Syneron Reports Fourth Quarter and Full Year 2012 Results

Record quarterly revenue of $72.8 million, up 19% y/y

Non-GAAP Q4: Operating margin more than doubles to 7.8%; Net income of $4.1 million, or $0.11 per share, up from $1.1 million; Cash from operations of $8.8 million

Feb 12, 2013, 07:44 ET from Syneron Medical Ltd.

YOKNEAM, Israel, Feb. 12, 2013 /PRNewswire/ -- Syneron Medical Ltd. (NASDAQ: ELOS), the leading global aesthetic device company, today announced financial results for the three month and full year periods ended December 31, 2012.

Fourth Quarter 2012 Year-Over-Year Financial Highlights Include:

  • North America revenue of $30.6 million, up 46%
  • International revenue of $42.2 million, up 5%
  • EBU1 segment revenue of $7.2 million, up 19%
  • Non-GAAP gross margin of 53.0%, down from 55.0%
  • PAD2 segment non-GAAP operating margin of 12.3%, up from 10.1%
  • Non-GAAP EPS of $0.11, up from $0.03
  • Generated cash from operations of $8.8 million
  • Cash and investments portfolio of $136 million at December 31, 2012

Full Year 2012 Year-Over-Year Financial Highlights Include:

  • North America revenue of $93.2 million, up 20%
  • International revenue of $170.4 million, up 13%
  • EBU segment revenue of $27.1 million, up 35%
  • Non-GAAP gross margin of 54.2%, up from 54.1%
  • PAD segment non-GAAP operating margin of 10.4%, up from 8.1%
  • Non-GAAP EPS of $0.21, up from $0.07

Louis P. Scafuri, Chief Executive Officer of Syneron, commented, "We finished the year with a strong fourth quarter with record revenues. The PAD segment delivered robust revenue growth combined with enhanced operating leverage. Our network of subsidiaries and distribution partners contributed to solid international results, including strong performance in Asia. In North America, our team had particular success with the elos Plus™ next generation multi-platform system and GentleMax Pro® multi-wavelength system, providing positive initial signs that our sales force restructuring strategy is on track. We also continued to roll out UltraShape in international markets and drive enrollment in the U.S. clinical trial. We remain on track for potential FDA clearance by the end of 2013.

"In the EBU, most of our products had a solid quarter and we made good progress with our initiatives to closely monitor our investments and narrow segment losses. This resulted in sequential improvements in EBU segment gross margin and operating margin, putting us on track to achieve our goal to reach breakeven operating results in the latter part of 2013. We also look forward to the first quarter 2013 launch of the mē home-use hair removal system in the U.S."

Revenue: Fourth quarter 2012 revenue was $72.8 million, an increase of 19.2% compared to $61.0 million in the fourth quarter of 2011. The year-over-year revenue growth was driven by ongoing new product adoption and new products in the PAD segment, combined with continued growth in EBU segment revenue.

Non-GAAP Financial Highlights for the Fourth Quarter Ended December 31, 2012:

Gross Margin for the fourth quarter 2012 was 53.0%, compared to 55.0% in fourth quarter 2011,primarily due to a higher mix of lower margin system sales in the PAD segment and a slight year-over-year decline in EBU gross margin, partially offset by a higher production and sales volume and recently implemented costs cutting and efficiency measures.

Operating Income for the fourth quarter 2012 was $5.7 million, up from $2.2 million in fourth quarter 2011, representing an operating margin of 7.8% of revenue in the fourth quarter 2012, compared to 3.5% in the fourth quarter 2011.

Net Income for the fourth quarter 2012 was $4.1 million, up from $1.1 million in fourth quarter 2011.

Earnings Per Share for the fourth quarter 2012 was $0.11, up from $0.03 in the fourth quarter 2011.

Net income and earnings per share for the fourth quarter 2012 are adjusted to exclude the following items, which are detailed in the Company's financial tables:

  • Amortization of acquired intangible assets of $1.9 million
  • Stock-based compensation of $1.4 million
  • Other non-recurring costs of $4.1 million
  • Income tax adjustment benefit of $8.5 million

GAAP Financial Highlights for the Fourth Quarter Ended December 31, 2012:

Gross Margin for the fourth quarter 2012 was 49.5%, compared to 46.3% in fourth quarter 2011, primarily due to a higher mix of lower margin system sales in the PAD segment and a slight year-over-year decline in EBU gross margin, partially offset by a higher production and sales volume and recently implemented costs cutting and efficiency measures.

Operating Loss for the fourth quarter 2012 was $1.7 million, compared to $8.2 million in fourth quarter 2011.

Net Income for the fourth quarter 2012 was $5.2 million, compared to a net loss of $8.0 million in fourth quarter of 2011.

Earnings Per Share for the fourth quarter 2012 was $0.15, compared to a loss per share of $(0.23) in fourth quarter 2011.

Fourth quarter 2012 GAAP net income and earnings per share includes a one-time net tax benefit of $6.8 million, or $0.19 per share.

The fourth quarter 2011 results include the effect of a $3.2 million expense associated with a voluntary field action related to the LiteTouch dental laser systems, which was initiated after the issuance of our fourth quarter 2011 earnings press release, but was recorded in our 2011 GAAP financial statements, since it related to conditions that existed at the balance sheet date of December 31, 2011, but prior to the issuance of our 2011 GAAP financial statements.

Cash Position: As of December 31, 2012, the Company's cash and investments portfolio was $136 million.

Hugo Goldman, Chief Financial Officer of Syneron, commented, "During the quarter we continued to carefully manage expenses in both segments of our business, with a focus on enhancing efficiency. PAD segment non-GAAP operating margin was 12.3% in the fourth quarter, demonstrating the leverage potential we have as we continue to expand sales of our higher margin products and consumables. On a consolidated basis, we generated $8.8 million in cash from operations and continue to have a strong balance sheet."

Unaudited Non-GAAP segment results for the three months ended December 31, 2012 and 2011 (in thousands):

Syneron Medical Ltd.

Unaudited Non-GAAP Condensed Consolidated Statements of Income (Loss)

(in thousands)

For the three-months ended

December 31,

% of 

December 31,

% of 

% of 

2012

Revenues 

2011

Revenues 

Change

Revenues

PAD

$            65,605

90.2%

$            55,051

90.2%

19.2%

EBU

7,155

9.8%

5,990

9.8%

19.4%

Total revenues

$            72,760

100.0%

$            61,041

100.0%

19.2%

Operating income (loss)

PAD

$              8,055

12.3%

$              5,575

10.1%

44.5%

EBU

(2,353)

(32.9%)

(3,422)

(57.1%)

(31.2%)

Total operating income

$              5,702

7.8%

$              2,153

3.5%

164.8%

 

Unaudited Non-GAAP segment results for the twelve months ended December 31, 2012 and 2011 (in thousands):

Syneron Medical Ltd.

Unaudited Non-GAAP Condensed Consolidated Statements of Income (Loss)

(in thousands)

For the twelve-months ended

December 31,

% of 

December 31,

% of 

% of 

2012

Revenues 

2011

Revenues 

Change

Revenues

PAD

$           236,516

89.7%

$           208,401

91.2%

13.5%

EBU

27,106

10.3%

20,041

8.8%

35.3%

Total revenues

$           263,622

100.0%

$           228,442

100.0%

15.4%

Operating income (loss)

PAD

$            24,497

10.4%

$            16,835

8.1%

45.5%

EBU

(13,294)

(49.0%)

(12,538)

(62.6%)

6.0%

Total operating income (loss)

$            11,203

4.2%

$              4,297

1.9%

160.7%

 

Unaudited GAAP segment results for the three months ended December 31, 2012 and 2011 (in thousands):

Syneron Medical Ltd.

Unaudited Condensed Consolidated Statements of Income (Loss)

(in thousands)

For the three-months ended

December 31,

% of 

December 31,

% of 

% of 

2012

Revenues 

2011

Revenues 

Change

Revenues

PAD

$            65,605

90.2%

$            55,021

90.2%

19.2%

EBU

7,155

9.8%

5,990

9.8%

19.4%

Total revenues

$            72,760

100.0%

$            61,011

100.0%

19.3%

Operating income (loss)

PAD

$              1,152

1.8%

$             (1,412)

(2.6%)

(181.6%)

EBU

(2,851)

(39.8%)

(6,739)

(112.5%)

(57.7%)

Total operating loss

$             (1,699)

(2.3%)

$             (8,151)

(13.4%)

(79.2%)

 

Unaudited GAAP segment results for the twelve months ended December 31, 2012 and 2011 (in thousands):

 

Syneron Medical Ltd.

Unaudited Condensed Consolidated Statements of Income (Loss)

(in thousands)

For the twelve-months ended

December 31,

% of 

December 31,

% of 

% of 

2012

Revenues 

2011

Revenues 

Change

Revenues

PAD

$           236,516

89.7%

$           208,280

91.2%

13.6%

EBU

27,106

10.3%

20,041

8.8%

35.3%

Total revenues

$           263,622

100.0%

$           228,321

100.0%

15.5%

Operating income (loss)

PAD

$              7,393

3.1%

$           (33,001)

(15.8%)

(122.4%)

EBU

(15,161)

(55.9%)

(15,855)

(79.1%)

(4.4%)

Total operating loss

$             (7,768)

(2.9%)

$           (48,856)

(21.4%)

(84.1%)

Use of Non-GAAP Measures

This press release provides financial measures for gross margin, operating margin, operating income (loss), net income (loss), earnings (loss) per share, which exclude one-time expenses relating to the mergers with Candela Corporation and Primaeva Medical Inc., an expense charge related to stock-based compensation and amortization, one-time severance and other one-time charges and non-recurring costs, and non-recurring costs associated with the voluntary field action regarding the LiteTouch Dental Laser Product in Europe, and are therefore not calculated in accordance with generally accepted accounting principles (GAAP). Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance because it reflects our ongoing operational results, operating margin, operating income (loss), net income (loss) and earnings (loss) per share. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management uses non-GAAP measures when evaluating the business internally and, therefore, felt it important to make these non-GAAP adjustments available to investors. A reconciliation of each GAAP to non-GAAP financial measure discussed in this press release is contained in the accompanying financial tables.

Conference call

Syneron management will host its fourth quarter and full year 2012 earnings conference call today at 8:00 a.m. ET. Syneron will be broadcasting live via the Investor Relations section of its website, www.investors.syneron.com. To access the call, enter the Syneron Investor Relations website, then click on the webcast link "Q4 2012 Results Webcast."

Participants are encouraged to log on at least 15 minutes prior to the conference call in order to download the applicable audio software. The call can be heard live or with an on-line replay which will follow. Those interested in participating in the call and the question and answer session should dial 877-844-6886 in the U.S., and 970-315-0315 from overseas. The conference pass code is: 91695614.

About Syneron Medical Ltd.

Syneron Medical Ltd. (NASDAQ: ELOS) is the leading global aesthetic device company with a comprehensive product portfolio and a global distribution footprint. The Company's technology enables physicians to provide advanced solutions for a broad range of medical-aesthetic applications including body contouring, hair removal, wrinkle reduction, rejuvenation of the skin's appearance through the treatment of superficial benign vascular and pigmented lesions, and the treatment of acne, leg veins and cellulite. The Company sells its products under two distinct brands, Syneron and Candela. Founded in 2000, the corporate, R&D, and manufacturing headquarters for Syneron Medical Ltd. are located in Israel. Syneron also has R&D and manufacturing operations in the U.S. The Company markets, services and supports its products in 90 countries. It has offices in North America, France, Germany, Italy, Portugal, Spain, UK, Australia, China, Japan, and Hong Kong and distributors worldwide.

SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS

Any statements contained in this document regarding future expectations, beliefs, goals, plans or prospects constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Further, any statements that are not statements of historical fact (including statements containing "believes," "anticipates," "plans," "expects," "may," "will," "would," "intends," "estimates" and similar expressions) should also be considered to be forward-looking statements.  There are a number of important factors that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including the risks set forth in Syneron Medical Ltd.'s most recent Annual Report on Form 20-F, and the other factors described in the filings that Syneron Medical Ltd. makes with the SEC from time to time.  If one or more of these factors materialize, or if any underlying assumptions prove incorrect, Syneron Medical Ltd.'s actual results, performance or achievements may vary materially from any future results, performance or achievements expressed or implied by these forward-looking statements.

In addition, the statements in this document reflect the expectations and beliefs of Syneron Medical Ltd. as of the date of this document.  Syneron Medical Ltd. anticipates that subsequent events and developments will cause its expectations and beliefs to change.  However, while Syneron Medical Ltd. may elect to update these forward-looking statements publicly in the future, it specifically disclaims any obligation to do so.  The forward-looking statements of Syneron Medical Ltd. do not reflect the potential impact of any future dispositions or strategic transactions that may be undertaken.  These forward-looking statements should not be relied upon as representing Syneron Medical Ltd.'s views as of any date after the date of this document.

Syneron, the Syneron logo, eMatrix and elos are trademarks of Syneron Medical Ltd. and may be registered in certain jurisdictions. The elos (Electro-Optical Synergy) technology is a proprietary technology of Syneron Medical Ltd. All other names are the property of their respective owners.

1 – EBU: Emerging Business Units. Products in the EBU include me home-use hair removal system, elure Advanced Skin Brightening products, Tanda LED systems, Light Instruments' dental laser devices along with pipeline products that include Fluorinex teeth whitening and fluorination.

2 – PAD: Professional Aesthetic Device segment, which includes the results of the Syneron and Candela device businesses.

 

 

Syneron Medical Ltd.

Unaudited Condensed Consolidated Statements of Loss

(in thousands, except per share data)

For the three-months ended

For the twelve-months ended

December 31,

December 31,

December 31,

December 31,

2012

2011

2012

2011

Revenues

$            72,760

$            61,011

$           263,622

$           228,321

Cost of revenues 

36,715

32,786

127,182

113,472

Gross profit

36,045

28,225

136,440

114,849

Operating expenses:

Sales and marketing 

18,685

19,798

77,795

69,433

General and administrative

8,701

7,979

34,188

33,730

Research and development

8,306

6,783

29,936

28,334

Other expenses (income), net

2,052

1,816

2,289

32,208

Total operating expenses

37,744

36,376

144,208

163,705

Loss from operations

(1,699)

(8,151)

(7,768)

(48,856)

Financial Income (Expenses), net 

(49)

127

925

1,015

Other income

-

-

-

35

Total other income 

(49)

127

925

1,050

Loss before taxes on income 

(1,748)

(8,024)

(6,843)

(47,806)

Taxes on income 

(6,700)

121

(4,502)

3,944

Income (Loss) before non-controlling interest

4,952

(8,145)

(2,341)

(51,750)

Net loss attributable to non-controlling interest

222

104

998

955

Income (Loss) attributable to Syneron shareholders

$              5,174

$             (8,041)

$             (1,343)

$           (50,795)

Income (Loss) per share:

Basic 

Income (Loss) before non-controlling interest

$                0.14

$               (0.23)

$               (0.07)

$               (1.47)

Net loss attributable to non-controlling interest

0.01

-

0.03

0.03

Net loss attributable to Syneron shareholders

$                0.15

$               (0.23)

$               (0.04)

$               (1.44)

Diluted

Income (Loss) before non-controlling interest

$                0.14

$               (0.23)

$               (0.07)

$               (1.47)

Net loss attributable to non-controlling interest

0.01

-

0.03

0.03

Net Income (loss) attributable to Syneron shareholders

$                0.15

$               (0.23)

$               (0.04)

$               (1.44)

Weighted average shares outstanding:

Basic 

35,587

35,307

35,475

35,158

Diluted

35,808

35,307

35,475

35,158

 

 

Syneron Medical Ltd.

Condensed Consolidated Balance Sheets

(in thousands)

December 31,

December 31,

2012

2011 (*)

Assets

Current assets:

Cash and cash equivalents

$              66,359

$              62,319

Short-term bank deposits

20,520

23,771

Available-for-sale marketable securities

41,136

70,463

Trade receivable, net

50,023

43,300

Other accounts receivables and prepaid expenses

9,837

8,891

Inventories, net

36,862

31,169

Total current assets

224,737

239,913

Long-term assets:

Severance pay fund

600

295

Long-term deposits and others 

1,879

2,118

Long-term available-for-sale marketable securities 

7,966

15,590

Investments in affiliated companies

1,000

200

Property and equipment, net

6,148

4,155

Intangible assets, net 

30,433

31,813

Goodwill

25,219

18,867

Deferred taxes

21,116

10,060

Total long-term assets

94,361

83,098

Total assets

$            319,098

$            323,011

Liabilities and Stockholders' Equity

Current liabilities:

Short term bank credit

$                     -

$                1,082

Accounts payable

19,926

21,094

Deferred Revenues

11,986

11,550

Other accounts payable and accrued expenses

50,125

41,704

Total current liabilities

82,037

75,430

Long-term liabilities:

Contingent consideration liability

6,750

2,535

Deferred Revenues

3,924

4,112

Warranty Accruals

472

564

Accrued severance pay

691

496

Deferred taxes

3,095

5,182

Total long-term liabilities

14,932

12,889

Stockholders' equity:

222,129

234,692

Total liabilities and stockholders' equity

$            319,098

$            323,011

 (*)

Derived from audited financial statements

Syneron Medical Ltd.

 Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

For the twelve-months ended:

December 31,

December 31,

2012

2011

Cash flows from operating activities:

Net loss before non-controlling interest

$           (2,341)

$          (51,750)

Adjustments to reconcile net loss to net cash  used by operating activities:

Share-based compensation 

4,734

3,400

Depreciation and amortization

11,014

10,048

Impairments of intangible assets and goodwill

3,820

123

Realized loss, changes in accrued interest and amortization of premium (discount) on marketable securities

(806)

1,565

Impairment of investment in affiliated company

200

9,387

Revaluation of contingent liability

(1,910)

(8,830)

Changes in operating assets and liabilities

Trade receivable, net

(6,697)

(2,833)

Inventories, net

(7,072)

(8,581)

Other accounts receivables

839

(984)

Deferred taxes

(12,064)

(179)

Accrued severance pay, net

(136)

(19)

Accounts payable

(2,134)

4,467

Deferred revenue

406

(3,852)

Accrued warranty accruals

676

(299)

Other accrued liabilities

440

3,640

Net cash used in operating activities

(11,031)

(44,697)

Cash flows from investing activities:

Purchases of property and equipment

(2,085)

(2,116)

Proceeds from the sale or maturity of available-for-sale marketable securities

71,032

148,612

Purchase of available-for-sale marketable securities

(33,281)

(83,584)

Investments in short-term bank deposits, net

3,249

(22,579)

Investments in affiliated company

(1,000)

-

Net cash paid in acquisition of subsidiaries

(15,050)

-

Other investing activities

(202)

326

Net cash provided by investing activities

22,663

40,659

Cash flows from financing activities:

Short term bank credit, net

(1,082)

(1,655)

Acquisition of shares held by non-controlling  shareholders of  a subsidiary

(7,200)

(571)

Proceeds from exercise of stock options

1,950

4,054

Net cash provided by (used in) financing activities

(6,332)

1,828

Effect of exchange rates on cash and cash equivalents

(1,260)

708

Net increase (decrease) in cash and cash equivalents

4,040

(1,502)

Cash and cash equivalents at beginning of period

62,319

63,821

Cash and cash equivalents at end of period

$           66,359

$           62,319

Syneron Medical Ltd.

Unaudited Non-GAAP Financial Measures and Reconciliation

(in thousands, except per share data)

For the three-months ended

For the twelve-months ended

December 31,

December 31,

December 31,

December 31,

2012

2011

2012

2011

GAAP operating loss

$             (1,699)

$             (8,151)

$             (7,768)

$           (48,856)

Legal settlement costs 

-

-

-

33,900

Stock-based compensation

1,373

947

4,738

3,400

Amortization of intangible assets

1,902

1,920

7,772

7,936

Merger and other non-recurring items

4,126

7,437

6,461

7,917

Non-GAAP operating income

$              5,702

$              2,153

$            11,203

$              4,297

GAAP net Income (Loss) attributable to Syneron shareholders

$              5,174

$             (8,041)

$             (1,343)

$           (50,795)

Legal settlement costs 

-

-

-

33,900

Stock-based compensation

1,373

947

4,738

3,400

Amortization of intangible assets

1,902

1,920

7,772

7,936

Merger and other non-recurring items

4,126

7,437

6,461

7,917

Income tax adjustments

(8,475)

(1,195)

(10,111)

117

Non-GAAP net income attributable to Syneron shareholders

$              4,100

$              1,068

$              7,517

$              2,475

Income (Loss) per share:

Basic

GAAP net Income (Loss) per share attributable to Syneron shareholders

$                0.15

$               (0.23)

$               (0.04)

$               (1.44)

Legal settlement costs 

-

-

-

0.96

Stock-based compensation

0.04

0.03

0.13

0.10

Amortization of intangible assets

0.05

0.05

0.22

0.23

Merger and other non-recurring items

0.12

0.21

0.18

0.23

Income tax adjustments

(0.24)

(0.03)

(0.29)

0.00

Non-GAAP net income per share attributable to Syneron shareholders 

$                0.12

$                0.03

$                0.21

$                0.07

Diluted

GAAP net Income (Loss) attributable to Syneron shareholders  

$                0.14

$               (0.22)

$               (0.04)

$               (1.41)

Legal settlement costs 

-

-

-

0.94

Stock-based compensation

0.04

0.03

0.13

0.09

Amortization of intangible assets

0.05

0.05

0.22

0.22

Merger and other non-recurring items

0.12

0.21

0.18

0.22

Income tax adjustments

(0.24)

(0.03)

(0.28)

0.00

Non-GAAP net income per share attributable to Syneron shareholders 

$                0.11

$                0.03

$                0.21

$                0.07

Weighted average shares outstanding:

Basic

35,587

35,307

35,475

35,158

Diluted

35,807

35,854

35,881

35,946

SOURCE Syneron Medical Ltd.



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