CUTR - Earnings call transcript Q2 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the Cutera Inc Second Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Mr. Investor Corporate President, Vice Scalo, Relations, Development. and Matthew you. Thank

You may begin.

Matthew Scalo

Investor session. welcome Thanks, the Scalo, will XXXX of Chief Development. Executive to Jason is earnings After Mowry; and call and on Cutera's and a the And be conference President Officer, Matt second-quarter Gardiner. Cutera's is Chief there Cutera's operator, Financial prepared today Sandra Corporate comments, name call. Vice question-and-answer President, David Relations Richey; My Officer,

forward-looking These company's statements management's discussion but today statements. The certain guidance the forward-looking or forecast of not financial of purposes. future reflect expectation for any includes current including, modeling provided limited aspects to, businesses,

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

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

identify those factors For Securities press in statement statements, filed. Form are subject and and words safe Form in with Factors you and in XX-Q to All statements Exchange XX-K, we our section our the to our as to subsequently updated the forward-looking risk may filed risks forward-looking described including that in refer entitled harbor Risk release Commission today. earlier encourage uncertainties,

of to events speak or reliance no circumstances or date information, place events. you forward-looking reflect statements, update on unanticipated publicly occurrence which to obligation Cutera cautions are made. also to statements only new reflect not the of undertakes as undue they Cutera any the forward-looking to

results Future from materially current may differ management's expectations.

and the into ongoing to financial particularly We believe GAAP these underlying release. in Please facilitate from In operations, our complete non-GAAP a measures can from measures, when results earnings basis. greater refer Cutera's period. results will adjusted financial addition, including transparency we to to period of comparing discuss reconciliation analysis on results non-GAAP measures an more

operating financial measures to, should but by as along be GAAP. prescribed with, considered These the not performance non-GAAP measures alternatives

President, to to the With call like Richey. that, I Jason over our turn would

Jason Richey

our joining Cutera's for to I dedication his execute observations thank results since Dave joining and and financial review afternoon, second-quarter team as XXXX Good our us the year-to-date appointed you and from initial members will ask and Mowry, today. Matt. commitment reflects Thanks, recently then well in on CEO, Sandy and share our results, the individual as, company objectives. personal to focus delivering on financial performance July. guidance,

together, initiatives, and encouraged by we've commercial able operational results share Working the we progress against made you with and our to today. are I'm

three quarter, prior factors. second For total driven by over year, the XX% revenue key grew

to strong Cutera's quarter system, revenue, sculpting First, of grew from truSculpt, continues generate portfolio of our truSculpt iD, well XXXX. over XX% demand. flex, truSculpt as including commercial products, truSculpt Total XD the unique muscle of and new contributions body sculpting limited release second as,

tone and flex's their complements results up two to patient's of suite muscle systems and combination by We're encouraged the by than enhance in body sculpt physician patients. clinician seek. as the patients truSculpt with truSculpt area, well modes that as capabilities, flex, the times in fat-reduction large coverage we provide The the sculpting the and physician's group. competition, experienced more customizable truSculpt truSculpt iD's flex to full early treatment X capabilities ability interest target believe these the

prior as, increased strong procedure-related well utilization. grew as second-quarter expanding system revenue triple by over to addition sales, In the base, truSculpt digits driven installed system year,

product see to team. Although the our of management our value investment development in it's still early, we're beginning

North pricing top improvements driving We the in realized of line The America leadership system our system renewed North second factor products, including focus legacy III. on sales American enlighten was our team. growth

less this Additionally, a legacy system pricing headwind was of quarter.

discipline. pricing sales and team's improved our reflect approach These competitive strategic opportunities positive to results

in commercial The third team. delivered key revenue XXXX our by international second-quarter factor energizing growth was

second the our into the may positioning specific upgrades iD product markets implemented half of truSculpt included to of Pacific we critical European plans recall, improve Asia the aligned to plans personnel introduction key These with you XXXX. and As during regions. within select international

in Our investments second-quarter and XXXX performances these quarter. Europe throughout Australia international results the are beginning Japan, the value to strong demonstrate with of

from pleased While monitor market continue deliver efforts thus and investments are make to with our and we the far, will expanding important adjustments of results promise and key markets. we to the on additional each these

Chief the turn the for as, To would the provide Sandy to call Gardiner, quarter, guidance additional details over like year, I our on well Financial full Officer. to as

Sandra Gardiner

Jason. Thank you,

was and company's only International quarter the history of year being XX% up period to ago million, the year. XX% a revenue this second from quarter grew the the compared second-quarter despite quarterly the $XX.X in the Second constituting revenue same highest revenue XXXX.

growth earlier, mentioned in significant quarter. and the Europe Jason Japan, drove Australia As

Regarding we flat efforts compared for accounted of the for diminished sculpting as our in revenue system, discussed the contribution strong channel our year. Juliet, sales remained by second-quarter U.S. XX% direct growth international portfolio, generated truSculpt truSculpt mix, as offset demand portfolio quarter was was year-over-year ago XX% revenue in the women's system worldwide XX% revenue second-quarter to XXXX. year microneedling body our second product past RF from Secret have product The and the continued period. over and in health

positive a per-procedure growth well launch on as, procedure-related period. to continue muscle focus sculpting grew as with a Both accounted strong XX% revenue, June. revenue of revenue in and percent recurring of XX% has Recurring XXXX defined utilization of recurring those for of over XX% installed revenue. year as revenue investments systems, skincare quarter, second stream iD Development increasing generate system management past our global systems consistent shown of second-quarter for service our systems and consumable, the continued revenue, and our second-quarter demand In in revenue, from with service truSculpt the We total with as executed expansion truSculpt up total the system approximately and the limited see a flex and teams. our in Practice momentum year-to-date revenue the ago

for my or gross XX% the on non-GAAP a the well for and insights in I'll our in Non-GAAP approximately adjusted The basis to results. refer second our in trends provide ago comments higher year-on-year product mainly to the our non-GAAP GAAP as the quarter prices, changes improvement system margin reflects revenue our in and III, the selling period. XXX in than underlying margin results I combination move detailed of gross gross As incremental solid expansion margin into into year description growth, select today's operating release channel enlighten or Please points second-quarter mix, total on press discussion was as, example. and an the business. expenses, focus of

gross XXXX We remain on track goals. with our margin

to marketing sales marketing leadership expense regional approximately a period development a first second basis, $XXX,XXX the the the revenue of a the percent year North Non-GAAP expansion leadership revenue the due compared of expenses. growth XXXX, well in operating was in quarter increased XX% as result of as commercial in and quarter revenue quarter the to dollar primarily and on from second overall and of sales practice year American of Moving spend over XX% ago On in XX% ago. XXXX. the a investment sales quarter managers, to as as, of second nominal

research. essentially clinical the at of in compared expense and XXXX. engineering in the XXXX, into second the of same product committed development million of expenses activities $X timing We support second We flat to $X.X XXXX operations. development in to same period general million approximately market. remain due quarter in were and introductions XXXX Non-GAAP and research from of $XXX,XXX prudent period our was remain focused scalability in to down administrative the of on the in Non-GAAP the quarter in investing investment new

diluted to the XXXX. $XXX,XXX Non-GAAP non-GAAP ERP in the weighted costs. the quarter excludes for $X.X fully million compared compute to compensation, net addition in expense outstanding diluted same $X.XX stock-based Non-GAAP customary in of period million and amortization to approximately used income implementation share. second depreciation non-GAAP quarter shares. operating In average million was EPS XXXX expenses, XX.X shares or CRM per also income was was and $X.X Fully

our mentioned in we allowance full As previous offset a calls, to provision on future have tax periods. valuation

at DSO cash $XX.X million Net of receivables flow. XX and the days XX, were quarter end June sheet versus of to from year approximately times our in X.X an were accounts second second first by or day of balance the and at from decreased the XXXX. to XXXX inventory period $XX.X XXXX, quarter million Turning the representing million $X the turns a the X.X of times decrease of quarter prior Inventories XXXX. of ratio one

in XXXX, million improved was million compared $X.X operations credit of reflecting policies, processes and quarter the ago. well as, by collection the to generated year Cash a from supply second second for chain as quarter $X enhanced

of capital of remained position as $XX cash million and June no with held Our investments and we strong, XX, debt working cash XXXX, approximately $XX million. and of

to Turning XXXX guidance. our

executing in as We While anticipate improve investment. reflects on in in we $XXX our margins XXXX our X% representing to these to as year stabilize remain operational benefits infrastructure commercial business of initiatives. our XXXX prudent a year $XXX progress second guidance. guidance our to million, see XXXX believe legacy initiatives. the financial of XXXX. million over level the X% financial and reiterate will with quarter, we Total pleased be against are the our assumptions we performance Therefore, our XXXX revenue focused begin to we full range increase full We non-GAAP over gross and to the our

the in $X million is EBITDA $X expected adjusted range Lastly, to million. be of to

call the turn to new his Mowry, initial over joining CEO, to for Cutera like our now would month. observations last I David since

David Mowry

to of you you, a with speak pleasure Sandy. It's all Thank today.

I XX like team team their to by as Let warm welcome, last for Cutera Sandy, their the onboarding days. congratulating entire effectively thank and Jason in me the results. as, also well second-quarter as well would both the over delivering me support strong start for financial as,

many in for reasons Cutera. of I invest our joined same to have Cutera chosen the shareholders

strong aesthetics capacity the shape of is future the both addition delivering excellent with while associated shareholder brand capability the with to and and market a the global Cutera, rich In value. history business identity this to

to have we solutions a markets. and the appropriate conditions unique broad these a breadth aesthetics At develop of focus combining the with on portfolio a design, distribute of in the scale Cutera, balance market addressing laser

near-term look critical market our I for our details I'm the company in execute this as need to findings. plans we more the the speed, new providing encouraged half evolve I and some and many segment will come second to XXXX. of forward While advance to up am my initiatives strategy, of time early by to

the With that, questions. I'd over for turn now Operator? to call like

Operator

Please for instructions] Chris question first floor Stephens. Our Cooley of from is is The coming open now [Operator go ahead. questions.

Chris Cooley

Questions, and to Cutera. David, welcome

two Just maybe I'll quick me, and get queue. back in the ones for

Sandy. there there. component really the like of consumables growth to for saw First, the the element see Impressive continuation but in – growth recurring and maybe there, we I'd the

about think little a the to in love then that about maybe would that us quarter, of some out. lift regarding contouring think much. what And all, to playing early and I portfolio. utilization? hear if margin rollout days Talk but as an to bit of additional Thanks body you truSculpt how additionally, color of to this the contributed Still type adoption and so early at what we about changing here kind seeing just aspects, accounts perspective you're now, continue seeing from how, is the on

Sandra Gardiner

Thanks, Chris.

margin that address I So the you question will have. gross

into So go gross as that you know, component. elements margin there several are the

So I that we first, think, pricing the certainly, discipline talked.

less saw that and headwinds the certainly We contributed. of

of accretion both to volume And comes the the and that some then because recognize contributed additionally, revenue. mix lastly, margin absorption to gross elements that. Additionally, the able manufacturing we recurring also and were additional with really the – all the

revenue consumable the have with year-over-year. have a very on certainly we we pleased that been So

had It's quarter and growth area, in XXX% where we've a skincare additionally, that both second but consecutive service.

recurring So all of contributed. elements revenue the

to accretion, very gross really confident we So that margin our they remain provide feel and that's all we full-year together guidance. on why track that for came

Jason Richey

go of flex. lot the there's question, space. the that this runway I'll This I sculpting Jason. ahead still still I space. and in Chris, is body like think on take a

excited we interest truSculpt is space to – year, and to the in. of in to in. to as earlier innovate around I'm around traditional portfolio talked find And our market we innovating area interested trying we where have introduce legacy where also the our were flex a were about because, lot still at The but body – verticals an sculpting ways we looking

So I there. still there's think a nice runway

us gives some penetrate flex accounts. I to truSculpt competitive ability think the

this And verticals sort track us the to of expand time that the ID way of over think it with that one share quite course beefing that users. I much market current we're how of we with gives is runway we'll to bit like movement the up of able gain in. have we feel our a the of

the out in and The training commercial then leaders, into the release. we feedback did before is to get phase, So full our commercial hands and sales of limited in opinion some was of quarter. the release go a what key idea we QX this do a production there final this get some force

I I'm really able sort that's reiterate to that seeing we of to this some at that the body are we're where in fact muscle space, and momentum the do with positive So excited device. point, up vertical but beef stimulation to be sculpting our want

David Mowry

Dave. is this Chris,

it, an us. this I still I is and insight. limited we only I've gathering release, days, that everyone space sure that we're but think to close that Just to for here been commercial just in are exciting want make understands kind of XX

we're and support in that manner to the and And to while launch make on some have we're building long-term front it that a responsible us doing thoughtful encouraged this a do sure this work making we're needed still and of we by sure as it, infrastructure we in basis.

wanted you the innings, realize very that encouraged. early in just we're although I sure make we're to So

Chris Cooley

Understood. Congrats on the results.

David Mowry

you. Thank

Operator

is [Operator you. Please ahead. of next Our from instructions] go Stifel. Thank Block question Jon coming

Unidentified Analyst

this for for Hi, Thanks is Trevor the question. on Jon.

So of you keeping first revenue from this raising and really results you quarter, strong this at what's I'm one, point. curious just kind guidance had

a historically, bit half. sales than heavier first the little has second Looking been half

first that so you're from think half bit little so guiding I far. something the the a would than higher far point what to implication results

David Mowry

to Hey, this how do you're we comfortable here is for and the asking going going I've XX we're but, for obvious what to the question, with thanks frankly, Look, I there. to we're Trevor, think get and days, need been and Dave, question. get

that. be be how and everyone on we of the that call in know we how think the I to on thoughtful comfortable, prudent enough build I to to guidance. got know – some credibility story to investors this we've we get I myself well provide think we've want and do And until very got

that while of the from challenge a lot compete to still effectively That lot ourselves on to first of the of we a there's half being half in of tailwinds things said, there's year, back the the execute and year. have

we're from to limited is immediate on uptick do understanding but is ability going field to Our the be better position great, in and the because long-term. launch still to that not the launch how flex – gathering on feedback commercial the commercial that product tru the some

think we're ahead we've we've and that of have comfortable been, execute to And we it lever to I to That to build credibility, to said, to we happen. raise that I and time opportunities think sure get those guidance. need but where before got get that willing some make frankly, I need with

Unidentified Analyst

maybe Okay. Great. And on just specifically. truSculpt, another one

So it be is you is it sold separately? Or truSculpt the marketplace? going Are in positioned flex be bundling to iD? being with to how going

Jason Richey

ours, to up of think, in We I a things spot. have able go into having and one good as with that, do the being to aesthetics nice about us comprehensive portfolio the really, opportunity flex I both, the think is it again, as beefs portfolio the base and the puts

flex, nice of to patient portfolio. new we around I result. deal We sell part be iD incorporate their package visiting to XD users But the them base that certainly have and that drives encourage a installed hopefully, as really with we'll think greatest which of and, users gain opportunity insight and have their also an to a iD with

Unidentified Analyst

Great. you. Thank

Jason Richey

Yes.

Operator

it questions additional or instructions] in to I'm time. any to for queue Thank I showing closing no you. back this would like comments. [Operator additional turn at management

David Mowry

appreciate Cutera. today continued the to Okay, everyone call thanks, participated for your thank operator. I'd interest And Really that. in who like on

you this to the year. we back us, with have look of updates move as of work we and of plenty half We providing through in forward front

very you. conversations. your you to thank interest. Thank those look much We forward Operator? So for

Operator

gentlemen, for thank Ladies your today’s concludes and participation. you This event.

You at disconnect time. may this or log off

Cutera (CUTR) 10 Aug 192019 Q2 Earnings call transcript