STAA - Earnings call transcript Q4 2017

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Operator

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the STAAR Surgical Fourth Quarter and Full Year 2017 Financial Results Conference Call. [Operator Instructions]. This call is being recorded today, Wednesday, February 28, 2018. would turn I to conference time, Mr. this like the to over At EVC Moore group. Brian with

Brian Moore

Crystal, good call you, the XXXX. on review Thank and company's fourth the joining you the on STAAR us quarter, for which Surgical December results conference financial this ended to afternoon, afternoon for everyone. XX, Thank

and results call the and Mason, detailed Andrews, www.staar.com. issued Financial Chief Caren the Deborah Time X:XX news in CEO p.m. release XXXX website and available and On President are full fourth after just is quarter at Officer. was on today Surgical; of year The Eastern STAAR STAAR's now

this we Before any statement. is expectations, associated projections, made forward-looking webcast differ statements update a the and not based do judgment the me forward-looking uncertainties public described with the the and outcomes This the filings the those call, results analysis and intend in these company to statements that you periodic the statements. subject reflect SEC. risks or press STAAR's no plans, statement so. and will beliefs of as described with are in historical today's call about includes statements assumes uncertainties obligation well a make statement not statement in of that during that The to as release future of does are We STAAR forward-looking remind fact actual prospects. to These to that materially the forward-looking to begin, events this numerous forward-looking in on conference is risk conference and could of actual cause from call harbor you company's conference let as important course and are this remarks statements. and quickly caution date safe

helpful and GAAP a per to included non-GAAP net supplemental A the non-GAAP financial we reconciling information today's information performance. believe is to have and historical income information. addition, the assessing supplement share meaningful these our information numbers in adjusted future non-GAAP release. income provide are net table In provided GAAP We numbers, and in the that

call for And our we [Operator advance STAAR turn with Following remarks, questions this their in Instructions]. Executive open to from that, analysts. Chief cooperation thank the of We to I'd like everyone Officer Caren process. will President publishing over with call Mason, Surgical. to and prepared the

Caren Mason

your addressing Deborah trial and XXXX. growth in X-year stronger and XX% in And performance for to on beyond. combined, XXXX investments development, in QX surgeons sales Thank afternoon, outreach and questions. strengthened of additional XXXX quarter everyone. plan over our and XXXX a including practice our growth operations will training, the pivotal commercial Visian programs around will emerging X-year a infrastructure lens We this clinical, and with ICL before year products EVO certified for of in and for Korea spend to and and for second the support. the trajectory growth the solid our to results new globe strategic with for began call you, year regulatory upgraded business myriad treatment recent good XXXX our XXXX I XXXX then Europe, EDOF transformational appreciably review begin highlights. discussion finished and foundation the a a to target in contributed readiness to for the and reinforced regulatory, developments, and which STAAR The XXXX. accounted quality, completed base of about strength validate key and with X- certifications our XXXX for consumer half and have development research partnerships full cooperation bodies open representing then to XXXX. we new from brief expectations Europe compliance full realize XXXX, presbyopia, for ophthalmic financial begin to few minutes began QX fourth We QX we'll of Brian, a results overview XXXX several clinical XXXX ICL and We

we November, or we expect bolster in We for and double-digit XXXX with in top studies, imperatives fueled will clinical growth. on infrastructure we flow and ICL anticipated in indicated cash continue as strategic XXXX commercial believe, we expect expenses strong profitability growth in compared later planning realizable investment disclosed positive good actual. earnings to low-double regulatory digit XXXX, the generation. and As as to line X-year In unit to sustained plan increase progress committed remain improve greater is our cycle. our we to operating our sales compliance outreach, cash We by which which consumer achieved XXXX have mid-teens expansion, over and a to additional require promise,

share little like up. to more color see a Now we I'd XXXX on how shaping

with markets and China, of partners. global We and Japan, have ICL key growth Germany our Spain Korea, goals set selected distributor substantial in

are to Our set year-over-year, the well achieve revenue million us for grow revenue goal is to in in up aiming we $XXX XXXX. which over double-digit will

We back that on are pleased our track. Korea is strategy

from XXXX. We growth Korea expect in double-digit

focused embarked which the digital Olympics. during are growth, development on Toric and implementation an of We We practice co-marketing campaign, on with new distributor recently our STAAR's partner. began tools advertising

no train you and stations, are how X Visian viewer EVO are the apps Seoul campaign positioned doors, break leading to ads monthly theme, in next million X Olympics between carries carry The than which websites each on as in set break large board. our the screens subway running writers to permanently with PyeongChang. The more a of to Our spectacles strapped free. to from borders ICL free through glasses learn

North Canada. be in America will by to growth continue We void expect

North opened America as chains are Strategic large-volume in clinic to Agreement adding partners. Cooperation We

provide our and positioning practice North markets. proceed outreach to outstanding in can We way are enjoy surgeon premium America the and the with ICL marketing partners. is believe relationships right we international certification, stipulating primary the to development consumer commitments assure we largest these We and change the

limited in status. a Dependent for year-end. regarding launch we this additional information possible rating ICL the We by Visian At by States FDA. achieving United inspection are have the upon in-compliance QSR an time, Toric preparing

satisfied next current U.S. our they have reporting patients very approval. we post-ICL addition, In reporting is present for believe as safety over patient to registry data globe, XX%, we and family patient again. the of very around EVO footing of reporting and implantation. the Visian would product targeted an X,XXX past from clinical and year, impressive are with effectiveness being we the positive In XX% the satisfied, surgery family the lenses The satisfaction and a on surveyed picture or patient rating have steady of ICL recent

EDOF ICL We we clinical compelling expect with of for pilot March. and continue presbyopia study clinical study and presbyopia to enrollments the by the EU EDOF the results end completed ICL, promised our are first patient our pivotal for ahead have as trial forge believe as such, in

overall of and spending have planned a increase digit in consumer support planning robust in the in believe infrastructure balance gross price-competitive price a more from a growth trajectory temporary outreach. growth and flatten part Due lower near plan. this for as with our or margin injector projected decrease We to long-term We operations low-double sales commercial XXXX-year are percentages our struck more than and for new studies, the expecting to have XXXX. as large-volume anticipated right increased we diopter number term. we to submission We clinical foundations slightly in of spending expansion, XXXX initiate in improvements lower ICLs, we regulatory fees increase view increasing a stronger

expect along double-digit XXXX. with growth, over margin EPS improvement remember overall dollars nicely Of will the bottom in gross course, With line. as track that the we let's $X.XX do regard loss our to line, top

afternoon. We about of XXXX delivering Overall, position $XX.X million another and also are year our Deborah? prepared for enthusiastic remarks That our XXXX year-end plan of concludes look increase forward to the we strong for by end my shareholders. XXXX. cash to this

Deborah Andrews

I'll XX% you, reported with in start Karen, afternoon, everyone. sales increase line million $XX.X results by XXXX. $XX.X the reported sales. and IOL sales quarter increased by more increase of of offset net XX% of of injector financial of XXXX, in quarter provide sales decreased and overview market. details sales Thank unit and of was product over of XX% top growth fourth an STAAR with the with parts and summary of by then driven million a fourth ICL good partially revenue the The growth

sales America due distributor Japan, offset India, decreased ICL line and For our Middle to the product prior total XXXX, the America, double-digit and for the sales in markets, Latin ICL by quarter. $XX.X partially million sales in growth compared of $XX.X North The increase Asia year quarter China, to strong the fourth East, were million in Korea. Europe in is

revenue sales sales for acrylic IOLs. and units total and were For IOL Decreased silicone our year Collamer sales which XXXX, fourth the offset of in of line, million was the quarter period. from down increased by IOL partially $X.X XX% product were X% IOLs preloaded of prior

Our other prior for injector XXXX, product fourth over parts, period. primarily were $X.X the sales, quarter year the XX% up of million

to Our below sales. gross of XXXX, net points XXXX the fourth XX% the compared of quarter in the profit fourth couple of nearly percentage quarter grew a in increase

of by prior and the The Operating associated EDOF Our compared operating lower lower-margin commercial due the of gross ICL higher margin of expenses due cost of an IOL quarter product effect is XXXX the the favorable fourth for XXXX. the of in generation our also other fourth increase product. compared increased to and China, the for to expenses due compared Meeting of XX.X%. travel Toric profit to quarter the The in result $XX.X expenses, million, $XX.X in were gross was increase unfavorable another held in profit offset expenses XX.X% optic. trade Experts the expense expenses and trials part ICL clinical in increased which were to show, the of injector in mix decrease the quarter QX third and sales for the our year product timing the ICL quarter increased of sales compensation with million. partially margin margin operations highest in and the our sales, for margin quarter with increase next year clinical primarily gross G&A XXXX fourth XX% Operating ASPs, was increased to of was the to XXXX XX% ESCRS quarter prior of increase of

use, and fourth million income $X.X We net equipment which adjusted of a Act. basis, XXXX breakeven diluted diluted for loss the capital income recorded we a by XXXX $X.XX reported or quarter XXXX Tax largely benefit during fourth a the We certain in longer of an the share million also reported per loss tax or a of to as net was the fourth for of approximately of result or no net of recorded quarter a offset same $X.X Jobs as write-down prior Cuts On the quarter year for of compared million of share period. breakeven diluted per non-GAAP share. per the XXXX $X.X

STAAR $XX.X growth of increase by an XXXX, $XX.X reported XXXX. sales ICL the of decreased of of injector year with The sales, increase sales. by driven over full unit an million, XX% reported sales partially For offset XX% growth sales million parts revenue for net of XX%, increased IOL was

million For sales XXXX, million total product year for prior $XX.X compared to the full in of the $XX.X ICL line year. were

Asia America experienced and decreased growth Europe regions, the markets, in Korea. offset Latin growth U.S. partially and the Pac, notable EMEA North Japan, most by with sales and America Asia in Canada, the sales year-over-year distributor China, all

XX% of preloaded decreased IOL by sales XXXX, silicone IOLs were were for product from year sales revenue IOLs. full Collamer line, and of year in IOL acrylic X% period. prior increased of total For down Again, $XX.X sales which units and offset was million the partially the

up over Our other were XX% period. XXXX, prior year product sales million the for $X

gross ahead XXXX XX% to Our sales. profit in XXXX, net compared increase slightly the in grew of

product effect Our part XX.X%. was unfavorable by for period injector to of the in Toric increase increase an gross and lower-margin mix due gross year the profit favorable ICL sales sales. XX% other was compared XX.X% of product profit prior margin the offset in margin largely XXXX The to

of increased year compensation headcount stock the million, quarter X% that for of in repeated quality Our increased prior was overall China. was XXXX, remediation operations prior expenses to in year consulting compensation expense of decreased XXXX operating $XX acceleration due and were in -- fees, expense offset million. decrease by compared XXXX and The commercial not decrease $XX.X operating a to the partially

loss per of year or share $X.X $X.XX year of compared share diluted full basis, a net loss approximately net share a per income of loss or On we share. $X.XX we diluted $X.XX adjusted or the reported prior period. per for million $X.X compared a diluted to For a reported net net the million $XX.X for $X.XX per non-GAAP million $X.X million XXXX of XXXX, with or of

balance Now turning to sheet. our

over of the XXXX. equivalents Operator, years generated expects balances X full please activities to December going each restricted years, take XXXX cash cash to which X the Despite XXXX questions. in And during totaled of $X.X and investments $XX.X comments. my that, cash, significant and the is managed concludes The in for so to last the from year-end the line increase has last ahead operating Our company fourth This million open to year quarter forward. XX, cash of million questions. XXXX. and your the of in operational cash million million, we're its do company of continue $X.X ready with $X.X

Operator

Jason from Canaccord [Operator Instructions]. Mills question from And comes Genuity. our first

Jason Mills

up the gains talking get FDA But, we be near hypotheticals, give guess, limited that I'm for you around you you you your sort But for if sooner start, you if can future? to respect saw it change expect plans the Caren. relatively about with it your Warning going now in of I your spending positively, that with understand to business us that I looks all, set term, to would to anything distribution and XXXX, were any and or did outlook there anyway is at in pretty be is speak good later. if when way can or or It presume an in come near it the if I curious in Letter. Will a than rather information I while. a you any think could had change outlook, the investing may or

Caren Mason

United a outcome lifted. hopefully, We Warning Toric definitely the is result -- most the of the of that, the into Letter with already with so for, a being introduction market associated have model. preparing States [indiscernible] The positive of with been in the And

earlier happen So there year, the is upside could in this potentially the us. on revenue, for

million-plus So some to have Toric point not any had though comment but, into really does pretty growth yet although, yet, take aggressive U.S. a the would to doesn't The States in United account, reinspection that, the I $XXX units outside like and know preannounce. to we been is is in are they have that planning contacts of representatives FDA we facility, inspect Since policy our this of a FDA FDA assured reinspection, facility. the are periodic are with the we the to planning, not our obviously,

So we the inspection XXXX, for in know year. milestone. of sometime the look that it completing and half In believe the will within remain forward we it though meantime, to even and when the ready will don't we it occur will hopefully, occur first occur,

about to we're wanted are know conversation that I people just any with out lot the there. a get around FDA So wondering whether Because of timing. having

Jason Mills

hear. super that's to Caren. Yes, color, Good

expect the little to you this the few in. Caren, then of a you Gross sort guiding will ones it's Just quick said understandable 'XX. were and, others a margins jump temporary. But way also fiscal and wider for you're be

-- gross generally guess, margins. bottom there? good And respect color you you you X-year enroll, with respect The which just question? increasing gross you you offset, is that the how to could set over give solid then plan quarter, us Obviously, you expect if be see going? line augmented us margins. more your United which that fast to can level commented was across in would to time, where trial this through a I new you wondering you So your Toric, presence to -- presume assuming X-year your in how the to I but with positive Also, plan, lastly, had States respect helped that have mix EDOF with the Toric you I'm as an look market, do And margins

Caren Mason

lower With we to have Sure. surprised that of for we diopter expectations. are margin, regard gross pleasantly ICLs. orders the amount They exceeded are at our seeing

injector is that part also sales. dramatic mix well in of expect not part issue, increase So the as just we

so we us more getting in for good refractory are especially, and the the of So business of model globe, taking get up our strategic procedures. business to end diopter it's around more model market all partners, share of that more the their because more lower on we

We yes, gross of gross terms end to garner the expect 'XX improvement by In expect, products. Foundations heading plan. of margin gross of be And on track, margin those improvements our XXXX the do of we the for margin, back some in the for our is for year, terms on additional remainder and XXXX us. to mid-XXs towards

Torics as we percentage, some have as XX% now. of markets In right terms Torics, as a high

XX%, of as is really above a even trending forward interest sort gain the Toric. that, seeing we're will lots strong going company, that For now and of EVO we're in what whole, numbers, in

terms we conduct, following all effective be EDOF countries our the are we enrollment, and swift believe job lens. requirement to -- hope, quick and a we into who of working critical In European what convincing of properly timing be doing will and patient enter a will thorough us EDOF of with trial very for the that

begin March take So we April. enrollments place expect in our implants early first to to in and

Operator

Sidoti Our comes Sidoti Company. Jim question from next & from

James Sidoti

So just ICL is in just I said growth wanted growth that to or is just double-digit overall that XXXX, growth? you clarify,

Caren Mason

revenue exceed hopefully join expecting club. overall million, to that growth. That's $XXX excited we're We're to

James Sidoti

some changes back-end loaded the years, And -- that what any or seen seasonality you'll previous do you've anticipate be think from because you'll in products? do the new seen you you of in of more

Caren Mason

in in than think way company will in would I with experienced it vary the I think XXXX. grow has you the from past. work the we the what be pleasantly And surprised different

remind we over last growth the had have to sequential you, Just quarters. X

James Sidoti

Okay.

expect like sounds that it continue? to So you

Caren Mason

happen, see to like yes. would we what be would that certainly, Well,

James Sidoti

then, for the because can margin Okay. is 'XX, you sales of just you repeat, All that gave right. gross Great. guidance mix? the And

Caren Mason

last Experts focus lower it. our us. at performance call for we -- diopter ICLs to we visual started for effects, really It's qualification of Meeting have exciting and the year on the Yes. Because of really let's required

really refracted a our lens. need modest correction who patients had for So being offered weren't

terms volume available primary really really considered all in the surgeon, and of refracted be solution for In the for to for if good a refractive patients. excellent premium us it's not of most,

at So with correction performed traditionally comes LASIK diopters. a because has lower point lower well the price that, though, the

more So coming opportunity we be than to us that to the sooner is take share able planned. for of

up dollars along be And to at close going catch least upgrades so nicely That growth. are it's till what about us in gross margin very of terms are the foundational will also they the so more good, and in probably you margin take we But we in all terms year, 'XX, when top with give that opportunity per unit growing margins all are a the line on. dollars. look, to gross those because of of this with talked automation

Deborah Andrews

also All that, ICL right, our would that approved margins. add nicely I also add the getting the to in will Toric gross U.S. to

James Sidoti

Okay. guidance Toric But for I the you for U.S.? least, don't assume XXXX, in have that, at for the anything

Caren Mason

No, we don't.

Deborah Andrews

part That's of right, margins, is it. XXXX flat

Operator

Raymond next question Benchmark. from from Myers comes our And

Raymond Myers

the ICL. expect Let to then expected be also XXXX? discuss increase launched? why that me When injector about in first ask you in sales And do you been preloaded there's part an

Caren Mason

Okay, we're hold launch the regard terms now announcing date. with in on right of to preloaded,

on to in some opportunities, have injector We improve that we even development. is think, this

manufacturer a team, have by outstanding that more give and really dramatically. these next parts injector regard the the work on last relatively with for due of we'll manufacturer past relationship sales, amount we these to quarters. over in have up really years. to So the good that And gone a we purchases had couple our injector parts demand of some now with that color the bumpy With

for top it's for an et going have our as as cetera, some that, forward. parts, So us opportunity other to with well line opportunity obviously improve

would us capability We manage really on out. expert companies, is injector are for becoming I sort experts, most a and which we're at coding being parts, call to hard why

Raymond Myers

Good.

of you gross elaborate are you why expectations You second it And half. margin this margin expect in half your sounds like correctly, cadence? stronger to XXXX gross I talked the that about a as the heard expectations Can softer you if year. first and in bit

Caren Mason

even year, trajectory ended going though way the this And we we're be of the we're what into pretty the back calling I that in Well, think on lot much equal will to the will for to XXXX. planning the itself 'XX, is that cycle. mid-XXs expect a

good the ASPs as that are increased company. So costs really this price are above. It's to none mostly changes, directionally, traveling with stronger is of the news. mix troubling, as nothing or impacts it's got is that It's that that positively do

So dollars gross the line close margin it. margin with to will up be in revenue -- or

that's bottom all of the terms line. drop-through in good So to

Raymond Myers

then says $X.XX And of releases just The a correctly? I per supportive EPS am that you forma Great. a that reading pro press clarification. have share, diluted

Caren Mason

$X.XX Adjusted per net of income share, correct.

Raymond Myers

good. prepared Okay. in That's remarks. think that don't positive. Very the quite -- I said you your in

Operator

question Instructions]. from Weinstein [Operator William And from next Blair. our comes Brian

Andrew Brackmann

is a growth actually Brian Obviously, the years. Andrew past today. for I Brackmann on to question. over higher-level been part for a you few with start Caren, major guys wanted This off have partnerships of strategic the

those successful it plan? -- they and what in back, Looking what out didn't work has where according out was specifically made the to work cases what the just cases out, they where that worked in really didn't is

Caren Mason

and together, strategic the best reason that and all partner. I them is that say And Hey, models have. that well, that haven't out, we business just we of had for really strategize for worked clinical about haven't partnerships would that's really

do do partners that We they actually like model. we that research the on did patient strategic at at So results Aier diopter We with kind together, whether we with refractive the outreach are terms high consumer with we lower do their bigger actually or ICL. doing normal research. the of of have look in market, business low, procedures, the they the look of mid patients percentage way diopter the

with really we, co-marketing. growth, the together the so patient plan And a share, the strategically the of and outreach, research grow partner. all we every together together, the we And year makes market when the alliance, great that where

be know trajectory would So with and really this partners. analyze clearly year, very those our could growth what we

for parties validates because the big what makes it for definitely ICL. a it business model both So the year for is difference

Andrew Brackmann

then And any? on to is it. Got attributed what U.S. if investment that operating the of percentage this the expense Deborah, infrastructure, growth year, in

Deborah Andrews

I for this would for XXXX? -- say using are for --

Andrew Brackmann

For XXXX.

had about operating double-digit the talked You growth? expense

Deborah Andrews

mid please? low question, to the you -- Yes repeat would

Andrew Brackmann

the investments U.S. in be attributed XXXX, infrastructure, to over the any? increase to that Yes, digit in expenses what so commercial percentage going low-double if operating of is

Deborah Andrews

Well, there will where the the not an look the course, be for We growth the allocation, of in is greater it appreciably other around for opportunity is. planning, U.S. world. than investments basically But

We we've very in good lock a have and United a for bring out now and introducing plan, States. that's been kind it while of key, for to The wanting under been Toric

the So the first. the where expenditure consumer yes, will be outreach in key in plan rollout U.S., there cities, the we to definitely there product

Operator

Thank any you. the conference. our closing Caren call that to remarks. to does turn over would today's conclude question-and-answer back I for like now for Mason session And

Caren Mason

Thank call on for today. participation you our your

We We best your will scheduled the operator. and Angeles weeks. roadshow in be of in on the all investment All Baltimore. and York, our road Currently, appreciate New you. in to interest have coming you, Los nondeal company. Thank we

Operator

Ladies and thank the participating This conference. today's program. conclude does you in for gentlemen,

wonderful You Everyone, have day. disconnect. may a all

STAAR Surgical (STAA) 28 Feb 182017 Q4 Earnings call transcript