Full Press Release Details
STAAR Surgical Reports 12% First Quarter
~Total Sales of $20.2M Increased 15%
in Constant Currency from Q1 2013~
~ Record Quarterly Visian ICL
Sales Increased 15% to $12.2 Million ~
IOL Sales Increased 4%, Increased 12%
in Constant Currency
Conference Call and Video Webcast Today
MONROVIA, CA, April 28, 2014---STAAR Surgical Company (NASDAQ:
STAA) a leading developer, manufacturer and marketer of implantable lenses and delivery systems for the eye today reported revenue
for the first quarter ended April 4, 2014 of $20.2 million, a 12% increase over $18.0 million reported for the first quarter of
2013. On a constant currency basis, revenues grew 15% during the first quarter of 2014 compared to the first quarter of 2013. The
effect of foreign currency exchange reduced sales by $0.6 million during the quarter. The results included record quarterly sales
of $12.2 million of the Company's Visian ICL product portfolio, and $6.6 million of its IOL products. Lower margin Other
Product sales were $1.3 million, a 29% increase compared to the first quarter of 2013.
"We are off to a very good start in 2014 with revenue
growth of 12% and 15% growth in constant currency, which was driven by both ICL and IOL new product sales," said Barry Caldwell,
President and CEO. "Visian ICL growth continues to be fueled by the expansion and penetration of the ICL with CentraFLOW
technology, which makes the procedure more convenient and cost effective for both the patient and the surgeon. The CentraFLOW technology
drove a revenue increase of 27% in our EMEA region with deeper penetration in Europe and expansion to our Latin America markets.
CentraFLOW helped to drive a 17% revenue increase in our APAC region as we increased penetration in both Korea and India. Global
ICL revenue growth was 15% in the quarter and procedure growth was 14%. We continue to gain market share globally as LASIK procedures
remain under downward pressure."
"IOL revenue increased by 4% during the quarter, or a
12% increase in constant currency. This growth was driven by the expansion of our KS-IOL products in the European markets and growth
of preloaded silicone IOL sales in Japan. IOL revenue in Japan increased 23% in local currency (2% growth as reported) and units
increased 22%. IOL revenue increased by 64% in Europe while units increased 59%. Increased supply of the KS-IOL products allowed
us to grow revenue in our European markets and start to return consignment account levels in Japan to where they were a year ago.
We now feel more confident about our supply levels for the rest of the year," continued Mr. Caldwell.
"As previously discussed, our expenses related to the
FDA Panel Advisory meeting were expected to be higher during the quarter as a result of the postponement of the February 14th
panel meeting due to weather and the re-scheduling to March 14th. These costs associated with the Advisory meeting were nearly
double our original forecast and led to the GAAP net loss for the quarter," concluded Mr. Caldwell.
Gross profit margin for the quarter was 68.8% compared to 70.3%
in the first quarter of 2013. The transition of production of ICL's from Switzerland to the U.S. had a negative impact on
gross margins of approximately 140 bps. The increase of sales of low margin IOL injectors to a third party manufacturer had a negative
impact on gross margin of approximately 90 basis points. Overall average selling price on IOLs declined based upon the geographic
distribution of sales, although each market increased price. This had a negative 77 basis point impact. Increased average prices
on ICLs had a positive impact on gross margin which should continue and expand during the year.
Operating expenses for the first quarter of 2014 were $15.2
million, up 32% from $11.6 million in the prior year. This includes a $2.1 million increase in R&D expenses driven by the cost
of the FDA Advisory Panel meetings, which was $1.4 million in the quarter. Investments in Sales and Marketing increased by $0.9
million which includes cost related to the expansion of the U.S. sales team in anticipation of the potential launch of the TICL
and increased promotional spending. General and Administrative expenses increased by $1.4 million primarily due to compensation
and recruiting costs.
The income tax provision was $219,000 during the first quarter
of 2014 compared to a provision of $314,000 during the first quarter of 2013. This tax provision partially benefited by the increased
production in the U.S. of products previously produced outside the U.S. Based upon current projections the Company expects the
effective tax rate for the year will be approximately 30%.
The GAAP net loss for the first quarter of 2014 was $1.4 million
or $0.04 on a per diluted share basis, compared with a net income of $471,000, or $0.01 on a per diluted share basis, in the first
quarter of 2013. Adjusted net income (excluding manufacturing consolidation expenses, distribution transition expenses in Spain,
gain (loss) on foreign currency transactions, fair value adjustment of warrants, stock-based compensation expense and Toric ICL
FDA panel expenses) for the quarter ended April 4, 2014 was $1.6 million, or $0.04 per share versus adjusted net income for the
year ago quarter of $3.2 million, or $0.08 per diluted share.
Cash and cash equivalents at April 4, 2014 totaled $21 million.
During the quarter, the Company used $2.6 million in cash for operating activities including: $1.1 million for ICL inventory build
related to consolidation and planned launch of the TICL in the U.S., $1.0 million for FDA panel costs.
Visian Implantable Collamer Lens (ICL) Highlights.
Regional ICL Updates
Europe, Middle East, Africa (EMEA)
Quarterly Intraocular Lens (IOL) Highlights
Other Operational Highlights during the Quarter
The Company reiterates its annual 2014 metrics as follows:
The Company will host a conference call and webcast today 4:15
p.m. Eastern / 1:15 p.m. Pacific to discuss these results and recent corporate developments. The dial-in number for the conference
call is 866-202-0886 for domestic participants and 617-213-8841 for international participants, both using the passcode 15014292.
The Company will broadcast the event live from its booth on the Exhibitor Floor at the American Society of Cataract and Refractive
Surgery (ASCRS) Annual Symposium and Congress in Boston. The live video webcast with accompanying slides can be accessed from the
investor relations section of the STAAR website at www.staar.com.
A taped replay of the conference call will also be available
beginning approximately one hour after the call's conclusion and will be available for seven days. This replay can be accessed
by dialing 888-286-8010 for domestic callers and 617-801-6888 for international callers, both using passcode 94266534. An archived
video webcast will also be available at www.staar.com.
Use of Non-GAAP Financial Measures
This press release includes supplemental non-GAAP financial
information, which STAAR believes investors will find helpful in understanding its operating performance.
The Company conducts a significant part of its activities outside
the U.S. It receives sales revenue and pays expenses principally in U.S. dollars, Swiss francs, Japanese yen and Euros. The exchange
rates between dollars and non-U.S. currencies can fluctuate greatly and can have a significant effect on our results when reported
in U.S. dollars. When preparing its financial statements in conformance with GAAP, the Company translates foreign currency sales
and expenses denominated in Japanese yen to dollars at the weighted average of exchange rates in effect during the period. As a
result, the Company's reported performance may be significantly affected by currency fluctuations. In order to compare the Company's
performance from period to period without the effect of currency, the Company will apply the same average exchange rate applicable
in the prior period, or the "constant currency" rate to sales or expenses in the current period as well. Because changes
in currency are outside of the control of the Company and its managers, management finds this non-GAAP measure useful in determining
the long term progress of its initiatives and determining whether its managers are achieving their performance goals. The Company
believes that the non-GAAP constant-currency sales results measures provided in this press release are similarly useful to investors
to give insight on long term trends in the Company's performance without the external effect of changes in relative currency values.
The table below shows sales results calculated in accordance with GAAP, the effect of currency, and the resulting non-GAAP measure
expressed in constant currency.
"Adjusted Net Income" excludes
the following items that are included in "Net Income" as calculated in accordance with U.S. generally accepted accounting
principles ("GAAP"): manufacturing consolidation expenses, Spain distribution transition expenses, gain or loss on
foreign currency transactions, the fair value adjustment of outstanding warrants issued in 2007, and stock-based compensation expenses.
Management believes that "Adjusted Net Income" is
useful to investors in gauging the outcome of the key drivers of the business performance: the ability to increase sales revenue
and our ability to increase profit margin by improving the mix of high value products while reducing the costs over which management
has control, and FDA TICL Panel expense.
We have excluded manufacturing consolidation, Spain distribution