Product Revenue in North America Up 15% y/y; Asia-Pacific Region Up 28% y/y and EMEA Region Down 13% y/y, Both in Constant Currency
Sold 42 UltraShape Systems in North America and Generated Strong Growth in Consumables Utilization, with FTZs Representing 24% of UltraShape Revenue
Generated $4.1 million in PicoWay Sales
IRVINE, Calif., Nov. 11, 2015 /PRNewswire/ -- Syneron Medical Ltd. (NASDAQ: ELOS), a leading global aesthetic device company, today announced financial results for the three month period ended September 30, 2015.
Third Quarter 2015 and Recent Non-GAAP[1] Highlights:
Amit Meridor, Chief Executive Officer of Syneron Medical, said, "We achieved a fourth consecutive quarter of double digit product revenue growth in North America and strong growth in the Asia Pacific region. However, our overall growth was tempered by two factors: the loss of a CoolTouch OEM customer and weakness in the EMEA region. The loss of the CoolTouch OEM customer was the result of an unforeseen change in ownership, which impacted revenue by approximately $2 million because they immediately discontinued their contract and planned deliveries for the quarter. Given this development, we are evaluating alternatives for the CoolTouch OEM business. The weakness in the EMEA region was due to increased seasonality, a weak economic environment, as well as market conditions that are driving pricing pressure and our decision to protect margins and maintain pricing discipline in this region. EMEA revenue was down $3.3 million in the quarter, an 18% year-over-year decline, or 11% in constant currency.
"As to our key growth drivers, UltraShape™ revenue amounted to $4.5 million, including 42 systems sold and strong double-digit sequential growth of per procedure Focal Treatment Zones (FTZ) leading to $1.1 million, or 24% of total UltraShape revenue for the quarter. PicoWay® revenue amounted to $4.1 million, with continued momentum with Korean MFDS regulatory clearance in July followed by international launch of the PicoWay Resolve™ dual wavelength fractional modality in October. Profound sales during the first full quarter of our launch were approximately three quarters of a million dollars and our momentum with this innovative product line in the market is strong. This progress with our key products contributed to the improvement in our gross margin. Looking forward, into Q4 2015 and 2016, we believe Syneron has several growth opportunities with our strong product portfolio and pipeline. Accordingly, subject to legal restrictions, we plan to accelerate our share repurchase activities as we continue to execute on our strategic initiatives."
Non-GAAP Financial Highlights for the Third Quarter Ended September 30, 2015:
Gross Margin for the third quarter 2015 was 57.0%, or 58.9% in constant currency, compared to 55.6% in the third quarter 2014. The year-over-year improvement in constant currency gross margin reflects favorable geographic mix, and double digit product growth, particularly in North America and Asia Pacific, including the newly introduced high margin UltraShape in North America and PicoWay products worldwide.
Operating Income for the third quarter 2015 was $1.3 million, or $2.4 million in constant currency, compared to $2.6 million in the third quarter 2014. This reflects the Company's investments in sales and marketing expenses related to the significant expansion of the Company's North American sales force, including the establishment of a dedicated body shaping team.
Net Income and Earnings Per Share in the third quarter 2015 was $0.9 million, or $0.03 per share, compared to net income of $0.9 million, or $0.03 per share in the third quarter 2014.
Net income and earnings per share for the third quarter 2015 are adjusted to exclude the following items, which are detailed in the Company's financial tables presented at the end of this press release:
GAAP Financial Highlights for the Third Quarter Ended September 30, 2015:
Gross Margin for the third quarter 2015 was 55.3%, compared to 53.6% in the third quarter 2014. The year-over-year improvement in gross margin reflects favorable geographic mix, and double digit product growth, particularly in North America and Asia Pacific, including the newly introduced high margin UltraShape in North America and PicoWay products worldwide.
Operating Loss for the third quarter 2015 was $7.1 million, compared to $1.1 million in the third quarter 2014. This reflects the Company's investments in sales and marketing expenses related to the significant expansion of the Company's North American sales force, including the establishment of a dedicated body shaping team. It also includes $5.6 million of intangible asset and goodwill impairment related to the CoolTouch subsidiary.
Net Loss and Loss Per Share in the third quarter 2015 was $6.5 million, or $0.18 per share, compared to $2.3 million, or $0.06 per share in the third quarter 2014.
Cash Position: As of September 30, 2015, the Company's overall cash position, including cash, short-term bank deposits and marketable securities, amounted to $79.5 million, compared to $92.3 million as of June 30, 2015. Cash use in the third quarter 2015 included investments in inventory to support growth and increased working capital. The reduction in cash position also included the repurchase of 463,004 shares of Syneron common stock during the third quarter 2015 at an average price of $9.47 for $4.4 million under the Company's previously authorized $20 million share repurchase program. Since December 2014, the Company has repurchased a total of 894,671 shares at an average price of $10.36 for $9.4 million under this program.
Use of Non-GAAP Measures
This press release provides financial measures for gross margin, operating income (loss), net income (loss) and earnings (loss) per share, which exclude expenses related to amortization of acquired intangible assets, stock-based compensation expense, re-measurement of contingent consideration fair value, impairment of intangible assets and goodwill, Fair Market Value (FMV) adjustment, tax benefit, changes in foreign currency exchange rates and non-recurring legal fee, 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 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, believes 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. Constant currency results assume foreign revenues, gross profit and operating income (loss) are translated from foreign currencies to the U.S. dollar, at rates consistent with those in the prior year.
Conference Call
Syneron management will host its third quarter 2015 earnings conference call today at 8:30 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 "Q3 2015 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 877-280-2293 in the U.S., and 1-809-212-923 from outside of the U.S. The conference pass code is: 4394991.
About Syneron Candela:
Syneron Candela is a 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, tattoo removal, improving 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 three distinct brands, Syneron, Candela and CoolTouch, and has a wide portfolio of trusted, leading products including UltraShape, VelaShape, GentleLase, VBeam Perfecta, PicoWay, Profound and elos Plus.
Founded in 2000, the corporate, R&D, and manufacturing headquarters for Syneron Candela are located in Israel. Syneron Candela also has R&D and manufacturing operations in the U.S. The company markets, services and supports its products in 86 countries. It has offices in North America, France, Germany, Italy, Portugal, Spain, UK, Australia, China, Japan, and Hong Kong and distributors worldwide.
For additional information, please visit http://www.syneron-candela.com.
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.
Forward-looking statements in this press release include Mr. Meridor's statement that the Company has several significant growth opportunities with its strong product portfolio and pipeline and the anticipation to accelerate share repurchase activities.. 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 associated with the successful build-out of our North American sales force and its ability to enable us to generate more North American revenue and improve margins, the market acceptance of our new products, including UltraShape and PicoWay products, and the stabilization of the European market, as well as those 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, UltraShape, 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] The third quarter 2015 year-over-year comparisons are on a non-GAAP basis, excluding items set forth in the section titled "Non-GAAP Financial Highlights for the Third Quarter Ended September 30, 2015."
| Syneron Medical Ltd. |
|||||||||||||
| Unaudited Condensed Consolidated Statements of Operations |
|||||||||||||
| (in thousands, except per share data) |
|||||||||||||
| For the three-months ended |
For the nine-months ended |
||||||||||||
| September 30, |
September 30, |
September 30, |
September 30, |
||||||||||
| 2015 |
2014 |
2015 |
2014 |
||||||||||
| Revenues |
$ 62,074 |
$ 60,257 |
$ 198,959 |
$ 181,688 |
|||||||||
| Cost of revenues |
27,738 |
27,955 |
93,377 |
86,016 |
|||||||||
| Gross profit |
34,336 |
32,302 |
105,582 |
95,672 |
|||||||||
| Operating expenses: |
|||||||||||||
| Sales and marketing |
23,934 |
20,261 |
69,468 |
57,605 |
|||||||||
| General and administrative |
6,301 |
6,881 |
22,187 |
20,453 |
|||||||||
| Research and development |
5,550 |
5,752 |
17,364 |
18,141 |
|||||||||
| Other expenses, net |
5,613 |
507 |
5,039 |
1,523 |
|||||||||
| Total operating expenses |
41,398 |
33,401 |
114,058 |
97,722 |
|||||||||
| Operating loss |
(7,062) |
(1,099) |
(8,476) |
(2,050) |
|||||||||
| Financial income (expense), net |
- |
(764) |
6 |
(372) |
|||||||||
| Loss before taxes on income (tax benefit) |
(7,062) |
(1,863) |
(8,470) |
(2,422) |
|||||||||
| Taxes on income (tax benefit) |
(536) |
442 |
(155) |
1,409 |
|||||||||
| Net loss |
$ (6,526) |
$ (2,305) |
$ (8,315) |
$ (3,831) |
|||||||||
| Loss per share: |
|||||||||||||
| Basic and Diluted |
|||||||||||||
| Net loss per share |
$ (0.18) |
$ (0.06) |
$ (0.23) |
$ (0.10) |
|||||||||
| Weighted average shares outstanding: |
|||||||||||||
| Basic and Diluted |
36,395 |
36,768 |
36,609 |
36,681 |
|||||||||
| Syneron Medical Ltd. |
|||||
| Condensed Consolidated Balance Sheets |
|||||
| (in thousands) |
|||||
| September 30, |
December 31, |
||||
| 2015 |
2014 (*) |
||||
| (Unaudited) |
|||||
| Assets |
|||||
| Current assets: |
|||||
| Cash and cash equivalents |
$ 41,321 |
$ 57,189 |
|||
| Short-term bank deposits |
363 |
6,414 |
|||
| Available-for-sale marketable securities |
29,449 |
30,055 |
|||
| Trade receivable, net |
51,041 |
55,899 |
|||
| Other accounts receivables and prepaid expenses |
15,916 |
15,168 |
|||
| Inventories |
51,862 |
36,894 |
|||
| Total current assets |
189,952 |
201,619 |
|||
| Long-term assets: |
|||||
| Severance pay fund |
553 |
514 |
|||
| Long-term deposits and others |
296 |
267 |
|||
| Long-term available-for-sale marketable securities |
8,389 |
16,785 |
|||
| Investment in affiliated company |
20,760 |
20,130 |
|||
| Property and equipment, net |
9,196 |
7,011 |
|||
| Intangible assets, net |
14,165 |
21,698 |
|||
| Goodwill |
22,785 |
25,285 |
|||
| Deferred taxes |
14,489 |
13,525 |
|||
| Total long-term assets |
90,633 |
105,215 |
|||
| Total assets |
$ 280,585 |
$ 306,834 |
|||
| Liabilities and Stockholders' Equity |
|||||
| Current liabilities: |
|||||
| Accounts payable |
$ 17,242 |
$ 21,948 |
|||
| Deferred revenues |
11,949 |
14,054 |
|||
| Other accounts payable and accrued expenses |
27,125 |
32,595 |
|||
| Total current liabilities |
56,316 |
68,597 |
|||
| Long-term liabilities: |
|||||
| Contingent consideration liability |
5,039 |
4,983 |
|||
| Deferred revenues |
3,440 |
3,782 |
|||
| Warranty accruals |
663 |
860 |
|||
| Accrued severance pay |
627 |
507 |
|||
| Deferred taxes |
- |
140 |
|||
| Total long-term liabilities |
9,769 |
10,272 |
|||
| Stockholders' equity |
214,500 |
227,965 |
|||
| Total liabilities and stockholders' equity |
$ 280,585 |
$ 306,834 |
|||
| (*) |
Derived from audited financial statements |
||||
| Syneron Medical Ltd. |
|||||||||||||
| Unaudited Condensed Consolidated Statements of Cash Flows |
|||||||||||||
| (in thousands) |
|||||||||||||
| For the nine-months ended |
|||||||||||||
| September 30, |
September 30, |
||||||||||||
| 2015 |
2014 |
||||||||||||
| Cash flows from operating activities: |
|||||||||||||
| Net loss |
$ (8,315) |
$ (3,831) |
|||||||||||
| Adjustments to reconcile net loss to net cash |
|||||||||||||
| Non-cash items reported in discontinued operations |
|||||||||||||
| Share-based compensation |
2,811 |
3,016 |
|||||||||||
| Depreciation and amortization |
6,645 |
6,442 |
|||||||||||
| Impairments of intangible assets |
5,613 |
1,477 |
|||||||||||
| Realized loss, changes in accrued interest and amortization |
474 |
629 |
|||||||||||
| Adjustment to fair value of investment in JV |
(630) |
- |
|||||||||||
| Revaluation of contingent liability |
56 |
601 |
|||||||||||
| Changes in operating assets and liabilities: |
|||||||||||||
| Trade receivable, net |
1,655 |
931 |
|||||||||||
| Inventories |
(15,420) |
(2,676) |
|||||||||||
| Other accounts receivables |
(763) |
1,177 |
|||||||||||
| Deferred taxes |
(1,141) |
(1,082) |
|||||||||||
| Accounts payable |
(4,741) |
(648) |
|||||||||||
| Deferred revenue |
1,197 |
1,030 |
|||||||||||
| Accrued warranty accruals |
(1,517) |
(2,548) |
|||||||||||
| Other accrued liabilities |
(5,208) |
(233) |
|||||||||||
| Net cash provided by (used in) operating activities |
(19,284) |
4,285 |
|||||||||||
| Cash flows from investing activities: |
|||||||||||||
| Purchases of property and equipment |
(3,636) |
(1,110) |
|||||||||||
| Proceeds from the sale or maturity of marketable securities |
26,899 |
31,002 |
|||||||||||
| Purchase of marketable securities |
(18,274) |
(23,984) |
|||||||||||
| Proceeds from short-term bank deposits, net |
6,051 |
3,546 |
|||||||||||
| Acquisition of a subsidiary |
- |
(11,016) |
|||||||||||
| Other investing activities |
(29) |
(15) |
|||||||||||
| Net cash provided by (used in) investing activities |
11,011 |
(1,577) |
|||||||||||
| Cash flows from financing activities: |
|||||||||||||
| Repurchase of shares from shareholders |
(8,916) |
- |
|||||||||||
| Proceeds from exercise of stock options |
2,097 |
1,250 |
|||||||||||
| Net cash provided by (used in) financing activities |
(6,819) |
1,250 |
|||||||||||
| Effect of exchange rates on cash and cash equivalents |
(776) |
(829) |
|||||||||||
| Net increase (decrease) in cash and cash equivalents |
(15,868) |
3,129 |
|||||||||||
| Cash and cash equivalents at beginning of period |
57,189 |
37,583 |
|||||||||||
| Cash and cash equivalents at end of period |
$ 41,321 |
$ 40,712 |
|||||||||||
| Syneron Medical Ltd. |
||||||||||||
| Unaudited Non-GAAP Financial Measures and Reconciliation |
||||||||||||
| (in thousands, except per share data) |
||||||||||||
| For the three-months ended |
For the nine-months ended |
|||||||||||
| September 30, |
September 30, |
September 30, |
September 30, |
|||||||||
| 2015 |
2014 |
2015 |
2014 |
|||||||||
| GAAP gross profit |
$ 34,336 |
$ 32,302 |
$ 105,582 |
$ 95,672 |
||||||||
| Stock-based compensation |
49 |
70 |
149 |
224 |
||||||||
| Amortization of intangible assets |
1,010 |
1,110 |
3,030 |
3,010 |
||||||||
| Non-GAAP gross profit |
$ 35,395 |
$ 33,482 |
$ 108,761 |
$ 98,906 |
||||||||
| GAAP operating loss |
$ (7,062) |
$ (1,099) |
$ (8,476) |
$ (2,050) |
||||||||
| Stock-based compensation |
979 |
1,057 |
2,811 |
3,016 |
||||||||
| Amortization of intangible assets |
1,468 |
1,809 |
4,416 |
4,311 |
||||||||
| FMV adjustment to investment in JV |
- |
- |
(630) |
- |
||||||||
| Remeasurement of contingent consideration |
- |
507 |
56 |
507 |
||||||||
| Impairment of intangible assets |
5,613 |
- |
5,613 |
- |
||||||||
| Other non-recurring items |
260 |
350 |
1,656 |
1,889 |
||||||||
| Non-GAAP operating income |
$ 1,258 |
$ 2,624 |
$ 5,446 |
$ 7,673 |
||||||||
| GAAP net loss |
$ (6,526) |
$ (2,305) |
$ (8,315) |
$ (3,831) |
||||||||
| Stock-based compensation |
979 |
1,057 |
2,811 |
3,016 |
||||||||
| Amortization of intangible assets |
1,468 |
1,809 |
4,416 |
4,311 |
||||||||
| FMV adjustment to investment in JV |
- |
- |
(630) |
- |
||||||||
| Remeasurement of contingent consideration |
- |
507 |
56 |
507 |
||||||||
| Impairment of intangible assets |
5,613 |
- |
5,613 |
- |
||||||||
| Other non-recurring items |
260 |
350 |
1,656 |
1,889 |
||||||||
| Tax benefit |
(856) |
(478) |
(1,637) |
(1,138) |
||||||||
| Non-GAAP net income |
$ 938 |
$ 940 |
$ 3,970 |
$ 4,754 |
||||||||
| Income (Loss) per share: |
||||||||||||
| Basic |
||||||||||||
| GAAP net loss per share |
$ (0.18) |
$ (0.06) |
$ (0.23) |
$ (0.10) |
||||||||
| Stock-based compensation |
0.03 |
0.03 |
0.08 |
0.08 |
||||||||
| Amortization of intangible assets |
0.04 |
0.05 |
0.12 |
0.12 |
||||||||
| FMV adjustment to investment in JV |
- |
- |
(0.02) |
- |
||||||||
| Remeasurement of contingent consideration |
- |
0.01 |
- |
0.01 |
||||||||
| Impairment of intangible assets |
0.15 |
- |
0.15 |
- |
||||||||
| Other non-recurring items |
0.01 |
0.01 |
0.05 |
0.05 |
||||||||
| Tax benefit |
(0.02) |
(0.01) |
(0.04) |
(0.03) |
||||||||
| Non-GAAP net income per share |
$ 0.03 |
$ 0.03 |
$ 0.11 |
$ 0.13 |
||||||||
| Diluted |
||||||||||||
| GAAP net loss per share |
$ (0.18) |
$ (0.06) |
$ (0.23) |
$ (0.10) |
||||||||
| Stock-based compensation |
0.03 |
0.03 |
0.08 |
0.08 |
||||||||
| Amortization of intangible assets |
0.04 |
0.05 |
0.12 |
0.12 |
||||||||
| FMV adjustment to investment in JV |
- |
- |
(0.02) |
- |
||||||||
| Remeasurement of contingent consideration |
- |
0.01 |
- |
0.01 |
||||||||
| Impairment of intangible assets |
0.15 |
- |
0.15 |
- |
||||||||
| Other non-recurring items |
0.01 |
0.01 |
0.05 |
0.05 |
||||||||
| Tax benefit |
(0.02) |
(0.01) |
(0.04) |
(0.03) |
||||||||
| Non-GAAP net income per share |
$ 0.03 |
$ 0.03 |
$ 0.11 |
$ 0.13 |
||||||||
| Weighted average shares outstanding: |
||||||||||||
| Basic |
36,395 |
36,768 |
36,609 |
36,681 |
||||||||
| Diluted |
36,672 |
37,228 |
37,059 |
37,185 |
||||||||
| Syneron Medical Ltd. |
|||
| Unaudited Non-GAAP Financial Measures and Reconciliation |
|||
| (in thousands, except per share data) |
|||
| For the three-months ended |
|||
| September 30, |
|||
| 2015 |
|||
| GAAP Revenue |
$ 62,074 |
||
| Exclude foreign exchange impact |
3,045 |
||
| Non-GAAP Revenue |
$ 65,119 |
||
| GAAP gross profit |
$ 34,336 |
||
| Stock-based compensation |
49 |
||
| Amortization of intangible assets |
1,010 |
||
| Exclude foreign exchange impact |
2,935 |
||
| Non-GAAP gross profit |
$ 38,330 |
||
| GAAP operating loss |
$ (7,062) |
||
| Stock-based compensation |
979 |
||
| Amortization of intangible assets |
1,468 |
||
| Impairment of intangible assets |
5,613 |
||
| Other non-recurring items |
260 |
||
| Exclude foreign exchange impact |
1,145 |
||
| Non-GAAP operating income |
$ 2,403 |
||
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SOURCE Syneron Medical Ltd.
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