Staar Surgical Company · NASDAQ:STAA
Staar Surgical — Q3 2013 Earnings Presentation
34 slides from Staar Surgical's earnings presentation, Oct 30, 2013
Slide 1: Q3 2013 Results – Investor Presentation
1 NASDAQ : STAA Q3 2013 Results – Investor Presentation October 30, 2013
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 statem ents about any of the following: any projections of earnings, revenue, sales, profit margins, cash, effective tax rate or any other financia
Slide 3: Agenda
Agenda 2013 Metric Update Barry G. Caldwell Chief Executive Officer Key Financial/Consolidation Updates Steve Brown Chief Financial Officer Operational/New Product Updates Barry G. Caldwell Chief Executive Officer 3 Q&A Session Your Questions
Slide 4: Key Operating Metrics for 2013
Key Operating Metrics for 2013 4 Q1 Q2 Revenue Growth of 8% to 10% 12% to 14% GM Expansion of 250 bps GAAP Profitable Each Quarter Consolidation Progress while Quality & Supply Maintained
Slide 5: Key Operating Metrics for 2013 – Revenue Growth
Key Operating Metrics for 2013 Revenue Growth 5 Q1 Q2 Q3 Revenue Growth of 8% to 10% 12% to 14% GM Expansion of 250 bps GAAP Profitable Each Quarter Consolidation Progress while Quality & Supply Maintained
Slide 6: 2013 Key Metric Report: Revenue Growth (Currency Impact)
2013 Key Metric Report Revenue Growth (Currency Impact) • Q3 Growth in Japan (24% of Total Global Sales) – (5%) in USD – +18 % in Constant Currency • Weakening of the yen – Value in Q3 2012 was 78.7 yen to USD/Q1 was 79.2/Q2 was 80.1 – Value in Q3 2013 was 98.9 yen to USD/Q1 was 91.9/Q2 was 99.4 • I
Slide 7: Revenue Growth (Key Market ICL Growth) Q3
Korea China U.S. Spain India M East Japan Lat Amer Germany France Italy U.K. Q3 12 Q3 13 18% Revenue Growth Q3 2013 24% Revenue Growth YTD 2013 Q3 Revenue Results 2012 - 13 Visian ICL Sales Increase in 11 of 12 Target Markets 2013 Key Metric Report Revenue Growth (Key Market ICL Growth) +13% +22% +7
Slide 8: Revenue Growth (Key Market ICL Growth) YTD
Korea China U.S. Spain India Japan M East Lat Amer Germany France Italy U.K. Q3 YTD 12 Q3 YTD 13 24% Revenue Growth YTD 2013 Q3 YTD Revenue Results 2012 - 13 Visian ICL Sales Increase in 11 of 12 Key Markets 2013 Key Metric Report Revenue Growth (Key Market ICL Growth) +9% +32% +10% +89% +20% +41% -
Slide 9: Unit Growth in Key Markets (Gaining Share Globally)
Korea China India U.S. M East Spain Lat Amer Japan Germany France Italy U.K. Q3 YTD 12 Q3 YTD 13 Q3 YTD Unit Results 2012 - 13 Visian ICL Units Increase in All 12 Target Markets 2013 Key Metric Report Unit Growth in Key Markets (Gaining Share Globally) +7% +32% +17% +13% +22% +46% +33% + 7% +29% +49
Slide 10: 2013 Key Metric Report: Revenue Growth (IOL Growth)
2013 Key Metric Report Revenue Growth (IOL Growth) • Sales were $5.3 million, $730k less than PY Q3 • Increase of 1 % in Constant Currency – Negative impact of $809k due to foreign exchange • Approximately $0.8 million in backorders from European customers • Distribution efforts for KS IOLs have bee
Slide 11: Q3 2013 IOL Revenue
Japan U.S. EMEA China Total Q3 12 Q3 13 Q3 Revenue Results 2012 - 13 Revenue in CC +$809k or 1% Increase Q3 2013 Key Metric Report Q3 2013 IOL Revenue USD - 11% / +15% - 11% +52% - 60% - 12% / +1%
Slide 12: Q3 YTD 2013 IOL Revenue
Japan U.S. EMEA China Total Q3 YTD 12 Q3 YTD 13 Q3 YTD Revenue Results 2012 - 13 Revenue in CC +$2.2M or 3% Increase YTD 2013 Key Metrics Report Q3 YTD 2013 IOL Revenue USD Flat / +21% - 11% +21% - 58% - 9% / +3%
Slide 13: 2013 Key Metric Report: Gross Margin Expansion
2013 Key Metric Report Gross Margin Expansion 13 Q1 Q2 Q3 Revenue Growth of 8% to 10% 12% to 14% GM Expansion of 250 bps GAAP Profitable Each Quarter Consolidation Progress while Quality & Supply Maintained
Slide 14: Gross Margin Expansion
2013 Key Metric Report Gross Margin Expansion • Gross Margin Targets continue to be negatively impacted by two factors – Value of the yen to USD – Lower margin injector sales to third party without a quantity of KS - IOLs to offset • Q3 Impact was 270 bps – Approximately one half of the impact was o
Slide 15: 2013 Key Metric Report: GAAP Profitability
2013 Key Metric Report GAAP Profitability 15 Q1 Q2 Q3 Revenue Growth of 8% to 10% 12% to 14% GM Expansion of 250 bps GAAP Profitable Each Quarter Consolidation Progress while Quality & Supply Maintained
Slide 16: 2013 Key Metric Report: Manufacturing Consolidation
2013 Key Metric Report Manufacturing Consolidation 16 Q1 Q2 Q3 Revenue Growth of 8% to 10% 12% to 14% GM Expansion of 250 bps GAAP Profitable Each Quarter Consolidation Progress while Quality & Supply Maintained
Slide 17: Manufacturing Consolidation Results
2013 Key Metric Report Manufacturing Consolidation Results • End of Q2 only had 5,000 ICLs in FGI at Switzerland (7,500 in total) – By comparison finished FY 2012 with 13,000 in FGI – Finished Q3 with 11,400 ICLs in FGI (+52%) – Plan is to increase FGI level 50% higher before Switzerland closed • Pr
Slide 18: 2013 Solid Year Overall, Good Platform for the Future
2013 Solid Year Overall Good Platform for the Future • Solid Platform Established from the Performance First Nine Months – Weakened yen value has provided significant negative headwind on gross margins • Revenue growth rate estimated at or near 14% for the year in USD: – Despite continued headwinds
Slide 19: Q3 Key Financial Results: Topics to Discuss
Q3 Key Financial Results Topics to Discuss • Impact of Foreign Currency • Manufacturing Consolidation Tax Impact • Gross Margin Expansion • GAAP and Non - GAAP Adjusted Net Income • Key Financial Results YTD 19
Slide 20: Impact of Foreign Currency
Q3 Key Financial Results Impact of Foreign Currency • Negative Impact on Revenue of $1.0M During Q3/$2.7M YTD – $809k to IOLs & $ 155k to Other Sales Q3 – $2.2M to IOLs, $364k to Other Sales & $110k to ICLs YTD • Value of Yen Impacted Key Financial Results YTD – YTD 96.7 yen to USD vs. 79.3 YTD 2012
Slide 21: Manufacturing Consolidation Tax Impact
Q3 Key Financial Results Manufacturing Consolidation Tax Impact • Expenses were $490k Q3, $2.0M YTD – Now expected to spend approximately $260k in Q4 • Positive Tax Impact from Consolidation to Q3 – Tax benefit of $433,000 – Reversal of NOLs in Japan since not manufacturing there and Japan now guara
Slide 22: Expanding Gross Margins
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 2007 2008 2009 2010 2011 2012 2013 YTD GM% IOL Mix ICL Mix Q3 Key Financial Results Expanding Gross Margins 22 Q3 Mix: ICLs at 62.7% and IOLs at 31.1%.
Slide 23: Expanding Gross Margins
Q3 Key Financial Results Expanding Gross Margins • Key Factors in the stall of our gross margin expansion success – Have provided a negative 260 bps impact for the first nine months • Value of yen – YTD approximately a 120 bps impact • Increase of very low margin IOL injector sales – YTD approximate
Slide 24: YTD Financial Results
YTD Financial Results 24 YTD 2013 YTD 2012 Change Revenue $53,271 $47,316 +$5,955/+13% Gross Profit $37,322 $33,122 +$4,210/+13% Gross Profit Margin 70.1% 70.0% +10bps Operating Expenses $35,381 $33,098 +$2,283/+7% Income Before Taxes $ 2,162 $ 430 +$1,732 Income Taxes $ 888 $ 779 $ (109) Net Income
Slide 25: Non-GAAP Measures Q3
Q3 Key Financial Results Non - GAAP Measures 25 Measure Q3 2013 Q3 2012 GAAP Net Income (loss) $525 $(90) Mfg. Consolidation Expenses $490 $728 Spain Distribution Transition Cost $00 $397 Foreign Currency Impact $(226) $(191) Adjustment of Warrant Value $ 00 $(10) Stock - based Compensation Expense
Slide 26: YTD Non-GAAP Measures
Q3 Key Financial Results YTD Non - GAAP Measures First Nine Months 26 Measure YTD 2013 YTD 2012 GAAP Net Income (loss) $1,274 $(349) Mfg. Consolidation Expenses $2,004 $1,980 Spain Distribution Transition Cost $442 $569 Foreign Currency Impact $38 $(9) Adjustment of Warrant Value $ (27) $(217) Stock
Slide 27: YTD Key Financial Results
Q3 Key Financial Results YTD Key Financial Results • Revenue Growth of 13% / 18% in Constant Currency – Visian ICL Growth of 24% / 24% in Constant Currency • Gross Margin 70.1%, 72.7 % GM without negative impacts – Negative impact from yen valuation and low margin injectors 260 bps • Cash Position a
Slide 28: Q3 Operational Updates: Regulatory
Q3 Operational Updates Regulatory • FDA Toric ICL Submission – FDA inspections in both Switzerland and U.S. manufacturing sites – Key reviewers on the TICL submission were present at both site visits – Responded to technical question on October 24, new technical question today • CentraFLOW Submissio
Slide 29: Q3 Operational Updates: ESCRS Meeting in Amsterdam
Q3 Operational Updates ESCRS Meeting in Amsterdam • Visian ICL 10 th Annual Experts Meeting – 160 surgeons in attendance from 40 markets • ESCRS Exhibit Hall and Meeting Presence – Largest booth in Company history – Over 7,000 delegates in attendance • Largest ICL Training Course at ESCRS • ESCRS Ev
Slide 30: Rapid Cadence of New Products
Q3 Operational Results Rapid Cadence of New Products 30 • V4b - Expanded Treatment Range • V4c - Eliminates Step in Procedure • V5 - Preloaded ICL with Enhanced Optics – Saves Time – Learning Curve Shortened – More Consistent Delivery
Slide 31: Rapid Cadence of New Products (V6 ICL is Next in Line)
Q3 Operational Results Rapid Cadence of New Products (V6 ICL is Next in Line) Visian ICL V6a • Differentiates ICL for myopic patients nearing age 40 who will need near & intermediate adds – Approximately 30% of population myopic • Add near - vision enhancement capability – Adds 1.0 to 2.0 diopters o
Slide 32: Upcoming Investor Meetings
Upcoming Investor Meetings • Week of November 11 in New York City – NDR (12 th ), Stephens Conference (13 th ) & Canaccord Genuity Conference (14 th ) • AAO Investor Breakfast Meeting in New Orleans (November 16) • Piper Jaffray Annual Healthcare Conference in NYC (December 3) • NDR December 16 - 17
Slide 33: Thank You – Your Questions Please
Thank You YOUR QUESTIONS PLEASE 33
Slide 34: Q3 2013 Results
34 NASDAQ : STAA Q3 2013 Results – Investor Presentation October 30, 2013