STAA - Earnings call transcript Q3 2019

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Operator

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the STAAR Surgical Third Quarter 2019 Financial Results Conference Call. [Operator Instructions] This call is being recorded today Wednesday, October 30, 2019. At this time, I would like to turn the conference over to Mr. Investor, and Director, STAAR Development Senior Surgical. Moore, Media Corporate Relations for Brian

Brian Moore

and Thank afternoon afternoon us you, September the good Thank Michelle XXXX of everyone. company’s results STAAR ended conference third quarter the XXXX. on Surgical you call review this to XX, financial for the joining for

after Chief Time Caren quarter press The release is our third today On and on at Executive Officer. the are STAAR’s call Eastern Officer www.staar.com Financial Chief was X issued now available just results President and Mason, and p.m. Deborah Andrews, website of

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

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

prepared two limit then the any everyone to questions analysts. line re-queue will to follow-ups. analysts their themselves We process. publishing in remarks, our ask additional We cooperation Following with questions for we advance with this open thank from

with over to Mason, President that, turn call CEO And and of would like I the to STAAR. Caren

Caren Mason

you, Brian afternoon good Thank and everyone.

growth market, progress refractive ICL conservative of significantly today third take double-digit our The represented lenses reported of record the growing represent industry. ninth for third quarter, within share at in vision effecting correction. of refractive quarter as XX% Global ICL the XXXX ongoing unit in rates our growth for change third quarter of results above cash all-time we sales paradigm the continue and our record generation unit to quarter the

our higher company Importantly, back GAAP STAAR positive revenue ICL revenue unit X companies you net of of at growth, growth, cash of publicly These This with targets based the a medical the and least the and quarter we accomplishment on include technology year-over-year XX% balance earnings January. fiscal initially is the to we our in targets just caps level public reaffirming traded of where growth profitability. achieved publicly estimates believe strong upon expected expected full small-cap first XXXX companies This we an flow income, consensus financial on GAAP year-over-year positive we the Based the market $X third today XX% higher below and income net companies of year-over-year technology of GAAP outlined unit and sheet. in commitment results for quite the for context is are revenue growth cash in while one strong is billion. year maintaining XX year, with for medical quarters XX% XXXX. two available

successfully XX% markets, driven during basis, with up China the was ICL to during to in up Korea units units of year-ago several the growth the XX% the the the line unit ICL as growth Japan France record UK up XX%, up final top support period. global China week growth Spain units mobile levels I implant Implants quarter in milestone the units of China-surgeon up third regional were and Germany for now key activities in to in congratulate quarter, this partners achievement. social for our high growth XX%, seasons third XX%, for excess Turning up details on designed hurdled unit units season XX%, mentioned. units South and year year, a marketing we prior compared up as media a China for XX% a XX%, included Commercial the units some record just quarter in high XX% implant by On consumers. basis, prior over whom

we that and in in programs Spain. soon As exciting September, influencer will very new concluded in a campaign initiated include programs these Europe marketing new

Congress annual for business included including practice practice and experts September, the best our only U.S. and banner also clinic marketing in the and Surgeons advertising ICL hosted from and and We YouTube Midwest. the held surgeons our shared meeting. and amplify with very included date, in In and safety of day learning refractive and presentations, podium the ophthalmic the data, of consumer We across began meeting hosted and clinicians at a Paris. engagement biggest Society experts two for awareness In quarter international Dallas, advertising digital programs. in ophthalmic that to effectiveness our U.S. billboard We third and continuum Surgeon events. was U.S. almost significant modeling, optometrists Refractive The Cataract in leading September. August, event surgeons are lens-based XXX surgeons panel inaugural Texas. in ahead to European of meeting surgeons, we leaders during our business extend we council

lens to family we new supplement continue our approving Mark product expands DEKRA, letter study market study lenses. EVO countries, October XX, opening approval in range body, target quarter In of notified opportunity lenses the this XXXX, large Europe, in our for for the The we protocol. the additional that anticipate recommendations, age family market received seeking working in be which our dated review and letter regulatory on U.S., trial the to few our FDA activities, for a we of EDOF to by remains will a the Turning XXXX CE our design the are of from U.S. second STAAR our in for EVO EVO included include a clinical for under the in presbyopia

responding so. a or within We week to FDA are

recommendations. very qualify our be lines much close expect out forward to and to design, sites through next FDA’s will We to we continue expeditiously We work study including study patients. not time impacted latest moving look steps as and the enrolling

of would the Before over investment with for performance, more I a review weeks. coming to detailed our turn to I where financial Deborah to meeting community few forward highlight near-term opportunities like the in call the we look

with outlining Next November vision to the where Investor Stephens forward will at in our we be XXXX, November X, Annual strategic the XX, we Investment in week, City, Institutional on Friday, Tennessee. period. X-year to XXXX look Conference meeting hosting investors and On York Day invitation-only planning will our New be for we Analyst XXXX Nashville,

the some corporate headquarters you fourth quarter. Forest to at forward seeing We of also during look Lake

Now I’ll over Deborah. to turn it

Deborah Andrews

of the everyone. summary start quarter of I then in results down financial third Good of statement. million the income Caren. increase XX% line $XX.X Thank you, provide year reported sales STAAR will detail in top overview reported of afternoon, $XX.X XXXX, over period. and the million with more a the ago net an

currency primarily the third Foreign abated the headwinds, during euro, quarter.

company Our basis growth points, growth $X.X by of months was quarter. respectively. X and by revenue net sales the represented of in XXX XX% of in was rate first negatively XX%, Strong the top revenue impacted million driven ICL reported in which growth approximately XXXX line total

the our quarter of income due XX.X% profit in third temporarily gross our quarter. margin Gross demand statement, for growing quarter compared down expenses products. margin manufacturing in new prior the to was period incurred was intended the XX.X% construction in to the third for year facilities the to reduced satisfy Moving

to million, our to the operating continue ICL Total move As for expansion we as gross third product XX% forward. we expenses and lines margin the range, margin a gross of XX% reminder, anticipate remains increase in to compared of improved $XX.X XX% XX% fiscal in and XXXX. the the million $XX.X were of compared expenses quarter an quarter during to operating prior half increase of year first the

$X.X G&A expense in million $XX.X Taking digital, a and operating selling and The $X.X was and as costs expenses million the at third in year to include as expenses, and continued and investments professional G&A $XX.X of compared was marketing. million compensation due quarter to including compared facility consumer million headcount expense to ago. stock-based increased fees. in and look increased increase closer a strategic the expenses, Marketing salary-related were components

quarter. $X.X $X.X quarter operating increase expenses in $X.X to compared income million million ago to Our ago the during of was R&D related compared an the expenses in R&D The as clinical generated in operating approximately due million to quarter. activities. income increase in year primarily expenses We trial million were the year of to $X.X

September both period the X% to year X-month and compared operating period, respectively. XXXX, X.X% the ended was quarter and XX, X.X% third ago our in For margin

income per $X.XX in the share. is $X.X share. of to quarter release. to non-GAAP per Net million ago approximately as compared or as was quarter quarter per information $X.X million reconciling net per ago diluted or was basis, net or third GAAP diluted for to $X.X the or compared $X.XX income the net share adjusted a diluted On non-GAAP adjusted for of income year $X.XX today’s A financial table income $X.XX million share million during diluted $X.X year a the the information included

XXXX. our million generated our September cash in the XXXX. activities third restricted of with to totaled million XX, now million cash quarter record compared cash from as cash, of company Turning December XXXX, in The at $XXX.X XX, $XX.X operating sheet, equivalents a balance $XXX and

fiscal Finally, as XX% percentage in QX. QX this annual we quarterly and models, the XXXX. sales in a XX% in and comparable In fiscal XX% of continue from analysts expect assist regarding that we sales in their investors have in calendarization QX, of quarterly with of of as our year a fiscal note sales to QX, XXXX, in we to received questions calendarization experienced as the was please total calendarization number XX% XXXX fiscal

with QX This quarterly moderate highest that in then has our closely QX. as by seasonality the QX dollar quarter the followed consistent is business calendarization

dollar QX our to continue quarter will We revenue for anticipate lowest year. fiscal the be

our This concludes now prepared we are ready to take questions. remarks. Operator,

Operator

question [Operator from comes Jason Canaccord Mills Our of first Genuity. Instructions]

Your line is open.

Jason Mills

enroll us to enroll? expect X of might line Caren. the will to you is your the a number ophthalmic go I devices hasn’t has. guessing months then X start taking being you respect for with into that The conference, the recommendations could, am had the least that investor with been detail I am of if to maybe cycle review of detail perhaps Thank the up give the afternoon, questions. frames week month of States. you good other bit has components I And I group you but preliminary lay us the it a let you more wanted for at And assuming if the us changed out you? and for patients sort to follow for the XX Hi, time could at sort time FDA asking next while. of United more for know FDA to average what

enrollment similar somewhat get piece on want could great. Thank are you. pieces you, around if for be would those the it, I you think so arms assume investors to that? is comment but can That I their what So

Caren Mason

Jason. you, Thank Sure.

Again, we did to into. we receive and begin FDA. to approval a a October regarding XX ought got on letter look few So considerations from that comments we we received possible full the

so the now we should to final to regarding a are with believe we FDA final or this we within So what reviewing expect agreement not if and be study. week close that respond to

We are in we have trials available. that those have slots participating surgeons than very enthusiastic about more clinical interested we in been have as underway the activities

availability we’ve very can the study patients enrollment that were this a lot also be talked to last our swift. the months a the tell and here you with criteria. meeting imagine opportunity So several in associated you to and about meet the with and over that diopter if I surgeons, who may quick is U.S. ranges of the trial in

clear can’t you I that large so I but majority these for relatively can surgeons what into tell of that get practices it’s And surgery details, have is procedure. refractive the

be to those the will will acceptance So for right and we an we qualified expect of will want a great believe be that there for hope be all part offer, who patients reasons. study and there this

be requested which has when industry. FDA offered with of to will typical we enroll is would aggressive as we in be will able the has follow swift the most criteria which not all the and then criteria our cycle to that And expectation considerations – timeframe with able that and you of consider the then mentioned through X-month able timeframe. that all have in our So we we review that to be then and in is meet changed the

Jason Mills

lens you seeing does diopter the about you. EVO that’s very Okay, have option in user this and expand society opportunity here that. So ranges? bit trends did in lower I for diopter Caren, have you And quite we product, for thank back got With vis-à-vis focused opportunity it’s the Paris, this the really at European in broad, queue. discussion Thank did lower lower to an in ranges. about U.S. study question specifically and the the you user ICL growth patients in to on get and then is in diopter will comment in of diopter but EDOF are lower using expand you patients? helpful. the coming Europe the Perhaps respect meeting, a include Germany business, meeting indications the Asia, the the

Caren Mason

Sure. Thank you, Jason.

been As know, imagined. of range aggressive option we market been share Asian have been the that of and we even countries with than increasing has in a could you number lower that’s an diopter have substantially more

know talking a ago. have we be part And was share where double-digit Day, low digits so XX%, market for we few cases above we about going this some in at will Investor the years that single most we started

my we throughout that refractive including ranges. XX% grow only grown the a global diopter fast And range is consistently in aggressively we’re in so growing situation prepared the for on at the I And and surgeon said XX%, have as where we remarks, those without that surgery, year into all lower procedures above where average. couldn’t X.X% refractive market, at units hitting

taking Europe, we Asia. are the same the share, taking are in ranges lower are doing we share So And diopter we period. at in

Germany We you get in everybody in and free the so as and an for and aware, September they And back probably Europe, August, to in part, are enjoying is their July work. had out in time most we coming UK, great extraordinarily and growth. year Spain, a There terms is the of well markets September expect of Europe. etcetera close to about very, lot Germany, very in in excitement EDOF to our then

of market diopter part Asia look lot moving are who the strategic or expand rollout We we that are or a have all I’d like be we the in ready when again, and at at say, to U.S. the down would structured planning. we all, range looking the to poised total Europe, doctors, of opportunity.

That and/or either our And Investor going that through of would at room, points add direction business. number the video X are about proof terms is really in years the surgery also to present, who future lens refractive in Day, the a this surgeons be based. have through are of of to for theme are I the next is who like talking we the of who will strategic why

of their We the the who into number business the strategic are have for many future, world have already excited lens there, majority a around up based. and are of lined having we who move partners

in plus business will vision equipment the in with examples their States present have United model. moving laser into surgeons are We practices no ICL from XX% correction who new

here at a very it’s time STAAR. So, exciting

Jason Mills

get you, back queue. Thank will in I Caren.

Caren Mason

are You welcome, Jason.

Operator

from comes Cooley Our of question next Chris Stephens.

open. is line Your

Chris Cooley

on record the Good quarter. afternoon congratulations and

Caren Mason

Thanks, Chris.

Chris Cooley

gross were margin. you multipart And IOL maybe quarter I the help on one-time will in traditional quarter you talk lower in the flow you should then higher and I’ll I would scaling, Jason expenses, and in And quarter, there took a specifically and you unpack ones, bit realized Could that on up. fun follow in on just had line? first And generated little cited say maybe in or of the us my those gross weighed noticed congratulate also the a other some those on of you contemplated, I lot what both surgical quarter. one had margin had been could we you startup cash the maybe then I sales the what cataract margin but products the the record margin just how operating I about puts the takes since that guess be flowed question so gross have through the than

Deborah Andrews

the through through facilities I manufacturing Lake capitalizable. administrative see associated incur And of Nidau There those of or discussed expect product – will or correct, here expenses in you a run some capitalizable, you Forest and that out I gross number the Yes, preparation we sales administrative not we but the seeing that in answer currently. the expenses earlier exactly, that year you, Chris. the other are and question in had it we with of most build you’re think for is cost don’t we have are did coming – it’s declining. that are been also that margin

expected to the and down towards even on other resuming decrease the sales of in the second some midyear growth product half, rate areas. throughout We potentially then decline slow

gross those negative margins. So do and margin impact on products they have are lower our obviously, a overall

Chris Cooley

you United Great, basically, to to backing I trying strategic from required be me, just balance but maybe of there, up from assuming think unit is as timing then United us And could And which outside both CapEx realistic envision be of what’s the that’s Nidau what a really steep, update broader you helpful. you the utilizing are States double-digit could when it. So Thanks would high rescaled? then fairly going as growth a appreciate how perspective? standpoint, going well? actually am continued so from much. additional in startup I maybe facility type States, lastly that forward is you regarding

Caren Mason

Okay.

So moving engineering, cover into some plans state-of-the-art advanced of requirements our Nidau then are Europe. of create China, initially that product some the advanced to will all the the manufacturing discipline in capability Asian, of for

basically another building Nidau offices we and the sales and all building So marketing making and we out to are current manufacturing. convert administrative for sure other moving our

are we And and CapEx, manufacturing equipment, our new we at work are that we the because of advanced upgrading in of we lab looking are so upgraded, in our engineering terms some doing, etcetera. clean investment are of rooms, upgrading

that above is quarter of we would beginning All year. next of the product of out to like of third on the the timeline shipping start have currently Nidau we in be ideally the to facility again able the

goal have but ability of a our do now, work our and meet now looks to So we that to do. right good lot

So, it but going are our target. XXX% to guarantee we that’s not

Chris Cooley

Thanks forward Great. to so much. you week. see next Look

Caren Mason

Yes.

Thank bet. You you.

Operator

Benchmark of Our question Company. from Jackson comes next Bruce

is open. line Your

Bruce Jackson

Hi, thanks my taking for questions.

the you overhead Going back the gross to with EDOF next the have margin we start cadence, got absorption TAM and shipping year. until

thinking should the in and the bit maybe will that then gross at at, half pickup level be lower be back margins So this continue or little a next we year? of

Deborah Andrews

No.

gross We expect continue expand to our margins.

about We presentation, were to in Day margins at XXXX Investor our will forward. do last we continue and we we what expect our going versus same expect talking they year to the increase – gross expect be more that but year-over-year

Bruce Jackson

fourth over any And third with changes that’s expenses, operating quarter, then quarter? in the Okay, the great.

Caren Mason

more our our of quarter, trial expectation fourth expenses associated clinical that in work. we pickup is with Well, will

aggressive. in So, should top little quarters, about breakdown XX% the on the comparison in we the likely that of your asked top the the more be line you total. QX of question on will like the regarding beginning XXXX to on the a expect in be fourth most line, then quarter as And contribution a

your model of So gives right that look you kind at a there? business

Bruce Jackson

going Okay. for are early is Do quarter, And like market. reads last kind there characteristics, now? believe the question me how type fourth business in on first have of seasonality generally with as any you I a Korea countries, then Korea is different different right quarter that of

Caren Mason

Our good. is very Korea business

but exactly Korea we a We with able for not growth large they business we to we very what are that ordering up you their expect aggressive as not the was do rate some know year strategic new obviously give agreements. to – were opportunities in be, are gearing ago

how for Korea think So, up. entire depends December, the they early our grow continue late aggressively requirements year, to see I expectation that is will January it quarterly, but quite all shaping on

Bruce Jackson

me. That’s on the it for quarter. Congratulations

Caren Mason

you very much. Thanks, Bruce. Thank

Operator

[Operator Our Brian question Instructions] next Weinstein of Blair. William comes from

open. Your line is

Andrew Brackmann

you on Hi, you can commercial going about year, that good specific you utilizing there? how that first the for planned afternoon. the of on product just region just that on of the right year back planning launch maybe and to us This Brackmann in is infrastructure the launch of presbyopia you remind Maybe have line the are of next questioning Andrew actually and that some have then upon Thank investments you. now product that Brian.

Caren Mason

Okay.

direct Spain the go distributor are Germany covered. and So and we most of do in UK markets major and remaining the Europe in

which etcetera. to will of of for be lot in in a the major However, outreach doing, those the to awareness, we be of will consumer all the a practice the model year patients, we handle development, countries and China other the markets, start-ups, example, a we’re implementing selling, where business marketing, what management next hybrid similar number

obviously have we place in infrastructure our so and plans detailed And countries for plans today. direct

to building strategic strategic And rollout We significant the up who we the then we assisting will will very what be employees other with believe those be markets managing meet demand. will be in effectively. are believe we Surgical STAAR

Andrew Brackmann

That’s thanks. all Okay, got. we have

Caren Mason

Thanks, Andrew.

Operator

Chris question Stephens. have a We from follow-up Cooley of

open. is line Your

Chris Cooley

market to what current the us label thank Appreciate be lower so in particular with you the XX%ish of current of address percent the has Could for and just the talked at the that do the the ICL, with you applicable follow-up. that I U.S. for week. would looked we in that taking Thanks one next States, obviously get in and of front Visian a in about type In past, to the U.S. Europe, the you. if we range about market. indications much. been the use the you hypothetical? tell able will outside opportunity see, you have Well, plus strokes, United you broad think IFU of diopter just of try

Caren Mason

Okay.

So our requirements that to XX% be but to in response, able at be United answer we our belief the of going is an surgery EVO with family should refractive XX% of this is to aggressive least lenses States.

so you very surgeons, course, goal, volume of terms do. week would are who is be what able that, our ICL. to tell like targeting few XX% I mentioned I internally And aggressive as total next can of of in to we to earlier, their meet our will a certain you XX% for of

Chris Cooley

That’s so great. Thanks much.

Caren Mason

You Thank you are taking the welcome, question. Chris. for

Operator

questions. to back no to call I like closing would are There Mason for remarks. turn any the Caren further over

Caren Mason

Thank to and look call the Thanks you. many Surgical forward and your our Analyst investment STAAR you, interest you We everyone Day appreciate next Thank today. best week seeing participation at for and all operator. our New on Investor of all to in York. of your We you. in

Operator

today’s this gentlemen, you conference call. and Thank Ladies concludes for participating.

You may disconnect. now

STAAR Surgical (STAA) 31 Oct 192019 Q3 Earnings call transcript