STAAR Surgical(US:STAA)2020-05-10 15:03Financial Data and Key Metrics Changes - STAAR reported net sales of $35.2 million for Q1 2020, an 8% increase from $32.6 million in the prior year [23] - ICL sales represented 83% of total company sales for Q1 2020, with a 6% increase in ICL sales contributing $1.6 million to the top line growth [23] - Gross profit margin for Q1 was 70.4%, down from 74.2% in the prior year, primarily due to a higher mix of lower-margin product sales and increased manufacturing capacity costs [24] - The operating loss for Q1 2020 was approximately $1.1 million compared to an operating profit of $1.6 million in the year-ago quarter [28] - Adjusted net income for Q1 was $1.9 million or $0.04 per diluted share, down from $4.3 million or $0.09 per diluted share in the prior year [29] Business Line Data and Key Metrics Changes - Global ICL unit growth in Q1 2020 was up 9% year-over-year, with significant growth in key Asian markets [11] - ICL unit growth in Japan was up 79%, Korea up 14%, China up 7%, and the rest of Asia-Pacific up 37% [12] - In Canada, ICL unit growth was up 10%, and in Germany, it was up 5% despite procedure discontinuation in March [13] Market Data and Key Metrics Changes - The COVID-19 pandemic caused a pause in elective procedures, impacting various markets differently [10] - China resumed EVO ICL procedures, with significant patient interest and promotional activities noted during the Asia Golden Week [38] - Germany managed to keep some clinics open, contributing to continued patient procedures [48] Company Strategy and Development Direction - The company plans to resume double-digit growth in Q3 and Q4, contingent on the reopening of markets and elective surgeries [22][55] - STAAR is optimistic about the approval and rollout of the EVO EDOF lens for presbyopia, targeting a staged introduction in CE Mark countries [15] - The company is focused on supporting surgeons with promotional tools to encourage patient return as markets reopen [59] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in resuming growth, citing strong demand for ICLs and EVO lenses as elective procedures resume [21] - The company expects Q2 to be negatively impacted by the slow reopening of markets, but anticipates a recovery in Q3 and Q4 [22] - Management highlighted the importance of maintaining safety protocols while ramping up production and patient procedures [37] Other Important Information - The company resumed production at its California facilities on April 27, 2020, implementing COVID-19 safety enhancements [13] - Cash and cash equivalents totaled $110.9 million as of April 3, 2020, with expectations of ending Q2 with more cash than Q1 [30][31] - The company invested $2.2 million in property and equipment during the quarter, enhancing manufacturing capabilities [32] Q&A Session Summary Question: What is the current capacity in China post-reopening? - Management noted that initial safety measures limited patient procedures, but capacity is ramping up as confidence grows [36][37] Question: How are U.S. trial centers engaging with patients during the pause? - Management confirmed that constant contact was maintained with clinical trial sites, allowing for a smooth transition back to patient enrollment [40][41] Question: What is the outlook for double-digit growth in Q3 and Q4? - Management indicated that if conditions normalize, they expect to achieve growth above 20% in key markets [55] Question: Will there be pressure on pricing through the year? - Management does not anticipate pressure on average selling prices and expects positive pricing dynamics [58] Question: What is the expected charge for the second quarter due to the production pause? - A charge of approximately $1.4 million will be recorded due to the six-week production halt [62]