Slide 1: Q1 2014 Results – Investor Presentation
1 NASDAQ: STAA Q1 2014 Results – Investor Presentation From the American Society of Cataract and Refractive Surgery Meeting April 28, 2014
Slide 2: Forward-Looking Statements
Forward - Looking Statements All statements in this presentation that are not statements of historical fact are forward - looking statements, including stateme nts 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 2014 Metric Update Barry G. Caldwell Chief Executive Officer Q1 Key Financial Results Steve Brown Chief Financial Officer Operational Updates Barry G. Caldwell Chief Executive Officer 3 Q&A Session Your Questions
Slide 4: Overview of ASCRS Meeting
Overview of ASCRS Meeting First Three Days 4 2010 Today
Slide 5: 2013 Targeted ICL Markets
2013 Targeted ICL Markets 5 Market 2013 Total Ref. Proc.* 2013 Ref. Proc. ∆ 2013 ICL Proc. ∆ ICL Share Ref. Proc. 2013 ICL Gain China 875,000 +5% +41% 1.6% x U.S. 602,000 (3%) +19% 1.2% x Latin Am*** 226,380 (0.4%) +43% 1.7% x India*** 156,430 +5% +12% 4.5% x S. Korea*** 139,280 +0.7% +12% 12.4% x G
Slide 6: Key Operating Metrics for 2014
Key Operating Metrics for 2014 Annual Metrics 6 2014 Operating Metrics Q1 Q2 Q3 Q4 Revenue Growth of 8% to 10% ICL Revenue Growth of 20% GM Expansion of 300 bps GAAP Profitable Full Year Complete Mfg. Consolidation Mid - Year
Slide 7: Key Operating Metrics for 2014 – Revenue Growth
Key Operating Metrics for 2014 Revenue Growth 7 2014 Operating Metrics Q1 Revenue Growth of 8% to 10% ICL Revenue Growth of 20% GM Expansion of 300 bps GAAP Profitable Full Year Complete Mgr. Consolidation Mid - Year
Slide 8: 2013 Key Metric Report: Revenue Growth (Currency Impact)
2013 Key Metric Report Revenue Growth (Currency Impact) • Q1 Revenue Growth of 12% to $20.2M – $20.8M in Constant Currency (CC )/+15% • Weakening of the Yen as Compared to PY – Value in Q1 2013 was 92 yen to USD/Q1 2014 was 102.8 • Japan Revenues in Q1 were 25% of Total Revenue • Impact to Total Com
Slide 9: Key Operating Metrics for 2014 – ICL Revenue Growth
Key Operating Metrics for 2014 ICL Revenue Growth 9 2014 Operating Metrics Q1 Revenue Growth of 8% to 10% ICL Revenue Growth of 20% GM Expansion of 300 bps GAAP Profitable Full Year Complete Mgr. Consolidation Mid - Year
Slide 10: Q1 Visian ICL Units Increase in Key Markets
Q1 14 Q1 13 Visian ICL Units Increase in 9 of 12 Key Markets 2014 ICL Growth in Target Markets Q1 Procedure Growth (Continue to Gain Share Globally) + 21 % +23% + 5 % + 7 % - 20% +74 % +29% - 10% +39% +12% - 11% +25% 14% Global ICL Procedure Growth EMEA + 24% APAC + 15% NA - 19%
Slide 11: Q1 Visian ICL Dollars Increase in Key Markets
Q1 14 Q1 13 Visian ICL Dollars Increase in 9 of 12 Key Markets 2014 ICL Growth in Target Markets Q1 Revenue Growth USD +26% +29% +25 % - 16% + 10% - 12% +14 % +46% + 34% + 58% - 6% + 11% 15% Global ICL Dollar Growth EMEA +27% APAC +17% NA - 15%
Slide 12: 2014 Key Metric Report: Revenue Growth (IOL Growth)
2014 Key Metric Report Revenue Growth (IOL Growth) • Q1 Sales Were $6.6M , Increase of $0.3M or 4% – In CC $7.1M or 12% Increase – Negative Impact of Foreign Exchange was $0.5M • IOL Units Increased 16% in the Quarter – +22% in Japan Driven by Preloaded Silicone IOLs – +59% in Europe Driven by KS IO
Slide 13: 2014 IOL Growth
Japan U.S. EMEA China Total Q1 14 Q1 13 Revenue in CC +$748k or 12% Increase 2014 IOL Growth Q1 IOL Revenue Growth USD +2% / +15% - 6% +64% - 46 % +4% / +12%
Slide 14: Key Operating Metrics for 2014 – Gross Margin Expansion
Key Operating Metrics for 2014 Gross Margin Expansion 14 2014 Operating Metrics Q1 Revenue Growth of 8% to 10% ICL Revenue Growth of 20% GM Expansion of 300 bps GAAP Profitable Full Year Complete Mgr. Consolidation Mid - Year
Slide 15: Key Operating Metrics for 2014 – GAAP Profitable
Key Operating Metrics for 2014 GAAP Profitable 15 2014 Operating Metrics Q1 Revenue Growth of 8% to 10% ICL Revenue Growth of 20% GM Expansion of 300 bps GAAP Profitable Full Year Complete Mgr. Consolidation Mid - Year
Slide 16: Key Operating Metrics for 2014 – GAAP Profitable
Key Operating Metrics for 2014 GAAP Profitable 16 2014 Operating Metrics Q1 Revenue Growth of 8% to 10% ICL Revenue Growth of 20% GM Expansion of 300 bps GAAP Profitable Full Year Complete Mfg. Consolidation Mid - Year
Slide 17: 2014 Key Metric Report: Manufacturing Consolidation
2014 Key Metric Report Manufacturing Consolidation • Inventory Levels at the End of Q1 – ICLs now 26,500, up 55% from Year - End – TICLs now 18,000, as Build for Potential U.S. Launch – Levels consistent with Management's Plan to assure Supply & Quality • Communicated Officially June Closure to Empl
Slide 18: Very Solid Start to 2014 – Catalysts in Place for Growth
Q1 Very Solid Start to 2014 Catalysts in Place for Growth • Revenue Growth Exceeded Expectations for the Quarter • Key Regulatory Progress – CentraFLOW Approval in Japan during the Quarter – CentraFLOW Experts Panel Meeting scheduled for May in China – Favorable Panel Result for TICL in U.S . – Expe
Slide 19: Key Financial Results Topics to Discuss
Q4 Key Financial Results Topics to Discuss • GAAP and non - GAAP P&L • Gross Margin Expansion Plan • Operating Expenses • Tax Provisions for the Year 19
Slide 20: Q1 Key Financial Results
Q1 Key Financial Results 20 Q1 2014 Q1 2013 Change Revenue $20,178 $18,001 +$2,177/+12% Gross Profit $13,884 $12,654 +$1,230/+10% Gross Profit Margin 68.8% 70.3% (150bps) Operating Expenses $15,226 $11,570 +$3,656/+32% Income Before Taxes $(1,140) $ 785 $(1,925) Income Taxes $ 219 $ 314 $ ( 95) Net
Slide 21: Q1 Key Financial Results – Non-GAAP Measures
Q1 Key Financial Results 2014 Non - GAAP Measures ($000’s) 21 Measure Q1 2014 Q1 2013 GAAP Net Income (loss) $ (1,359) $ 471 Mfg. Consolidation Expenses $ 168 $ 901 Spain Distribution Transition Cost -- $ 442 Foreign Currency Impact $ (66) $ 341 Adjustment of Warrant Value -- $ ( 27 ) Stock - based
Slide 22: Gross Margin Expansion
Gross Margin Expansion How we get There from Here? • Additional Cost Associated with Start Up Costs for ICLs in U.S. • Approximately a 140 bps impact • Negative Impact from Increased Low Margin Other Sales – Preloaded Injectors sold to Third Party for use in their IOL line – Margins still to run abo
Slide 23: Operating Expenses
Operating Expenses Q1 Expenses Higher than Expected • Cost of FDA Panel Meeting for TICL • $1.4M without Costs of Employees and Travel • Basically had to Pay for Two Panel Meetings during the Quarter due to Postponement • G&A Increased by $1.4M • Primarily Driven by Compensation and Recruiting Costs
Slide 24: Tax Provisions for 2014
Tax Provisions for 2014 How the Year Should Progress • Income Tax Provision of $219k for Q1 2014 vs. $314k for Q1 2013 • Tax Benefits from Manufacturing Consolidation being Partially Realized During the Year • The Tax Provision for the Year is Projected on an Annual Basis • Expected to be Approximat
Slide 25: 2014 Key Financial Results Outlook
2014 Key Financial Results Outlook • Gross Margin Expected to Show Recovery • H2 Should provide Expansion due to Consolidation • Increased Supply of the KS IOL Product will Drive Sales into Higher Gross Margin Markets • Gross Margins would also Benefit from the TICL when approved for commercializati
Slide 26: Expanded Market Opportunities – TICL Opportunity in U.S.
Expanded Market Opportunities TICL Opportunity in U.S. • National Health and Nutrition Survey (NHANES; 1999 - 2004) – Myopia Prevalence 33.1% ( - 1.0D or higher) – Astigmatism Prevalence 36.2% (cylinder of 1.0D or higher) • Market Scope >100k Refractive Procedures >1.0D Astigmatism • In Markets Wher
Slide 27: Expanded Market Opportunities – TICL Opportunity in U.S.
Expanded Market Opportunities TICL Opportunity in U.S. • Average Patient in TICL Study Trial was - 9.37D of myopia and 1.95D of astigmatism 27
Slide 28: Market Introduction of the Preloaded ICL
Market Introduction of the Preloaded ICL Rapid Cadence of New Products (H1 2014) 28 • Preloaded ICL with Enhanced Optics – Saves Procedure Time – Learning Curve Shortened – More Consistent Delivery • New IP around Product • Enhanced Optic Design to Increase U seful O ptical Z one to Benefit P atient
Slide 29: V6 ICL Next in Line (V6a ICL)
V6 ICL Next in Line (V6a ICL) Rapid Cadence of New Products • Differentiates ICL for Myopic P atients N earing Age 40 Who Will Need Near & Intermediate Adds • Goal To Add Near - Vision Enhancement Capability – Treats the Early Onset and Progression of Presbyopia – Adds ≈2.0 Diopters of Near While Pr
Slide 30: V6 ICL Next in Line (V6b ICL)
V6 ICL Next in Line (V6b ICL) Rapid Cadence of New Products • Targets New Market : Presbyopic Patients A ge 40 and Above – Solution to the Need for Permanent N ear & Intermediate V ision E nhancement – 100% of Population over Approximately A ge 50 Affected (Estimated 1.8 Billion Are Challenged with
Slide 31: Consumer Education and Awareness
Consumer Education and Awareness • Patient Leads G enerated from ‘Doc Finder’ Increasing – 68% Contacted by Surgeon’s Practice (Working to Improve Follow Up) – From Those Contacts: 62% Received ICL, 10% Received LASIK 31 Social Media Marketing Jul '12 Aug Sep Oct Nov Dec Jan '13 Feb Mar Apr May Jun
Slide 32: Consumer Education and Awareness: Push and Pull
Consumer Education and Awareness Effective at Push, Looking to Expand Pull Push Marketing • We do pretty well at STAAR today. • Promoting to surgeons through sales reps and marketing tools. • Clinical training and articles on the technology. • Enhance the technology and introduce with a marketing st
Slide 33: Upcoming STAAR Catalysts – Key Drivers for Growth
• Expanded ICL with CentraFLOW approvals to Key Markets – Korea, India and Argentina H2 13 – Japan approval March 3rd & China May Experts Panel Meeting • Commercialization of Preloaded ICL H1 14 in Europe • Successful FDA Panel Meeting in U.S. for TICL on March 14 • P&L Contribution from Consolidati
Slide 34: Upcoming Investor Meetings
Upcoming Investor Meetings • May 7 th at Deutsche Bank Healthcare Conference in Boston • May 15 th at Bank of America Conference in Las Vegas • May 29 th at Benchmark Conference in Milwaukee • June 2 nd at Jefferies Healthcare Conference in New York City • Our Annual Shareholders Meeting in Monrovia
Slide 35: Thank You
Thank You YOUR QUESTIONS PLEASE 35
Slide 36: Q1 2014 Results – From the American Society of Cataract and Refractive Surgery Meeting
36 NASDAQ: STAA Q1 2014 Results – Investor Presentation From the American Society of Cataract and Refractive Surgery Meeting April 28, 2014