APYX - Earnings call transcript Q2 2021 | Apyx Medical Corporation

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Operator

Good morning, ladies and gentlemen. And welcome to the Second Quarter of Fiscal Year 2021 Earnings Conference Call for Apyx Medical Corporation. At this time, all participants have been placed in a listen-only mode. At the end of the company's prepared remarks we'll conduct a question-and-answer session. Please note, this conference call is being recorded and the recording will be available on the company's website for replay shortly.

the would to remind contain and your that based I remarks that forward-looking uncertainties begin, management are responses of and questions on that we could like inherent everyone to our statements and cause Before involve expectations risks well current today those Exchange filed our our results Annual most as actual including Report differ Commission with Risk filing. the on from materially in to XX-K the recent and Securities Factors as indicated, Form XX-Q recent those identified section most may of may Such in are the updated available factors filings which be time from time SEC, our to on website. our with to result We obligation publicly undertake a or statements of revise no future our information, as otherwise. forward-looking new update or events certain to financial Generally references include measures accordance are calculated also will Accounting call Accepted not with or in Principles GAAP. that This generally to measures. We as financial these refer non-GAAP to non-GAAP Relations in presented GAAP accordance those with financial of release Reconciliations the most press measures and calculated website. comparable in of our earnings on available measures are the the portion Investor I turn the to Mr. to now like call over would Officer. Medical's Executive and Chief Goodwin, Apyx Charlie President Please go ahead.

Charlie Goodwin

Thanks, joined welcome by the second to Semb, Operator. Tara on Officer. Chief our Financial line earnings call. morning, Good everyone quarter and I'm our

conclude open our were second of Most the performance, in sales results. quarter a regard on that operating a COVID-XX was with to Advanced of pleased particularly we Energy let's an the this see With guidance with sales sales $X.X - growth some our business XXX% the sales for environment, to total distributors. handpieces our XXX% grew second me our were business get by the QX is communicated which with million. year-over-year our saw and of we to We Shifting growth which provide our are outlook will as second during in Global the $XX.X the additional our thoughts performance note which this end notably, enhance decreased our with technology what revenue in procedure customers the largely a to we team of then before is US that the $X.X year-over-year during customer total The handpiece of progress our high grew resonate a view growth global in Energy achieve our call guidance the lingering to and were year-over-year for growth we demand our OEM and detail, handpiece as financial reflection total us we quarter. that with In then from XX% indication, both the Tara well execution outperformance cosmetic closing with intend morning's today. I Energy May. quarter, market. of earnings strong of achieve year-over-year to XX effects improvement expectations you products, detailed than By discussion agenda to base achieve exceeding Energy Let both are XXX% delivered continued XXXX, in XXX% in strong the to financial believe year-over-year we questions. strategic you US call. Then we in pursuing in revenue trends segments results, to expectations sales long-term region, better-than-expected enabled to from will primary important release. base. year-over-year. in performance solid of of refract geographic of million, continuing which spite operational Advanced international the results our we to in as quarter initiatives growth of provide and started sales It's of update more to review I'll healthy, call outlined to on of strong to XXX% above of pandemic. our the the a XXX% broader and on in press segment, quick strong sales our growth fueled quarter. updated was our to With Advanced key second We of we mind, million our XXX% surgery to able By the contributions revenue our of more US increased the quarter growth that, drivers $X.X in for driver our our internationally. increased in on second balanced revenue a handpieces, second growth we global the cover points impressive reflected I'll review sales We in total review each marketplace. nearly performance with existing begin that exceeded handpiece sales percentage utilization our our made sales strong four showed our XXX% million, year-over-year while expectations. results by to our sales Advanced $XX by we growth growth international performance the our strength, million. proud global sales to quarter and

specifically, the we of than the vary resulted markets, number purchasing country in environment high basis. more teens purchasing capital increasing to by potential and the COVID-XX, in period. XXX% But saw in Internationally, We generators dynamic certain the aided easy effects in global with that which the increasing of benefited equipment global year-over-year, though virtual we obviously continued from region. improvement remain sales engaging In this pleased a for engagement in our improvements US new comparison to customers trends process quarter, by part year were remain continued on of continued generators in our US throughout prior capital participation in generator of Energy see with shows. challenged by environment global sales Advanced QX, in by quarter-over-quarter and trade also pleased were challenged COVID. improving the in sales the to While see the equipment efforts

saw continued strong in several we improvement and notably Brazil from However, and Taiwan. demand key distributors most geographies, in overall

the efforts pandemic, ongoing strong, to our quarter second performance we the our important our that Advanced with just not during year. saw quarter, the growth sales It's since Brazil we of Advanced Energy business market are the that Given quarter 'XX. know second that improvements with to demand compared of to especially our quarter of ever of we Energy Advanced global remained XX% facing second respect the business a selling growth. aspects that pleased this team over XXXX, our we into second more challenges has the result as the year-over-year well, sales see saw is [ph] with back, from and XXXX, last distributor quarter up to sales began across be couldn't of Stepping pleased easier the of our Energy two Energy overall, We handpiece all with notable in comparison. is Advanced in of

which in our evidence our the continuing outlook XXXX. are business improve, to We are by us confidence gives trends that further continued for encouraged

as also sales in exceptional we our shareholders addition delivered net I'm that material loss to In well. EBITDA both in common performance and pleased improvements report loss to to QX, adjusted

a progress. review our of to Turning operating

growth the advance efforts position surgery continuing by four quarter, to we Medical in Apyx sustainable continued second for our cosmetic the strategic market our During initiatives. long-term to

US we FDA to in First, regulatory targeted the for XX. submission indications to May important cosmetic with notification on achieve registrations our new the during focused made procedures the quarter our is pleased progress XXX(k) to were obtaining surgery we US, respect an in countries. product and milestone the the on a which important strategy, specific In of with premarket clinical securing

As procedures by data clinical a our supported procedures. study of specific in evaluating is clinical and for obtain dermal to a reminder, Renuvion this use US intended submission from indication resurfacing IDE these our technology the is

As forward this clinical the FDA a regulatory we I'd their like multi-year teams and for decision, in look effort thank to reality. making submission to our

to contribute revised of patient these of Advanced Central to given We it's Outside that one countries the registrations, the neck initiated to X enrollment quarter. important this to this the important this assume And does a a to guidance to to With that our in in progress past we've we XXX(k) announce our years said, we not in in am order week. In portfolio that The come. cosmetic study market. headwinds. skin for submental respect of pleased that products Plasma Renuvion countries know have our our initial Energy located We achieving shipped small we today global study Renuvion adoption years in commercial We surgery their we three performance countries progress in are continued position phase of support XXXX. and America. expanding footprint, submission the drive by and the continue second our related for to our of made clinical skin patient XXXX. Technology IDE enrolled COVID Apyx secured our expand evaluating made Apyx to progress of enabling in laxity materially the the efforts to steady procedures intend we in three to Medical our technology for pleased the will during laxity use I procedures our sell will Phase December addition that And this second last of in results these our XXXX. Asia quarter to global recent the use of region. With in the in Helium continued evidence team to of initiative, new Medical our make second product the milestone, new US,

accepted manuscripts under the One in while for manuscript Medical remains During review. submitted has been the publication two quarter, clinical Journals. publication, for other clinical were

our support physician to initiative, and third cosmetic enhancing practice for Turning surgery strategic customers. our

our the countries QX our earnings As from hosted April. we by approximately call, Users existing event world. attended mentioned day was our early This XX of on participants with I in more half two around Meeting than customers, First

the event, opinion two we made and key surgeon By huge we forward have days, discussions top to leaders portal. it accounts, now surgeon and success, on users which annual During of look XX our these was on our a the online and demand available of inaugural presentations an hosted via event over basis. this hosting course all

to drew physician These clinicians. new or educate we programs on were and the our attended use customers participation by and PNP hosting In the second surgeon over XXX our existing supporting potential quarter. virtually from continue collectively and events and of technology in-person events addition during our benefits hybrid proper users, mentor to for both

as customers. their educate support We develop training knowledge the our and continue for better helping well, them distributors virtual sessions to international host to

QX, sponsored. in which our second resumed we multiple customers, surgeon by ways of from by our technology quarter. conferences also our These and are to participation their participated academic a success podium three in-person presentations with We featured the learn of and a new at we ensuring their in continue KOLs, surgeon shows few workshop We events some our the directly them that just to trade in and providing peers. opportunities potential existing support

Lastly, to of enable the manufacturing final focused and regarding In our to customers. and are to requisite handpiece initiative on securing commercial improve we introduction capabilities APR our registrations strategic XXXX, our the our fourth international efficiencies. product

over our the to manufacturing a and adoption reduce handpiece to handpieces per of is costs from the expected margins unit drive is Energy handpiece teams in continued our first reminder, As Advanced efforts gross benefit product manufacturing our its material APR to time. improvements the

have of strategy. made runway this have first but ahead respect during of still We half to us, year, plenty aspect our with of progress this important of the

our part Our capabilities as pleased and for results our Tara? to facility. very Bulgaria you now guidance. our groundwork the Apyx fronts, second is a success second manufacturing and has operational manufacturing into financial improving and production provide of future working integrating deliver In XXXX quarter strong quarter. to executing in all on Tara initiatives, review financial handpiece updated team will Medical with production technologies and progress been well the we summary, our are facilities new of our by the lean of lay

Tara Semb

or impact revenue year. begin within shipping quarter by revenue inbound was our segments, and will impacted Energy the primarily million, I the geographic margin for to Thanks, XX.X% Charlie to second gross costs. compared profit year-over-year margin million. Charlie. Advanced profit gross XXX% second was mix was offset by driven everyone. profit And profit covered mix good $X.X Energy not OEM results, $X.X increase last Gross our margins segments year-over-year quarter. of and write-downs of morning, partially did Advanced quarter the current The XXXX XX.X% between in inventory in by Since XXXX our that the higher line. Gross at Gross increased

increase margin Adjusted Loss in Energy share, related increase expenses development of gross per million, to our operating for selling, handpiece. second year-over-year to million, to efficiency million quarter the product $X.X $X.X general $X year-over-year XX% million, costs, $X.X second XXXX. the or tax of margins in or manufacturing compared $X.X income $X.X our XXXX. to $X.X expenses from a to loss benefit and in APR million improved the million, continued million. adoption $X.X $X.X and and loss decreased the year-over-year XXXX was XX% or compared increased was in quarter performance from in to share second tax year-over-year to increase Advanced Our expense million customer $X.X increase $X.X per continue million, Income in initiatives segments professional $X.XX expense or Operating benefit million salaries The attributable of million services. increase and operations driven for to Net XX% and EBITDA million. decreased million. of research was by $X.X administrative quarter a or related in $X.XX expenses, $X.X stockholders million, of $XX.X

net reminder, morning. our in adjusted stockholders non-GAAP reconciliation release a loss press provided we this from As a detailed attributable loss to EBITDA to

XX, as equivalents the XXXX. December cash XXXX, $XX.X As had of June to million, cash compared XX, of Company and $XX.X of million

earnings our Turning morning. press to in of review guidance, updated financial a which this release XXXX our we

XX% to XX% The driven now in liposuction range, of Energy updated procedures range revenue XX% existing Advanced driven assumed the months sub-dermal expect US by is to XX compares year-over-year. a This of from updated growth growth The XX% compares as million, to million growth range our markets. range, XXXX, of total XX assumed which guidance total year-over-year. to its to prior which For $XX.X of to XX% growth in $XX.X guidance guidance only XX% to we revenue year-over-year. following our XX% Energy ending revenue assume guidance to primarily use the international prior This contributions XX% representing range of Renuvion year-over-year. December growth international related sales to demand is and revenue Advanced growth continues coagulator by assumes

our approximately of approximately revenue updated also guidance year-over-year which compared total prior a Our revenue guidance, of range XX% assumes assumed OEM that decline to year-over-year. decline XX%

loss of range $XX.X $XX.X our the guidance to $XX stockholders to million. profitability million XXXX to prior we EBITDA $XX.X attributable of both of in range compares is $XX.X million in This the Note, terms adjusted and This loss prior fiscal In adjusted And driven expect, in loss our guidance million. the net year in to range $XX million performance of $XX.X range to profitability our $XX.X our we for million. net expect ranges to million of million. compares guidance loss EBITDA to guidance the stronger-than-expected decrease QX. by

XXXX for modeling to considerations purposes. guidance for continues following formal Our incorporate the

for full business. exclusively will driven XXXX our year Energy Advanced by our company be we growth period assume First, revenue the total

year expect respectively. over of guidance We in in guidance and Advanced both in US compared sales customers prior to Advanced growth the range, assumed sales XX% Energy year to US XX% growth internationally. growth our mid-point Energy which strong and year-over-year of customers Energy international our and And now XXXX, in XX% growth nearly assumes Advanced XX%, the to

by the now by by Second, product. year, geography last to XX% benefits primarily we driven to continued this in mix year, range XX.X% by and XX% expect compared gross margins of segment,

growth of range excludes income last compensation an which and last COVID-related from benefit to incremental expect This, X% the turn $XXX,XXX back in to other approximately tax of XXXX, of to XXXX expense. driven XX last million compared million compensation initial million, related million in year, our expect as $XXX,XXX closing to And expenses we expect $XXX,XXX approximately partnership outstanding joint approximately $X.X and tax $X.X of we compensation expenses. year-over-year, in approximately of a of call and driven carry-back including net to approximately reductions, interest And non-cash benefited to China, shares. of benefit GAAP continued depreciation Third, operating the normalized expense as operating approximately which income based other compared of non-controlling expense discretionary expense approximately our venture I'll $XXX,XXX, growth and for year. expectations established non-cash expense based million This we in in was operating XXXX our diluted of $X.X of net expense $X.X a of to normalized by remarks. loss OpEx a entertainment expenses weighted interest increase $XXX,XXX stock to previously, compared travel expect Fourth, With $XXX,XXX to $XXX,XXX tax year. approximately act. that, $XXX,XXX we by stock well XXXX GAAP XX% CARES that related average benefit we and lastly, expense shares amortization Charlie $X.X operating

Charlie Goodwin

Tara. Thanks,

us increased to and Our quarter results full momentum financial and year. continue exceptional this the strong in the recent operational performance past give for ability our deliver confidence the

increased sales our our we second year. today raising than half the quarter, revenue of to second are reflect our XXXX for improved performance and both during this expectations Given expected stronger the guidance the confidence,

we our year, continuation driven Specifically, Advanced we of Energy saw base primarily the during quarter. strong expect utilization months to the healthy achieve that the a handpieces by remaining of second of sales during the demand

over improvement in overall second equipment XXXX, we recovery front, environment capital equipment in sales remains while see half capital of uncertain. the expect global of to the pace On global the generator

focused strategy build day one we near for cosmetic strong adoption cosmetic and in the of longer the foundation what technology market facilitate focused ahead, believe us. we the and surgery potential by ourselves by in technology employees thanking procedures a drive for Looking market remain Apyx team our play to of market raise market on term to as truly approach. solid distributors quarter be a conclude our of now widespread to questions. to dollar revolutionize term my continuing of bring our largest pure represents Medical awareness customers, great opportunity innovative performed are company our today of surgery long we industry. and for the the executing Plasma balance to how our expand and on for deliver multi-billion best company well-positioned open cooling rapid call mission. the front the in congratulating our a investors to share strategy growth, to to Helium of leader entire for ability the through the remarks sheet continued a addressable its are to a with the and its tissue enabling I'd like on We operator, Technology to believe our And and our let's with heating elements With that technology and and our establish with support their

Operator

you. from Hewitt And [Operator Matt come Thank Craig-Hallum. will with our question Instructions] first

Matt Hewitt

and Good the on quarter. morning, congratulations strong

Charlie Goodwin

Good Thanks, Matt. morning.

Matt Hewitt

the the on hearing pandemic, utilization given the noticed just your beat. I back pretty as second what's is, from in increase half And standpoint? curious, expectations in a and you've are QX half, the what guidance strong and commented in more your the press with was customers their from release, you're you I first call, but guess as a than for me question on anticipating far here I'm your going

Charlie Goodwin

Yes.

the XXX% the of the our better-than-expected quarter the our was increased first we - upside stated both end second basically increased year-over-year. was And were from given our the $X.X our US for expectations. and and year, our balanced growth. revenue, of We contributions the first million - total that half handpieces high OUS. handpiece the above our And So

time. spotty to so from busy the is bit United open a base we're the our remain of encouraged outside been booked reflects entire healthy And strong it of the little country-by-country. the the the and in demand we've procedure and technology. And its And States that and what United all But utilization this been offices expecting States that's sign - trends.

utilization - it half based confident And the So year. of in a the half back the why year that's the of healthy of demand technology. our really back assumes we're

Matt Hewitt

that the That's as steps great. And for quickly you are then for upon second question, how as soon the dermal approval so as FDA prepare an real hit perspective you approval, I thinking And should Thank guess sales business hopefully on here that soon the approval? news gears kind can of taking you. from you ground what receive and marketing resurfacing my XXX(k), shifting for from you ramp that a about we running? be that

Charlie Goodwin

thank Yes. you. Okay,

on than have out more our said, XX. but May XX of we XX will probably, know, I XXX(k) submitted obviously over you we're - the don't It days, As more we of than take days timeline that. control

does contributions not include sales guidance, resurfacing. Our dermal our guidance for for XXXX the

force And We are launch week potential and the commercial about enter together and limited sales for contributions the next excited a we're prepare QX. full year plan actually in we launch XXXX. opportunities to getting as during growth potential

to So that's looking we're week got together forward and the - team next there. everybody seeing we

Matt Hewitt

Got right, you. it. thank All

Charlie Goodwin

Thank you.

Operator

O'Brien question Matt Sandler. from comes Piper Next with

Unidentified Analyst

This Matt. questions is for on and Korinne the on a taking for congrats Thanks quarter. great Hi.

Charlie Goodwin

you. Thank

Unidentified Analyst

think in the there's this How Apyx benefit in wellness. what you So meet talk around you're focus broadly is this on do perspective? internally shift from first, aesthetic of And in are doing to mindset? this lot of positioned best more some the broader been to a space things broader consumer speaking, shift

Charlie Goodwin

body. and trend, And causes people is you the that market older, of we're the things largest this as in skin wellness on to a get well into that into of We to loose not our you believe reluctance this sag. put the No, shift to older stretch see is we heat that very actually out foreign there's that saggy, wellness anything other or category Yeah. or We market body. skin the the transform that. suited wanting And in put collagen that. very one - adding nothing things to And natural great is us, your ourselves. that's skin. order is you believe look the older organ in because collagen question. this foreign the Thank technology to your for to reformat makes you think than their substances much. to into going And your for using feel And starts just with

we And specific for believe and of our skin the indication many best stated have our to path getting And everybody the about is on so sees into the this we marketplace And laxity, technology we ability walk for really continue down when this. the that market be to of we start the to really your I've to times, talking that directly consumer, it's believe opens able facing to thing care us. as take forward room you as the this skin.

think this we think capitalize on to trend to - be great to are position years for in so And we we able come. many we're

Unidentified Analyst

so Got one one then it. much. you one, Thank quick And last just on margin.

margin stay took Or XX% beyond XX% So this will you a year. below the does sequentially. thoughts think for that around progression sound it step And XXXX? range bit in How Do like gross think there? we'll margin 'XX? should quarter are about - think get a what to down of your a we we

Charlie Goodwin

Yeah.

the that look the of APR the is thing big APR So handpiece. the – States. as And started we just margin, the the on we're runway outside and if just adoption you United and at

of And a registrations that. and United everybody things States so outside APR to the to because adopted long go the got like we've ways onto get

all forward. shipping where done so of can see talk for we'll a particular, there, in those this Tara, multi-year out was specifically this story continue of getting some mix and things be the quarter, year, of you to so. expansion but the costs about inbound margin higher And going it will really because to

Unidentified Analyst

Thank you.

Charlie Goodwin

you. Thank

Operator

question The line from Instructions] Cleveland is next Russell Capital. RENN of with [Operator

Russell Cleveland

thanks the And Thanks great taking for for call. these so much numbers.

about are really One a know, are me give sales, we're we facelifts question, procedures new - I you tummy know, have Are procedures doing. and What tucks? And all what - feeling you they all doing, areas think on. the mostly they mostly international doing Are stuff? just this? pleased. coming these they

the right So now give is here real where me color some on overseas? growth

Charlie Goodwin

not also the it's in overseas, Yeah, but just United it's States.

Renuvion from contouring really sub in as using coagulator procedures. the is sub-dermal business body Our a

that revenue that. exclusively is it's US. where our of So off internationally in driven and from And comes the both

we us. dermal far now which the As being as be a done off would and And by submitted outside the the XX. is XXX(k) done being United for US That if States, in on the that new resurfacing, the for it May label indication is physicians.

the is that a a coagulator And for able then volume US be small allow so us it's outside sell point. resurfacing that be and market that this go very at now, getting to dermal - indication the to But would that and for right in to initially have procedures. dermal contouring we'd for almost get as registration But resurfacing. US the all body sub-dermal would

Russell Cleveland

than about… now. appears our you Would you some be doing we're What - think to bigger market - what say us a that the resurfacing that of do

Charlie Goodwin

for resurfacing the one new laxity skin the dermal amount But because us the market will a skin the because has the - it the And much billions the dollars of actually in No, largest laxity be resurfacing size. bigger is IDE is indication. market. – market dermal that will skin important than a get is that to that is indication be

Russell Cleveland

Great. Thanks so it. much. Thanks numbers. the appreciate I for

Charlie Goodwin

Thank you, Russ. you. Thank

Operator

question the Bauser Kyle from Colliers with Securities. line next Our of comes

Kyle Bauser

here. incredible morning. Great, quarter thanks. Congrats an on Good

Charlie Goodwin

Thank you, Kyle.

Kyle Bauser

talk on sites And - question go and just you're you've ranked out. don't it just a the with you of be tier, market, may how just them going I US presumably about, on distributors. and you, little and by know you're maybe targeting? Charlie, addressable kind of US? overall curious sales sites you in the a sites in in reps of to the the maybe Just US know, many kind And bit you're But after number mapped curious, OUS, overall are installed ranking of numbers your kind base. just that it OUS? there both that can give the But yet both on

Charlie Goodwin

Yeah.

procedures? actual sites, you're that talking talking are contouring you're when body about So correct, physicians, about doing

Kyle Bauser

yes. Exactly,

Charlie Goodwin

we're US, focus that's liposuction. talk made the is And our that doing outside driving. both of surgeons contouring clinicians US really dermatologists focus about work and we surgeons, plastic on where that body where that in we the Yeah, where those cosmetic the most are States. obviously, in XX,XXX Okay. and And are United are clinicians up and focused doing the on is them,

numbers really I it in very that say good see actually doing that, so from are group utilization because And we frankly, you And job going after. a the we're quite that our of that's the would can handpieces.

into the high and procedures. growth we milestones what adopting numbers You to little as of we that always more now. ones a are more it's the the clearance know, right a volume doing so know, 'XX, really, that And, our doing more those to as users, you as adopters move post far clarity lot after that. early But technology those on give see look high bit and some get will of giving that they're as we're we we're is you

Kyle Bauser

with Got eventual Will marketing selling the you you already know kind next going like extra is how for that, that But label? of talk enhanced language it. indication? also being up frame to resurfacing tightening the do of prep Appreciate know, in new going coagulation. second laxity skin you label clearance an and know you ahead with you're this to there the do skin anticipate sub-dermal get opportunity the to you'll for I salesforce you're efforts about dermal huddle that. them it question, And my or salesforce, [ph] here. sounds

Charlie Goodwin

consumers before remember, about dermal a the earlier, Renuvion salesforce we're obviously us allow for month I we're skin together would then it to together XXX(k) doing of in in the so dermal to direct-to-consumer in talk got we'd doing that skin directly resurfacing launch important. what we six to resurfacing the submit And that of closed. the is post technology is, From would looking did quarter portion the get getting and that, Yeah, for the on for getting now remember, will completely last salesforce next be now laxity able we so patient, last week, view, the different as to second week, we've laxity. to environment. follow-up about point for procedures. just this. talk of 'XX. clearance Because And the And to to now resurfacing - the our prepared to and importance And find very said dermal that enrollment be that. enroll be like And of looking our goes I of we're we mentioned message

would the sure go the to and how hymn we're and make make to together that everybody exists everybody that going skin want about huge of from to we on of the sure laxity to all same things. opportunity out page so we've we're talk this got get singing on same book And side

So yes, together everybody again. we would get

Kyle Bauser

quarter updates That’s on the great. Well, congrats all appreciate again. and the

Charlie Goodwin

Kyle. Thanks,

Operator

at for today. are for your showing remaining this conference questions currently you Thank That no participation. our conclude We time. does

Apyx Medical (APYX) 12 Aug 212021 Q2 Earnings call transcript