STAAR Surgical(STAA) - 2019 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - STAAR reported net sales of $32.6 million in Q1 2019, an increase of 20% over $27.1 million in the prior year period [19] - Adjusted for currency headwinds, net sales would have increased approximately 23% to $33.3 million [19] - Gross profit margin for Q1 was 74.2%, up 250 basis points from 71.7% in the prior year [20] - Net income for Q1 was $1.4 million or approximately $0.03 per diluted share, compared to $0.6 million or $0.01 per diluted share in the prior year [22] Business Line Data and Key Metrics Changes - ICL revenue grew by 31%, representing 85% of total company net sales in the quarter [19] - Other products segment sales declined by 19% in the quarter [19] - Operating income was approximately $1.6 million in Q1, compared to $0.8 million in the prior year [21] Market Data and Key Metrics Changes - ICL unit growth was 39% globally, significantly above the 5% to 6% growth reported in the ophthalmic sector [8] - ICL sales growth in Asia was exceptional, with Japan growing 94%, Korea 50%, China 49%, and India 26% [9] - North America grew by 15%, with the U.S. at 24% offsetting a decline in Canada [9] Company Strategy and Development Direction - The company aims to double ICL unit growth again by the end of 2020, focusing on a more aggressive strategic plan [28] - New strategic cooperation agreements were announced to partner closely with refractive surgeons [10] - The company is expanding its manufacturing capacity and investing in clean rooms for new product lines [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustained meaningful growth for ICL globally, with a target market share of 20% to 30% for myopia correction [11] - The company is optimistic about the upcoming CE Mark application for the presbyopia lens and ongoing discussions with the FDA regarding the EVO ICL family [12] - Management expects Q2 and Q3 to be the highest projected quarters of the year, particularly in China [34] Other Important Information - The company celebrated the milestone of 1 million ICLs implanted, indicating strong market acceptance [10] - Cash, cash equivalents, and restricted cash totaled $102.2 million as of March 29, 2019 [23] Q&A Session Summary Question: Confirmation of ICL unit growth doubling - Management confirmed that they hope to double ICL unit growth again by the end of 2020 and emphasized a more aggressive strategic plan [28] Question: Details on U.S. alliances and implications of new guidelines - Management explained that U.S. alliances involve marketing support and surgeon training, and the new guidelines in Germany and Japan expand the diopter range for ICLs [30] Question: Growth rate in China and inventory management - Management clarified that the perceived deceleration in growth is due to prudent inventory management, with expectations for strong Q2 and Q3 performance in China [34] Question: Update on Switzerland facility - Management stated that the Switzerland facility will be reopened as a premium manufacturing site for ICL lenses, with an expected capital outlay of about $3 million [36][37] Question: Expectations for sales and marketing spending - Management anticipates an increase in sales and marketing spending beginning in Q2, especially with upcoming trade shows [55]