whether initiatives capital from terms This spot physician funnel. marketing development their the practice the and below into order around helps it's a goes in

at we going from we'll six, regional in prior. add the adding I go be four PDM when think time, balance where level, point of from likely the be So the people likely some at looking the we'll we're us to move, should return the looking to manager look then for thing five another at positive space is year up be a this a in territory manager really to from And we'll on which or from year. when through heads, adding we at at look more investment so

Jonathan Block

the Maybe sculpture. CoolSculpting to over That's body pivot just contouring very tough and from helpful market, numbers non-invasive color. certainly,

to both despite looks better, you to derive You price talk close just full competitors? fair list out for And you what there the guys growth market? and Can on seem truSculpt you for non-invasive truSculpt. much, able And the overall consumables? the and are just seeing called much XX% some are you to body like out contouring pricing what capital from pressures other to

Jason Richey

question. good a I would space competitive. the that fiercely That's you is tell

done been a but full list job good good of able we've competition price, to XX% the by would to I say, pretty not think We've outpricing a sustaining I XX%. price. we're charge

the challenges have to command do need order that that continue premium is products and that that a of In One that, that. sure have we we implementing to we're innovate make to we pricing strategy.

technology, it's this agnostic, that hands-free, feel best-in-class do painless, anatomically terms XX-minute in it's it's we and like I in of lipolysis. it's with it's So such procedure, a

have pretty some proud of market, what X hold prices and So to enthusiasm but based around the a think features compared is that momentum we frees. I'm offering stiff because it as lot us get move the this in competition, up challenging X some we're commercial cases and it's these place to regard, systems on into of I to those lot team a only for competition, as in really the a of unique has but around there also to against technology done be, buy the competition not that

of line of of and technology. I the features benefits our we're good doing the holding based job off think unique so And pretty a

Jonathan Block

so bps want the XXX clarification. I've roughly a sort And but this one got margin, more just sequentially, sure gross maybe down to make on Sandy, of I right.

sequential or So just a is revenue a base, basis, now you've pricing sequential gross on margin it's fact so is all that correct? pressure stable quarter-over-quarter lower that arguably the got

Sandra Gardiner

Yes.

to legacy to You're We QX the exactly the of were margins. from It's year-over-year correct. ASP the that all hold ASPs largely able QX. affected pricing gross

Jonathan Block

X the you the first XX%-and-change to can up you're read XX% but per little versus XX% your if still non-GAAP bit months And a XX% gross get these average true, release to for expecting the you margins differently, next And versus think comments, in XQ? XX%? on be

Sandra Gardiner

have I and us going to read to margin behind in time, we point have reiterating XXXX. come Yes. some our this versus everything that for evaluate quite But that and what and us it's frankly, pricing, in time, gross it's X strategy that see point operational the improvements our prudent in -- quarter through, will with mean, things starting midyear. as we over our non-GAAP improve at of are we're yes, that this other that, we we

Operator

further At Jason I'd no to are time, this comments. to Instructions] Richey for [Operator turn There questions. the back closing call like

Jason Richey

Very us heads updating year. a on we continued all outlined we've in and well. Everybody, year. our like we've care. at team delivering that and Cutera, I got that the today participating can look our of to we're you X got for I'd we down, initiatives Take interest as your you in thank the that tell for being said, on focused really With throughout now. the quarter forward and to behind you the beginning call

Operator

teleconference. today's concludes This

and lines for your may at you thank we disconnect time, You participation. this your

Cutera (CUTR) 12 May 192019 Q1 Earnings call transcript