Staar Surgical Company · NASDAQ:STAA
Staar Surgical — Q3 2014 Earnings Presentation
33 slides from Staar Surgical's earnings presentation, Oct 30, 2014
Slide 1: Q3 2014 Results – Investor Presentation
N A S D A Q : S TA A Q3 2014 Results – Investor Presentation October 30, 2014 1
Slide 2: Forward-Looking Statements
Forward-Looking Statements All statements in this press release that are not statements of historical fact are forward-looking statements, including statements about any of the following: any projections of earnings, revenue, sales, profit margins, cash, effective tax rate or any other financial ite
Slide 3: Agenda
Agenda 2014 Annual Objectives Barry G. Caldwell Chief Executive Officer Q3 & YTD Key Financial Results Steve Brown Chief Financial Officer Operational Updates Barry G. Caldwell Chief Executive Officer Q&A Session Your Questions 3
Slide 4: Key Operating Metrics for Annual Objectives
Key Operating Metrics for 2014 Annual Objectives • Annual Key Operating Metrics established at the beginning of 2014 are Annual Objectives to Which We Report Our Progress Quarterly – Revenue Growth of 8% to 10% – ICL Revenue Growth of 20% – Gross Margin Expansion of 300 bps – GAAP Profitable Full Ye
Slide 5: Q3 Revenue Growth
2014 Annual Objectives Report Q3 Revenue Growth • Q3 Revenue Growth of 6.3% to $18.2M – $18.6M in Constant Currency (CC)/+9% • Visian ICL Revenue Declined 1% • 58.5% of total sales vs. 62.7% • IOL Revenue Increased 8.3% • 31.7% of total sales vs. 31.1% • “Other Product” Revenue Increased 68% • 9.8%
Slide 6: Q3 ICL Growth
2014 Annual Objectives Report Q3 ICL Growth +27% Revenue Growth of 12% in ROW Korea & Japan (41%) -45% +2% +19% +24% +9% -30% -15% -14% +18% +55% +99% Total ICL Revenue Increased in 8 of 12 Focus Markets
Slide 7: Korean Refractive Market
2014 Annual Objectives Report Korean Refractive Market • Negative media coverage of LASIK complications began on a “Regional Network” and Expanded to “National Network”-MBC • Focus was only on patients with Complications from LASIK • Theme was “Patients giving up on their Dreams because of LASIK” •
Slide 8: New Korean DTC Marketing Program Initiation
2014 Annual Objectives Report New Korean DTC Marketing Program Initiation • The “Big Model Strategy” Campaign (Lee Bo-young) • Engaged a famous Korean actress who has Visian ICLs • She was about -8.0 in both eyes, has ICLs for 8 years • Multiple marketing avenues for the Campaign • First ever TV Com
Slide 9: YTD ICL Growth
2014 Annual Objectives Report YTD ICL Growth Revenue Growth of 8% Procedure Growth of 5% APAC +3% APAC +2% EMEA +20% EMEA +17% NA (6%) NA (10%) Q3 14 Q3 13 APAC EMEA NA Total APAC EMEA NA Total Visian ICL Revenue and Units Increase in 9 of 12 Focus Markets
Slide 10: Q3 IOL Revenue Growth
2014 Annual Objectives Report Q3 IOL Revenue Growth • Q3 Sales Were $5.8M, Increase of 8.3%/+13% in CC – 7.4% Increase in Japan/+16% in CC, +45% in Europe • IOL Units Increased 13% during the Quarter – 14% Unit Increase in Japan, 41% in Europe • KS-IOL Units Increase 58% in Quarter – Acrylic Preload
Slide 11: Q3 IOL Revenue and Unit Growth
2014 Annual Objectives Report Q3 IOL Revenue and Unit Growth Revenue Growth of 8.3% Unit Growth of 13% +13% +13% CC Q3 14 Q3 13 +7.4% / +16% +14% -6% +41% +45% -8% +9% -1% Japan Europe U.S. ROW Total Japan Europe U.S. ROW Total Revenue in CC +$669k an Increase of 13%
Slide 12: Gross Margin Expansion
2014 Annual Objectives Report Gross Margin Expansion • Headwinds Continue in Three Areas: • Geographic Mix of IOL Sales • Start up Costs for ICL in U.S. Higher • Increased Sales of Lower Margin IOL Injectors • Steve will cover in more detail 12
Slide 13: GAAP Profitability
2014 Annual Objectives Report GAAP Profitability • Not Profitable in Q3 with Increased Spending • Investment Spending in R&D for V5 and V6a ICLs • Investment Spending in Sales and Marketing for Launch of TICL • Expense of ESCRS meeting, $1.2M, in Q3 versus $750k cost in Q4 PY • Higher Expenses for R
Slide 14: Manufacturing Consolidation
2014 Annual Objectives Report Manufacturing Consolidation • All Approved Products being Manufactured in Monrovia • Still working through inventory of some product which was manufactured in Switzerland • Maintaining manufacturing capability in Switzerland which adds some additional facility and overh
Slide 15: Puts and Takes YTD
Q3 Adds to Solid Start of 2014 Puts and Takes YTD • Revenue Growth currently at Upper Range of Expectations – IOL and “Other Product” Growth Higher than Expected – ICL Growth not as High as Expected – Impact of Yen a Negative Factor during H2 • ICL Positive Price Variances with New Product Introduct
Slide 16: Topics to Discuss
Q3 Key Financial Results Topics to Discuss • GAAP and non-GAAP P&L • Gross Margin Expansion Challenges • Operating Expenses • Below Operating Income line – Tax Provisions – Other Income 16
Slide 17: Q3 Key Financial Results
Q3 Key Financial Results 2014 GAAP ($000’s except per share) Q3 2014 Q3 2013 Change Revenue $18,188 $17,106 +$1,082/+6% Gross Profit $11,869 $12,059 $(190)/(1.6%) Gross Profit Margin 65.3% 70.5% (520bps) Operating Expenses $13,422 $11,886 +$1,536/+13% Other Income (Loss) $( 605) $ 327 $( 932) Income
Slide 18: 2014 Non-GAAP Measures
Q3 Key Financial Results 2014 Non-GAAP Measures ($000’s except per share) Measure Q3 2014 Q3 2013 GAAP Net Income (Loss) $(2,706) $525 Mfg. Consolidation Expenses ---- $490 Spain Distribution Transition Cost ---- ---- Foreign Currency Impact $628 $(226) Adjustment of Warrant Value ---- ----- Stock-b
Slide 19: YTD Key Financial Results
YTD Key Financial Results 2014 GAAP ($000’s except per share) YTD Q3 2014 YTD Q3 2013 Change Revenue $58,414 $53,271 +$5,143/+10% Gross Profit $39,419 $37,332 +$2,087/+6% Gross Profit Margin 67.5% 70.1% (260bps) Operating Expenses $43,705 $35,381 +$8,324/+23.5% Other Income (Loss) $( 434) $ 211 $( 6
Slide 20: 2014 Non-GAAP Measures
YTD Key Financial Results 2014 Non-GAAP Measures ($000’s except per share) Measure YTD Q3 2014 YTD Q3 2013 GAAP Net Income (Loss) $(5,854) $1,274 Mfg. Consolidation Expenses $334 $2,004 Spain Distribution Transition Cost ---- $442 Foreign Currency Impact $696 $ 38 Adjustment of Warrant Value ---- $(
Slide 21: Opportunities and Headwinds YTD
Gross Margin Expansion Opportunities and Headwinds YTD 21
Slide 22: Q3 Expenses
Operating Expenses Q3 Expenses • R&D Increased by $1.5M • Key Project Costs on V5 and V6a ICL new products • Remediation actions relating to the Warning Letter • Sales and Marketing Increased by $1.5M • $1.2M Expense of ESCRS in Q3 vs. Q4 of PY at $750k • Some of Increase Related to Anticipated Laun
Slide 23: Other Income and Tax Provisions During the Quarter
Below Operating Income Line Other Income and Tax Provisions During the Quarter • Other Income Line • Recorded as $(605k) vs. $327k, Impact of $(932k) in quarter • Primarily driven by foreign currency transactions $(854k) • Tax Provisions • Provision of $548k vs. $(25k), Impact of $(573k) in quarter
Slide 24: Opportunities and Challenges H2
Operational Updates Opportunities and Challenges H2 • Warning Letter Remediation Actions • Regulatory Approval Process Updates • CentraFLOW ICL in China • TICL in U.S. • V6a ICL in Europe • Clinical Updates on ICL with CentraFLOW 24
Slide 25: GMP Warning Letter Updates
GMP Warning Letter Updates Working Diligently to Resolve • A Total of Eight Responses to the Agency with Data – Initial Response Plus Six Proactive Monthly Progress Reports – Proactive Reporting has included Remediation Action Items • October 15 response on current MICL process in U.S. 2/10 3/21 4/1
Slide 26: CentraFLOW ICL in China
Regulatory Process CentraFLOW ICL in China • Successful May 15th Expert Panel Meeting in China • September 24th Technical Recommendation of Approval from CMDE – Both ICL and TICL • Learned of Marketing Approval from CFDA on October 29th • Final Step is the Approval Certification – Necessary to ship
Slide 27: Toric ICL in U.S.
Regulatory Process Toric ICL in U.S. • September 3rd received questions from the FDA on the TICL Calculator System – Response was required by October 3rd • The Calculator Software was updated, verified and validated during September • Submitted our Response to the Agency on September 25th • Waiting
Slide 28: V6a ICL in Europe
Regulatory Process V6a ICL in Europe • V6a designed to bring new optic to the ICL which would provide near vision capability for one who is approaching presbyopia • Could delay the need for reading glasses for several years • Optical bench results have been very good using a concept known as EDOF (E
Slide 29: ESCRS & AAO Clinical Data on CentraFLOW ICL
Operational Updates ESCRS & AAO Clinical Data on CentraFLOW ICL • Very interesting clinical data presented • Dr. Alfonso data from Spain – Zero Cataracts in over 1,000 ICLs with CentraFLOW – Two years out • Dr. Mertens data from Belgium – Zero cataracts in nearly 1,000 ICLs with CentraFLOW – Three y
Slide 30: Upcoming Investor Meetings
Upcoming Investor Meetings • November 11-12 at Stephens Healthcare Conference in New York City • November 20-21 at Canaccord Genuity Conference in New York City • December 2-3 at Piper Jaffray Healthcare Conference in New York City • We Expect to Report our Q4/FY Results on February 25, 2015 30
Slide 31: Q4 and 2015 Growth Roadmap
Upcoming STAAR Catalysts Q4 and 2015 Growth Roadmap • Continued Adoption of ICL with CentraFLOW technology – Should begin shipping product to China during Q4 – Interesting Clinical results seen in First Three Years • We are committed to enhancement of our Quality System and investing significant res
Slide 32: Your Questions Please
Thank You YOUR QUESTIONS PLEASE 32
Slide 33: Q3 2014 Results – Investor Presentation
N A S D A Q : S TA A Q3 2014 Results – Investor Presentation October 30, 2014 33
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