Cutera Reports Second Quarter 2017 Financial Performance, Increases Revenue and EPS Guidance and Expands Stock Buyback Program
Key operating highlights and financial performance for the second quarter of 2017, when compared to the second quarter of 2016, were as follows:
- Revenue:
-- Increased 32%, to a second quarter record of$36.4 million , due primarily to 63% growth inNorth America product revenue; International product revenue also grew by 7%
-- Twelfth consecutive quarter of double-digit revenue growth
-- Growth experienced by multiple products, with particular strength from the recently launched truSculpt 3D body-sculpting platform - Gross margin was 58%, exceeding guidance by approximately 2%, primarily driven by sales of truSculpt 3D body sculpting system
- Operating expenses declined as a percent of revenue from 63% to 53%
- Net income was
$1.9 million , compared to a net loss of$1.2 million - Earnings per diluted share increased to
$0.13 , compared to a loss of$0.09 - Cash generated by operations was
$7.7 million . Cash, cash equivalents and investments totaled$53.2 million atJune 30, 2017 - Stock repurchase program Board approved an incremental
$25 million to be added to the presently active stock repurchase program. In Q2’17, the Company repurchased$4.1 million of stock bringing the total stock repurchased since February 2015 to 3.6 million shares, or$52.0 million
“Our Board’s approval to further expand our stock repurchase program reflects its confidence in our ability to build long-term value for shareholders. I believe that our financial performance in the second quarter of 2017, and our overall trajectory, demonstrates that
Product Updates
Initial market acceptance for the Company’s truSculpt 3D system is robust. Many practitioners continue to communicate to the Company that they believe it to be the best-in-class system for body sculpting. truSculpt 3D offers a new treatment method and higher frequency resulting in increased efficacy and greater fat destruction and circumferential reduction. It also includes a consumable revenue stream enabling the Company to share in the procedure income with its customers. This important technology improvement is critical for the Company to enable the truSculpt platform to become a more competitive offering in the body sculpting market. The Company expects to further enhance the platform in the second-half of this year and has already received
Full-Year 2017 Outlook
- Revenue guidance is being increased from
$140 million to $144 -$147 million - Gross margin is expected to be in the range of 58% - 59%
- Earnings per Share guidance is being increased to approximately
$0.50 - $0.54 compared to the previous range of$0.45 - $0.50 - Repurchase sufficient shares to maintain the fully diluted share count at approximately 14.0 million for 2017
Conference Call
The conference call to discuss these results is scheduled to begin at
About
This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Specifically, statements concerning
CUTERA, INC. | ||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||||
(in thousands) | ||||||||||||
(unaudited) | ||||||||||||
June 30, | March 31, | June 30, | ||||||||||
2017 | 2017 | 2016 | ||||||||||
Assets | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | 18,679 | $ | 11,443 | $ | 7,420 | ||||||
Marketable investments | 32,270 | 36,990 | 35,902 | |||||||||
Restricted investments | 2,290 | - | - | |||||||||
Cash, cash equivalents and investments | 53,239 | 48,433 | 43,322 | |||||||||
Accounts receivable, net | 18,191 | 17,859 | 11,181 | |||||||||
Inventories | 16,913 | 15,672 | 14,702 | |||||||||
Other current assets and prepaid expenses | 2,840 | 2,403 | 2,619 | |||||||||
Total current assets | 91,183 | 84,367 | 71,824 | |||||||||
Property and equipment, net | 1,867 | 1,802 | 1,577 | |||||||||
Deferred tax asset | 381 | 394 | 401 | |||||||||
Intangibles, net | - | - | 44 | |||||||||
Goodwill | 1,339 | 1,339 | 1,339 | |||||||||
Other long-term assets | 381 | 389 | 448 | |||||||||
Total assets | $ | 95,151 | $ | 88,291 | $ | 75,633 | ||||||
Liabilities and Stockholders' Equity | ||||||||||||
Current liabilities: | ||||||||||||
Accounts payable | $ | 4,293 | $ | 3,089 | $ | 2,752 | ||||||
Accrued liabilities | 18,973 | 14,950 | 13,201 | |||||||||
Deferred revenue | 8,901 | 8,275 | 8,919 | |||||||||
Total current liabilities | 32,167 | 26,314 | 24,872 | |||||||||
Deferred revenue, net of current portion | 1,982 | 1,801 | 1,685 | |||||||||
Income tax liability | 170 | 169 | 157 | |||||||||
Other long-term liabilities | 604 | 565 | 587 | |||||||||
Total liabilities | 34,923 | 28,849 | 27,301 | |||||||||
Stockholders' equity | 60,228 | 59,442 | 48,332 | |||||||||
Total liabilities and stockholders' equity | $ | 95,151 | $ | 88,291 | $ | 75,633 |
CUTERA, INC. | ||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||
(unaudited) | ||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||
June 30, | June 30, | June 30, | June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||
Net revenue | $ | 36,389 | $ | 27,477 | $ | 65,688 | $ | 49,900 | ||||||||||
Cost of revenue | 15,343 | 11,472 | 29,121 | 21,421 | ||||||||||||||
Gross profit | 21,046 | 16,005 | 36,567 | 28,479 | ||||||||||||||
Gross margin % | 58 | % | 58 | % | 56 | % | 57 | % | ||||||||||
Operating expenses: | ||||||||||||||||||
Sales and marketing | 12,787 | 10,712 | 23,560 | 19,428 | ||||||||||||||
Research and development | 2,981 | 2,712 | 5,926 | 5,421 | ||||||||||||||
General and administrative | 3,548 | 3,997 | 6,764 | 7,217 | ||||||||||||||
Total operating expenses | 19,316 | 17,421 | 36,250 | 32,066 | ||||||||||||||
Income (loss) from operations | 1,730 | (1,416 | ) | 317 | (3,587 | ) | ||||||||||||
Interest and other income, net | 276 | 217 | 549 | 361 | ||||||||||||||
Income (loss) before income taxes | 2,006 | (1,199 | ) | 866 | (3,226 | ) | ||||||||||||
Provision (benefit) for income taxes | 59 | 30 | (59 | ) | 54 | |||||||||||||
Net income (loss) | $ | 1,947 | $ | (1,229 | ) | $ | 925 | $ | (3,280 | ) | ||||||||
Net income (loss) per share: | ||||||||||||||||||
Basic | $ | 0.14 | $ | (0.09 | ) | $ | 0.07 | $ | (0.25 | ) | ||||||||
Diluted | $ | 0.13 | $ | (0.09 | ) | $ | 0.06 | $ | (0.25 | ) | ||||||||
Weighted-average number of shares | ||||||||||||||||||
used in per share calculations: | ||||||||||||||||||
Basic and diluted | 13,935 | 13,131 | 13,888 | 13,071 | ||||||||||||||
Diluted | 14,629 | 13,131 | 14,633 | 13,071 | ||||||||||||||
CUTERA, INC. | |||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||||
(in thousands) | |||||||||||||||||
(unaudited) | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
June 30, | June 30, | June 30, | June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
Cash flows from operating activities: | |||||||||||||||||
Net income (loss) | $ | 1,947 | $ | (1,229 | ) | $ | 925 | $ | (3,280 | ) | |||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||||||||||||
Stock-based compensation | 1,231 | 750 | 2,626 | 2,082 | |||||||||||||
Depreciation and amortization | 244 | 244 | 492 | 484 | |||||||||||||
Other | 6 | (75 | ) | (45 | ) | (63 | ) | ||||||||||
Changes in assets and liabilities: | |||||||||||||||||
Accounts receivable | (336 | ) | (8 | ) | (1,641 | ) | 464 | ||||||||||
Inventories | (1,241 | ) | (1,227 | ) | (1,936 | ) | (2,624 | ) | |||||||||
Accounts payable | 1,204 | 182 | 1,695 | 793 | |||||||||||||
Accrued liabilities | 4,191 | 1,985 | 1,534 | (773 | ) | ||||||||||||
Deferred revenue | 807 | (218 | ) | 784 | (321 | ) | |||||||||||
Other | (378 | ) | (712 | ) | (544 | ) | (1,114 | ) | |||||||||
Net cash provided by (used in) operating activities | 7,675 | (308 | ) | 3,890 | (4,352 | ) | |||||||||||
Cash flows from investing activities: | |||||||||||||||||
Acquisition of property, equipment and software | (141 | ) | (40 | ) | (210 | ) | (137 | ) | |||||||||
Disposal of property and equipment | 15 | 6 | 40 | 6 | |||||||||||||
Net change in marketable investments | 2,385 | 2,257 | 5,703 | 1,633 | |||||||||||||
Net cash provided by investing activities | 2,259 | 2,223 | 5,533 | 1,502 | |||||||||||||
Cash flows from financing activities: | |||||||||||||||||
Repurchases of common stock | (4,341 | ) | (2,586 | ) | (7,041 | ) | (2,865 | ) | |||||||||
Proceeds from exercise of stock options and employee stock purchase plan | 2,120 | 2,206 | 3,871 | 2,950 | |||||||||||||
Taxes paid related to net share settlement of equity awards | (383 | ) | (323 | ) | (1,167 | ) | (556 | ) | |||||||||
Payments on capital lease obligations | (94 | ) | (57 | ) | (182 | ) | (127 | ) | |||||||||
Excess tax benefit related to stock-based compensation | — | — | — | — | |||||||||||||
Net cash used in financing activities | (2,698 | ) | (760 | ) | (4,519 | ) | (598 | ) | |||||||||
Net increase (decrease) in cash and cash equivalents | 7,236 | 1,155 | 4,904 | (3,448 | ) | ||||||||||||
Cash and cash equivalents at beginning of period | 11,443 | 6,265 | 13,775 | 10,868 | |||||||||||||
Cash and cash equivalents at end of period | $ | 18,679 | $ | 7,420 | $ | 18,679 | $ | 7,420 |
CUTERA, INC. | |||||||||||||||||||||||||||
CONSOLIDATED FINANCIAL HIGHLIGHTS | |||||||||||||||||||||||||||
(in thousands, except percentage data) | |||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||
Three Months Ended | % Change | Six Months Ended | % Change | ||||||||||||||||||||||||
Q2 | Q2 | Q2 '17 Vs | Q2 | Q2 | YTD Q2 '17 Vs | ||||||||||||||||||||||
2017 | 2016 | Q2 '16 | 2017 | 2016 | YTD Q2 '16 | ||||||||||||||||||||||
Revenue By Geography: | |||||||||||||||||||||||||||
United States | $ | 24,239 | $ | 15,806 | +53 | % | $ | 40,783 | $ | 26,860 | +52 | % | |||||||||||||||
International | 12,150 | 11,671 | +4 | % | 24,905 | 23,040 | +8 | % | |||||||||||||||||||
$ | 36,389 | $ | 27,477 | +32 | % | $ | 65,688 | $ | 49,900 | +32 | % | ||||||||||||||||
International as a percentage of total revenue | 33 | % | 42 | % | 38 | % | 46 | % | |||||||||||||||||||
Revenue By Product Category: | |||||||||||||||||||||||||||
Products | |||||||||||||||||||||||||||
-North America | $ | 22,626 | $ | 13,888 | +63 | % | $ | 37,086 | $ | 22,912 | +62 | % | |||||||||||||||
-International | 7,489 | 6,976 | +7 | % | 16,021 | 14,465 | +11 | % | |||||||||||||||||||
Total Products | 30,115 | 20,864 | +44 | % | 53,107 | 37,377 | +42 | % | |||||||||||||||||||
Service | 4,662 | 5,023 | -7 | % | 9,486 | 9,490 | -0 | % | |||||||||||||||||||
Hand Piece Refills | 649 | 720 | -10 | % | 1,148 | 1,284 | -11 | % | |||||||||||||||||||
Skincare | 963 | 870 | +11 | % | 1,947 | 1,749 | +11 | % | |||||||||||||||||||
$ | 36,389 | $ | 27,477 | +32 | % | $ | 65,688 | $ | 49,900 | +32 | % | ||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||
Q2 | Q2 | Q2 | Q2 | ||||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||||||||||||
Pre-tax Stock-Based Compensation Expense: | |||||||||||||||||||||||||||
Cost of revenue | $ | 147 | $ | 40 | $ | 276 | $ | 181 | |||||||||||||||||||
Sales and marketing | 401 | 229 | 821 | 605 | |||||||||||||||||||||||
Research and development | 239 | 105 | 476 | 285 | |||||||||||||||||||||||
General and administrative | 444 | 376 | 1,053 | 1,011 | |||||||||||||||||||||||
$ | 1,231 | $ | 750 | $ | 2,626 | $ | 2,082 | ||||||||||||||||||||
CONTACTS:Cutera, Inc. Sandra Gardiner Consultant Chief Financial Officer 415-657-5500 Investor RelationsJohn Mills ICR, Inc. 646-277-1254 john.mills@icrinc.com