Slide 1: Q4 2014 Results – Investor Presentation
1 NASDAQ: STAA Q4 2014 Results – Investor Presentation February 25, 2015
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
Slide 3: Agenda
Agenda Revenue Overview Barry G. Caldwell Chief Executive Officer Q4 & YTD Key Financial Results Steve Brown Chief Financial Officer Regulatory & Closing Remarks Barry G. Caldwell Chief Executive Officer 3 Q&A Session Your Questions
Slide 4: Q4 & 2014 Sales Overview
Q4 & 2014 Sales Overview • 2014 Fiscal Year • Total sales increased 4% as reported to $75 million • 6% increase on constant currency basis • ICLs flat, IOLs increased 1% / 5% in CC • Other product lower margin sales increased 68% • Q4 • Total sales at $16.6 million as compared to $18.9 million Q4 20
Slide 5: Challenges Impacting Q4 Sales
Challenges Impacting Q4 Sales • Voluntary hold on ICL shipments • Approximately 2,000 ICLs not shipped • The timing of a 2,500 ICL lens order from our Korean distributor received in January • Foreign Currency Q4 • Five fewer shipping days vs. Q4 2013 5
Slide 6: Voluntary Hold Update
Voluntary Hold Update Impacted ICLs Available for Shipment in Q4 • Voluntarily elected to quarantine and hold several thousand ICLs from shipment • STAAR’s team identified deposit on some lenses during final inspection • To make cautious product quality decision we put them on hold • Root cause has
Slide 7: Korean Refractive Market 2H Headwind in 2014
Korean Refractive Market 2H Headwind in 2014 • Q3 negative media coverage of LASIK complications • Woo Jeon DTC Campaign started in December • Cable Television commercials • Movie Theater commercials • Bus Wraps • Journal and Magazine ads • Standing Banners for ICL Centers • The rate of decline in I
Slide 8: China Refractive Market CentraFLOW Approval in November
China Refractive Market CentraFLOW Approval in November • November approval from CFDA • Includes expansion the range of treatments for myopia and astigmatism • 200 Surgeons have now been trained on the new technology • First time ICLs stored in BSS have been utilized in China • Have to go through so
Slide 9: Financial Results Topics to Discuss
Financial Results Topics to Discuss • GAAP and Non - GAAP P&L • Gross Margin • Operating Expenses • Tax Benefit • Cash 9
Slide 10: Q4 Key Financial Results
Q4 Key Financial Results 10 Q4 2014 Q4 2013 Change Revenue $16,573 $18,944 $(2,371) / - 13% Gross Profit $ 9,403 $12,976 $(3,573) / - 28% Gross Profit Margin 56.7% 68.5% - 11.8 pts Operating Expenses $13,145 $14,227 $(1,082) / - 8% Other Income (Expense) $ (183) $ 203 $(386) Income (Loss) Before Tax
Slide 11: Q4 Key Financial Results Non-GAAP P&L Measures
Q4 Key Financial Results Non - GAAP P&L Measures ($ 000’s except per share ) 11 Measure Q4 2014 Q4 2013 GAAP Net Income (Loss) $(2,538) $(876) Mfg. Consolidation Expenses $(13) $238 Spain Distribution Transition Cost -- -- Foreign Currency Impact $200 $(77) Adjustment of Warrant Value -- -- Stock -
Slide 12: Key Financial Results Full Year 2014
Key Financial Results 12 Full Year 2014 Full Year 2013 Change Revenue $74,987 $72,215 +$2,772 / +4% Gross Profit $48,823 $50,309 $(1,486) / - 3% Gross Profit Margin 65.1% 69.7% - 4.6 pts Operating Expenses $56,850 $49,609 +$7,241 / +15% Other Income (Expense) $ (618) $ 414 $(1,032) Income (Loss) Bef
Slide 13: Key Financial Results Fiscal 2014 Non-GAAP Measures
Key Financial Results Fiscal 2014 Non - GAAP Measures ($000’s except per share ) 13 Measure Full Year 2014 Full Year 2013 GAAP Net Income (Loss) $(8,392) $398 Mfg. Consolidation Expenses $321 $2,242 Spain Distribution Transition Cost -- $442 Foreign Currency Impact $896 $( 39) Adjustment of Warrant
Slide 14: 4Q Gross Margin % vs. Prior Year
4Q Gross Margin % vs. Prior Year Qtr - over - Qtr gross margin unfavorable 11.8 pts 14
Slide 15: Q4 Operating Expenses
Q4 Operating Expenses • Decreased by $1.1M (8%) to $13.1M vs. prior year • Selling and Marketing decreased by $ 1.7M • $470k lower stock - based compensation • $790k reduction from ESCRS Conference timing • General and Administrative decreased by $350k • Lower stock - based compensation • Research a
Slide 16: Other Financial Items
Other Financial Items • Taxes • $1.4M income tax benefit in Q4 • Swiss tax authority ruling in connection with manufacturing consolidation • Cash • $13M at January 2, 2015 • Used $3.5M in cash for operating activities in Q4 • Used $1.5M in cash for purchase of PP&E in Q4 • Used $800k in cash for inc
Slide 17: Regulatory Update
Regulatory Update FDA Warning Letter of 2014 & Observations on 2015 FDA - 483 • Continued to work to resolve observations in the May Warning Letter • Two FDA inspections began in mid - November & ended February 4 – One was follow up on inspection on the Warning Letter – Second was a post approval in
Slide 18: STAAR Surgical Company Opportunities
• Q4 had it’s headwinds and challenges, but we are making progress • We are committed to the continuous improvement in our quality system and addressing the FDA observations • China and our other focus markets continue to represent a growth opportunity with current and enhanced technology • STAAR’s
Slide 19: Thank You
Thank You YOUR QUESTIONS PLEASE 19
Slide 20: Q4 2014 Results
20 NASDAQ: STAA Q4 2014 Results – Investor Presentation February 25, 2015