BIOL - Earnings call transcript Q2 2019

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Operator

Good day, everyone, and welcome to the BIOLASE 2019 Second Quarter Financial Results Conference Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Todd Kehrli of the EVC Group. Please go ahead, sir.

Todd Kehrli

Thank you, operator. thank results joining quarter for XX, and discuss today ended everyone, XXXX. financial BIOLASE's the afternoon, you us for to June Good XXXX second

Chief are call the President Vice call before performance Financial review Norbe, from for the will Chief and BIOLASE for Management company's On President Beaver, questions. today and and opening the Executive Officer. Executive the Officer; John quarter Todd operating second

any financial I'd a like this company's to forward-looking differ performance. current to to remind that a facts, variety that BIOLASE's of historical of are statements contained on presentation, materially regarding during from begin, everyone risks actual statements, results the the that initiatives are this These number the forward-looking statements presentation. will which company's and based cause we subject statements forward-looking made expectations not are strategic Before and in are be and including uncertainties statements could

will August as only statements call, with and forward-looking release Such replay the Exchange company's call Commission. available discussed of the today, results. represent refer to These today's filings listening call. the Securities A on company's view this XXXX completion shortly announcing BIOLASE When the be after news the today issued risks of are conference quarter in earlier this of X, to company's the XXXX. please website second

available on section not a news Investors have it copy the do you is the the If at BIOLASE of on biolase.com. website release,

The provided today's additional so will per quarterly GAAP you on also we results offer and disclosures. a Form company's as share can The company's share other we the financial reconciliation XX-Q, loss financial to loss non-GAAP well which in loss net of include per review SEC. and filed the as the encourage be of net net tables details be report loss unaudited to non-GAAP net them. release information, found the on news with BIOLASE's tables

pleased Chief to I'm Norbe. to President over and that, turn BIOLASE's Todd Officer, With Executive call the

Todd Norbe

afternoon. Thanks, Todd, and this us thanks, everyone, for joining

your over dental was support CEO and appreciate of to the that the existed my accomplished Coming and dental do. at continued new from I one a this to a BIOLASE. technology lot anniversary as of interest much is industry, standard Today I last year and the of care. have still attracted to BIOLASE. We've BIOLASE year create opportunity

allowing Waterlase commercial building well all-tissue to are to continues clinicians alike its way support on technology patients with infrastructure Our a amaze capabilities, reach. as for our expanded great technology, to and this we

have necessary we business put that align place in that can innovative year, past commercial with processes this are approach BIOLASE's the success. During technology achieve to an successfully

We to and continue better, in week out. get week

more to journey do work as Our continues we our to goal. ultimate have reach

short-term decisions reflect our that changes to While the we progress, quarter to this the long-term make are continue healthier of desired a revenues the the strategic growth. for of Rest sustainable positioning business assured these effect BIOLASE having for build significant impact future.

to reduction At and our of reaffirm fourth position in us the our have financial puts implemented same prudent track improved of have the positive and cost on year. time, the EBITDA goal achieving initiatives this been quarter

our me strategic during how the about made the let little company. Now quarter will we bit a decisions they talk and strengthen more

and is realign need evaluated significant new determined To achieve we've objective, to As commercial an R&D-centric quarters, we with to organization transitioning have company been our for with we direct sales driving from disciplined several around of that direction. practices. our a team been best portion have that team this communicating we you our one and this

during added the sales third our talent rebuilding team have new in sales quarters. are We of and the second process and

right personnel. our to attract We and believe enabling is process continue and the assessment to actively hire us recruit

training engagement on and DSO corporate sales Our recent events, referral program organization, our local direct our hiring the has coaching, segment. been or incentive focus commercial customer dentistry including across and our

I you to to new with early this high it's success, Although that transform can measure energy, share culture. and enthusiasm this talent change management brings

made our have was the which exit around imaging the business, international synergies, and distributors, with our lacked and any increased strategic decision also we payment shortening As our dealing to we and discounting discipline reducing unprofitable terms.

pricing resulted and overall terms this and has lost pricing. better While revenue decisions it these some leading discipline to in quarter, is improved our

were these our business. ensure the our strategic profitability we long-term the growth to while appropriate Again, decisions impacted results, QX value-enhancing of they decisions believe and

Market success experience quarter. Concurrent we last with This technology revenues Model increased our in the demonstrates are our go-to-market to interest strong and XX% changes, these we our continue compared increasing with business, experiencing growth approaches. which as growth new our to second Initiative, again strengthened in year's

has We rates. Dallas with market with new strategies this success had we pediatric LA, go-to-market County, and where out sales resulted great customer higher our Orange in customer the rolled that acquisition in increased training collaboration in the in program,

sales to select this expect out we markets in first. and result, success new The a in fourth other exciting, is of all roll it's the education in program putting U.S. this the As early initiative quarter. about

are has today, engine commercial as that well the our strive improve, the we confidence as a had are transform model laying the optimism foundation growth entire continue and we best-in-class continuously and encouraged our to around positive for BIOLASE company. market and drive strategies. always by seeing technology. commercial the predictable are It we will culture bolsters we results While we as increases results. our And to

of of dentistry, a place standard continue validating on is on our focus are our San influencer experiencing with which As a through expanding care advancing expanding base new which of is growth investment influencer way key return a -- we're specialist. corporate base, to dental our Diego. we effort, base our symposium, technology creating pillars, later with in partner part our our One this the year and dentistry this expanding the taking

Gordon a latest the techniques technologies Christensen, and founder learn world includes influencer This about two Clinicians of a educator, the and renowned dental Dr. dentists provide cutting-edge more and day event Report. by addressed will to opportunity keynote

We EPIC the X separate hygienists their the product needs have education a around will track line. to also support for further

important another to work of is new initiative care study McGuire BIOLASE for as standard for we create the a specialists. The

comparing of efficacy addition study gum surgery, for also the clinical versus flat Waterlase for the open this treatments patients assisted will In procedure. track periodontitis traditional to outcomes each reported

in anticipate of to to continue be study the of the interim will XXXX. by journal a half that of data be end XXXX. scientific We X-month And expectation during full the the is our first data published available

our we remain expanding of made the BIOLASE the of remain I our closing, committed strategy, excited lot In all-tissue a tough direction quarter go-to-market during adoption and about to and growth will strengthen prospects. and decisions We our lasers. that

initiatives, reductions outlook allowed quarter. to the half the our of by implemented we improved cost reduce other the increased pricing EBITDA to points expect With in year. cost first to The XX%, addition discipline, for this operating our in fourth expenses basis margins quarter structure, we second XXXX, us new in gross by XXX of our positive almost operating achieve

said, quarter I'll turn the call to financial John? that our review more With over detail. second in a John results for of

John Beaver

all us for you thank and joining Todd, afternoon. this Thanks again

million, quarter a the XXXX of the Revenue year-over-year. a review in quarter XX% me of was And to second million XX% decreased for compared year quarter the worldwide revenue the ago. from second the $X.X let Total XXXX second $XX.X U.S. numbers. decrease for

decline the earlier, decisions portion our due the quarter. discussed As realign a made we strategic U.S. force U.S. to of in revenue during to was sales significant the Todd

the sales XX% are sales We transparency quarter. second company, by turnover and U.S. territories impacted of during the the as organization. changing Waterlase our the sales of This culture increasing U.S. accountability vacant throughout were one-third

We are new direct sales actively disciplined our culture. team members new organization who commercial recruiting fit

due The quarter. to year-over-year, quarter, our decrease lasers. the our increased utilization increased million second Internationally, other during held quarter. and consumables which prior efforts was $X of the and million, to million in terms to During the the down $X primarily total year revenue back over second of international the orders was compared U.S. quarter our resulted discipline, revenue better XXXX revenue about pricing $X in promote in reflecting in X% second for

that, to reduction from in revenue a longer resulted for Canada direct which Also, has second half of second the exclusive ramped agreement in this the implement to distribution up originally year-over-year transition distribution quarter, Sinclair anticipated, expect in with into is net year. we heading the being so Dental Having sales million the don't $X.X than issue we the this little said to quarter. taken be a an

second lower XX%, XX% a a quarter in of mix, in margin Gross favorable better XXX margin manufacturing despite increase in quarter expenses revenue. for discipline. and the in of gross XXXX decrease the along with overhead XXXX, points second basis was up product reflects pricing The change from

for general million reduction administrative decreased second and quarter declined in Engineering year-over-year development the for to XXXX XX% expenses expenses were XXXX, the quarter. of operating compared expenses the and a Total year-over-year. million year-over-year. $X $X.X second XX% quarter XX% and the in of decreased second Sales quarter, while marketing year-over-year expenses XX% second

a share addition, of million compared second quarter. $X.X Net the share year-over-year loss of for when the loss $X.X XXXX. $X.X loss $X.XX quarter of second In net quarter $X.XX $X.X XXXX per million the or loss million, an XXXX in decrease for of to was operating operating XX% loss quarter compared second million of the of for to an prior or a year second was per loss

We reconciliation expense a believe GAAP excluding of stock and net our and related settlement. income our useful reminder, of expense, provides amortization net earnings developed a internally of the between depreciation measure non-GAAP operating the and software As expenses the cost patent to non-GAAP litigation income. disposal and includes a unaudited results by company's release comp

loss second these with of of to decreased million a or share per when $X.XX The year-over-year of $X.X a non-GAAP share items, loss million net during XXXX, quarter compared the per non-GAAP XXXX. second of or loss for loss of net excludes $X.XX which a XX% $X.X quarter the

in was the share the second XX.X diluted of shares the XX.X to shares and basic million Our compared quarter quarter. million count XXXX end at year-ago of

million XXXX. prudent Now top June We future remain cash growth. focused programs Cash, drive priority, turning as totaled a cash management be as continues to sheet. wisely equivalents XX, to cash cash cost restricted of $X in to our and investing containment, In on balance always. the

operating containment 'XX Our 'XX. cost XX% quarter compared loss for decline the have of lead a in second efforts as helped to to

remarks. me our operator Before I to questions, call turn let the the over summarize for

of long-term the the the during were changes success. to reflects position we revenue BIOLASE made for impact quarter right second quarter, those decisions several strongly While believe strategic greater

are We significantly achieve our we to efficiencies, growth sustained take our the foundation operational of profitability. to improve and to continue and steps laying goal

I'll turn the prepared Operator? questions. open to our for operator call back concludes call This to the remarks. the

Operator

from take [Operator our We ahead. go Please with Kyle will Company. first question & Bauser Instructions] Dougherty

Kyle Bauser

here. little late a joined I

just and bucket laser, off And Can is maybe consumables, questions. so quarter? with buckets just what you those in affected services? territories force about housekeeping the I'll And break that And imaging, how maybe the the one-third the by the then about of were to couple vacant recover bit the the more plan out in were of and talk realignment start a just sales quarter? a sales of little

John Beaver

I'll first Kyle. talk turn to then over territories. discuss it you, the the Thank about Todd to and question, I'll vacant

So significantly or the our our the Internationally, -- segments reasons the but that to we and Q to up. have to begun on distributors, revenue. we ramp slightly domestic. have various along of breakdown when the both due will internationally Canada. tomorrow, were discipline that Lasers to we terms complete will pricing for consumables try and in with we were up tell areas not general, file instill you I in segments, But down mentioned, slower-than-expected of that the mainly

as terms are here in say, out would it and out, standpoint, an in From middle you imaging completely imaging of of of I the was will second X we quarter. the from quarter, see immaterial imaging second revenue, of be but on now,

address to territories. want you if Todd, So open the

Todd Norbe

territories. open the of Kyle,

think have actively X that being about still searched open are we for. I

an more to we the a funnel process that rigorous DNA as the that fits think right been assessments make find going here than where is multiple I put we're the ever today through organization. hiring sure we with lot that it's

some gather, and you radically for DNA expectations some of performance around as that as and and actively up fit world, some We've backfills, end searching can you geography, labor in as start of market into right new fits the certain successful hiring out the geographies taking depends in And into. the culture longer going those is it and And we're folks that opting change it on in. the discipline, a others. we're in where probably we're world to tight in but it's the been than

Kyle Bauser

speak you you big course, has of the dentistry. just macro -- level, opportunity corporate And how here, and provide of yours, color been potentially on of you do how push DSOs maybe some and around kind in penetration think far from your curious opportunity? kind assessment, major you Can a where -- on how the think a is? any And do color can mean, Just this of I go? this you are standpoint?

Todd Norbe

large working with -- seeing is but when nature. as does tell There's Kyle, would DSO in is largest corporate a we've like it lot largest, in as organizations this, that slow, the is case. of work And here why I you, drivers, but of dental industry. the to stay. fastest-growing spoken in and the one large the we're when It's the good look with Yes, dentistry, indicated happen, We're before. very the market, we've segment opportunity is progress you the the progress past of

different technology. we DSOs make they also And the want to are sure that able embedded. first play important be part train all to in is have right and most doing the place that And it that is foremost right no they sure new and pieces that. the than trainer programs absorb get to the to to making education in But that have important so technology

And get of return investment on that the more importantly, technology.

in the I we've at the DSO mentioned the think on return there validated we've past, side. already investment

still scaling conversations very in and it's we're do do between Now that both around it, collectively how about we parties. active

Kyle Bauser

the see important for? we statement, nice opportunity where margin track the do really expansion? you which gross at OpEx most kind reducing think EBITDA margin words, various you the income levers the some will the operating John, expenses. the quarter, buckets the on on as of for And other QX do both and positive achieving greatest be in leverage we're In for progress on that look

John Beaver

this two implemented some twofold. manufacturing I buckets. still the it's steps We cost probably early is to QX, We've in and cost is on predominantly in you'll would and of pursue -- manufacturing QX in continue say see results the Right. in that One side, reductions. QX that.

initiatives already that the couple more QX. And identified a That have implement that we benefit will see year-end. of we still fully we've before in you'll that

in we QX, sure. fixed quarter see we margin. of that our -- a so dilution seasonally from with revenue that revenue best our certainly with that, volume our significant number, expect addition, And for gross over increase QX the that cost is a a just do In should increased standpoint, in that occurs you

the that. expect levels, side, we would majority sales go in On to is see OpEx of that marketing but up actually QX and QX the from

by sales In increased fact, up go accordingly with that driven comp all of is as variable we commissions, revenue. our higher sales

Operator

from with Please take ahead. We'll Jackson go question our next Company. Benchmark Bruce

Bruce Jackson

nicely. working up the on the initiatives capital what the balance management, I'm of capital to working have curious ticked you other Congratulations cash are underway. might some know,

give mind go? but could you think for an just us of the capital inventory might assuming you for something in the then where also for metrics So churn, working terms example, in got collections DSOs, if you've I'm and idea

John Beaver

Yes.

QX. the distributor. you, will our a working to say, AR question. continue challenge lot quarter, spoke around And with international our that Bruce, partners in side. some is balance, had from capital. distribution And you're the Chinese right, we late the for I So We on focus biggest we last changed sales days thank we a issues about of outstanding

will are terms. in discipline, excuse spoke the issue some the second year that the and pricing go we in of as have balance -- implementing so still forward improve and overall half that QX, we unpaid the However, old hoping to me, terms we payment with from distributor pricing the that we an started of expecting we term

should we going see forward. international so reduction a in DSO And

have issue don't international in so our majority an U.S., paid the it's get U.S., quickly quite the really in from the we that We receivables of sales of issue. more

inventory, of are to inventory. terms reduce ways In at we looking

referenced the that little the those second we the structure of the some require one quarter bit in deals. However, in out be markets will we actually rolling such that as quarter, of fourth inventory additional initiatives for of in we model a did will

pluses will if big our And your to initiative question, million do? of is to minuses, leads of $X there some had that kind we would though everything and of inventory, as be inventory that give it liquidity of we won't even in are goal maybe at we the do next but to so a which reduce expecting enough be correctly. receivables international it to us decrease need slightly, the end as quarter, we does do be, runway cash the And

that, And I tell you is tight. will that

debt, combination which and include pursue to various from to X. alternatives, additional could capital a the evaluate equity continue we'll anything So to of raise

Bruce Jackson

could the underway. that you've little bit Then sales a got force of we talk some more if about initiatives

spoke monitoring else Where with So of got and progress process. you've about management hiring course, worm, of of with force with? that terms and anything Are the sales -- in you're some the profile. training right you coming metrics up or doing you the sales seeing better the the

Todd Norbe

Yes.

the is what when keeps weekly were visual So as a I and and you a the conversation. I ongoing need to organization you center, from lot check management Bruce, this standpoint around I Todd. here, saw need you in of think these And first metrics lot of box the that think out is assessment, talent a is, first understanding But an think off. you front

that, And organizationally. that the you is assessment how hire where once then as and allows organization. here do do going most we're an talent an around we you organization you important process that probably the selling thing to specifically right create understand the And

the and really I directors think get benefited or that our used we've get to extensively structure increased really Group a and program to that program sales from that. sure bringing program discipline Brooks making our right organization to around training that's that It is The So And and yes building standpoint. the candidate finalized do We've a training to had world-class in place around we in that. either the talent do and helps also no. regional

management test faster. coming progressing so to over assess we'll gaps and We talent shortly help that at it. the that have board never the looking is better can them key so are, can learning here that's their a at where BIOLASE, we've we and had been the we're process we in get system And last rep now that the we like onboarding X and be that competency how on place in initiative building probably can now, weeks here anything that and that as that what after a XX new lead

Bruce Jackson

And then my question last DSOs. about is the

effectiveness So into that you're you And active generating expanded do see get level? to there turn mentioned of of, do that are the you or things them. might think need When those in either clinical you conversations any the cost -- conversations start to in order the DSOs in data for to to with you data some data, example, next terms relationships?

Todd Norbe

the a tracking best-in-class just to what dentist like. and versus looks procedures the for good look to customer the does, the it Yes, enablement, you a in here's gives reference at my allows, look that and and When then especially business at it the also BIOLASE only the here's only metrics, like not technology technology reference say, ability, it and look DSO, not who's of peer the feedback group WiFi but software to our procedures our number what question. and at in did

not on that DSO the importantly, to be. rate advantageous customer, drive the is but where for to more that utilization And it around us return needs and investment. for for teach is their making coach the sure to that only help and really So

opportunity one to and investment on spend area procedures, was management for driver that advantage that is of look understand GP our soft offices. lot was those focused them within largest coming and an of many procedures and huge that of what the DSO. a in revenue main able the for were GPs those a a did at as many We Heartland, but that them be the data DSOs, really don't around And for tissue that with time an to is from on, additional where extensively which trial was specifically in and return

Operator

[Operator Research. caller, Lisa Instructions] our ahead. with Singular go We Please will Springer next take

Lisa Springer

you market Angeles the I ask Dallas? wanted was increase about to of in breakdown Los revenues, what XX% of kind and the between that the between

John Beaver

Yes.

down process of LA, between quarter in those X higher So say you in Orange in year Lisa, this recall the initiative second percentage the LA. was in the directionally, Dallas I we don't we markets. that will break last may County. than And started

So they year-over-year both it both, was were but County, pretty in comp showed Orange LA, high a increases. they

Lisa Springer

that And a remarks important with you mentioned in revenue international component how in picture? Canada the slower-than-expected Canada overall your the up ramp in is Sinclair,

Todd Norbe

opportunity provides repurpose reach the leverage up is the Canada opportunities in it United one, here geography the close for that that be Sinclair obviously brings there. to States the We things It's before, just component. an within believe Canada, here with important had haven't of a some state doing that's and obviously, us because able couple we're of that to in we us. side of to

One there, reach in and installed really is lasers, we're this and around base upgrade also dentists, and to prior our progress huge quarter selling some there's experience that and seeing for an hygienists diode Sinclair us with opportunity a that early but already. around had has around

Lisa Springer

press And in enter than X the Market to in is may more the more geographic it additional we then Or about see market Model out possible release you mentioned Initiative X areas. Would market? expect you rolling year? this

John Beaver

Lisa, the that looking we at X kind rolling multiple program So, in of XX this to out, be we're will cities range.

be to testing the standard was that tried things, this but model our and it one I market if call thing other now County, example is not strategy. successful be that successful there, LA, is will it of rolling Orange try to sufficient are have go-to-market to significant, part will not of grounds we're we rolling the -- and our out that Dallas we're clear, dish, in areas. -- petri markets. We that an be this think additional so we're out model in it significantly we we're And And think different

Operator

no are time. to conference this back questions additional remarks. I would any over turn at There company the our or for closing further like to

Todd Norbe

you, great a BIOLASE. for concludes This your day. everyone, Thank Have interest our in call.

Operator

Once you for today's again, conclude does this your participation. Thank conference.

You may now disconnect.

Biolase (BIOLQ) 10 Aug 192019 Q2 Earnings call transcript