Syneron Reports Third Quarter 2013 Results Total Revenue of $62.7 Million; Non-GAAP EPS of $0.04 PR Newswire YOKNEAM, Israel, Nov. 13, 2013 YOKNEAM, Israel, Nov. 13, 2013 /PRNewswire/ --Syneron Medical Ltd. (NASDAQ: ELOS), the leading global aesthetic device company, today announced financial results for the three month and nine month periods ended September 30, 2013. (Logo: http://photos.prnewswire.com/prnh/20120528/535447) Third Quarter 2013 and Recent Highlights Include: oTotal revenue of $62.7 million, up 4% y/y oPAD^1 segment revenue of $54.6 million, up 3% y/y oEBU^2 segment revenue of $8.1 million, up 17% y/y oNon-GAAP gross margin of 53.1%, down from 55.3% in 3Q12 and up from 50.7% in 2Q13 oPAD ^ segment non-GAAP operating margin of 6.7%, down from 9.1% in 3Q12 oCompleted UltraShape clinical trial and submitted 510(k) application to FDA oSigned global joint venture with Unilever for home beauty devices Dr. Shimon Eckhouse, Chief Executive Officer of Syneron, commented, "During the third quarter we continued to execute on our strategy to drive growth of our higher margin products in North America, with a particular focus on the non-core segment of the market. We are successfully expanding our sales team under new management and are off to a good start, including double-digit growth from the Syneron product line in North America. We achieved this progress during the first full quarter of operations that included the reduction in work force that we executed during the second quarter. As a result, operating expenses were lower compared to the prior year despite our investments in the sales force and revenue growth. "We are excited by two positive recent developments for our body shaping product portfolio. In September, we received FDA clearance and CE Mark for VelaShape III, our new non-invasive body shaping platform. The market has reacted positively to its new features and increased power, which allow it to achieve robust results after a single treatment. We expect to begin ramping sales of VelaShape III during the fourth quarter. In the past month, we announced the successful completion of our UltraShape clinical trial, which exceeded the endpoints agreed on with the FDA, and subsequently submitted our application to the FDA for potential clearance in the first half of 2014. If cleared by the FDA, we expect UltraShape will be a significant addition to our body shaping product offering." Dr. Eckhouse concluded, "Last week, our Syneron Beauty subsidiary agreed to enter a transformational joint venture with Unilever in the home beauty device market. The combined company is well positioned to leverage Syneron's expertise in aesthetic device technology and Unilever's global product and consumer experience to become a leader in this growing market. We are very pleased with this transaction as it allows us to benefit from the growth potential of joint venture in the robust home beauty market, while eliminating the financial demands of building a consumer business. As a result, we will now focus on driving growth of our professional aesthetic device business, building the elure business in Asia, and improving our overall profitability." Revenue: Third quarter 2013 revenue was $62.7 million, up 4% compared to $60.1 million in the third quarter 2012. The increase was the result of higher PAD segment revenue in North America, Asia-Pacific, China and Latin America, along with growth in the EBU segment, partially offset by lower PAD segment revenue in Europe and Japan. Third quarter 2013 revenue was negatively impacted by $1.1 million due to the devaluation of the Japanese Yen against the U.S. dollar compared to the third quarter 2012. PAD segment revenue was $54.6 million, up 3% compared to $53.2 million in the third quarter 2012. EBU segment revenue was $8.1 million, up 17% compared to $6.9 million in the third quarter 2012. Non-GAAP Financial Highlights for the Third Quarter Ended September 30, 2013: Gross Margin for the third quarter 2013 was 53.1%, compared to 55.3% in third quarter 2012,primarily due to product and sales channel mix in the PAD segment, along with product mix and higher production costs in the EBU segment. Gross margin for the third quarter 2013 increased sequentially from 50.7% in the second quarter 2013. Operating Income for the third quarter 2013 was $2.1 million, up 22% compared to $1.7 million in third quarter 2012, representing an operating margin of 3.3% of revenue in the third quarter 2013, compared to 2.8% in the third quarter 2012. Net Income and Earnings Per Share in the third quarter 2013 was $1.5 million, or $0.04 per share, compared to net income of $1.0 million, or $0.03 per share, in the third quarter 2012. Net income and earnings per share for the third quarter 2013 are adjusted to exclude the following items, which are detailed in the Company's financial tables: oAmortization of acquired intangible assets of $1.7 million oStock-based compensation of $1.0 million oOther non-recurring costs of $0.5 million oIncome tax adjustment of $0.4 million GAAP Financial Highlights for the Third Quarter Ended September 30, 2013: Gross Margin for the third quarter 2013 was 50.9%, compared to 53.2% in third quarter 2012, primarily due to product and sales channel mix in the PAD segment, along with product mix and higher production costs in the EBU segment. Gross margin for the third quarter 2013 increased sequentially from 48.3% in the second quarter 2013. Operating Loss for the third quarter 2013 was $1.1 million, compared to $2.1 million in third quarter 2012. Net Loss for the third quarter 2013 was $1.3 million, compared to $2.3 million in third quarter 2012. Loss Per Share for the third quarter 2013 was $0.04, compared to $0.06 in the third quarter 2012. Cash Position: As of September 30, 2013, the Company's cash and investments portfolio was $110.3 million. Hugo Goldman, Chief Financial Officer of Syneron, said, "Our third quarter results reflect cost reduction and efficiency initiatives that we implemented in the second quarter. These initiatives contributed to a year-over-year and sequential decline in operating expenses even though we continued to invest in expanding our sales force in North America. We ended the quarter with $110.3 million in cash and investments, and with the anticipated closing of our joint venture with Unilever, we expect our professional business going forward to be cash flow positive from operations. After the close of the third quarter we reached a settlement with the Israeli tax authorities which resulted in the conclusion of our Israeli tax audits for the years 2007-2011. As part of this settlement, we agreed to pay approximately $4 million which will allow us to free up "trapped profits". The positive effect of this settlementon the fourth quarter will be reflected in our 2013 year-end financial statements." Unaudited Non-GAAP segments results for the three months ended September 30, 2013 and 2012 (in thousands): For the three-months ended September 30, % of September 30, % of % of 2013 Revenues 2012 Revenues Change Revenues PAD $ 54,582 87.1% $ 88.5% 2.6% 53,223 EBU 8,082 12.9% 6,909 11.5% 17.0% Total revenues $ 62,664 100.0% $ 100.0% 4.2% 60,132 Operating income (loss) PAD $ 6.7% $ 9.1% (24.4%) 3,681 4,866 EBU (1,617) (20.0%) (3,169) (45.9%) 49.0% Total operating $ 3.3% $ 2.8% 21.6% income 2,064 1,697 Unaudited GAAP segments results for the three months ended September 30, 2013 and 2012 (in thousands): For the three-months ended September 30, % of September 30, % of % of 2013 Revenues 2012 Revenues Change Revenues PAD $ 54,582 87.1% $ 88.5% 2.6% 53,223 EBU 8,082 12.9% 6,909 11.5% 17.0% Total revenues $ 62,664 100.0% $ 100.0% 4.2% 60,132 Operating income (loss) PAD $ 2.2% $ 2.7% (15.4%) 1,204 1,424 EBU (2,330) (28.8%) (3,568) (51.6%) 34.7% Total operating $ (1.8%) $ (3.6%) 47.5% loss (1,126) (2,144) Syneron Medical Ltd. Unaudited Non-GAAP Financial Measures and Reconciliation For the three-months ended September 30, 2013 September 30, 2012 EBU PAD Total EBU PAD Total GAAP operating $ $ $ $ $ $ income (loss) (2,330) 1,204 (1,126) (3,568) 1,424 (2,144) Stock-based 103 876 979 115 779 894 compensation Amortization of 398 1,274 1,672 312 1,674 1,986 intangible assets Other non-recurring 212 327 539 (28) 989 961 items Non-GAAP operating $ $ $ $ $ $ income (loss) (1,617) 3,681 2,064 (3,169) 4,866 1,697 Syneron Medical Ltd. Unaudited Non-GAAP Financial Measures and Reconciliation For the nine-months ended September 30, 2013 September 30, 2012 EBU PAD Total EBU PAD Total GAAP operating $ $ $ $ $ $ income (loss) (9,285) 923 (8,362) (13,018) 6,947 (6,071) Stock-based 293 3,012 3,305 220 3,145 3,365 compensation Amortization of 1,168 4,201 5,369 1,016 4,854 5,870 intangible assets Other non-recurring 1,035 2,699 3,734 839 1,496 2,335 items Non-GAAP operating $ $ $ $ $ $ income (loss) (6,789) 10,835 4,046 (10,943) 16,442 5,499 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 expenses related to stock-based compensation, amortization of intangible assets, one-time severance, other non-recurring items such as costs associated with the voluntary field action regarding the LiteTouch Dental Laser Product in Europe, and income tax adjustment, 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 third quarter 2013 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 2013 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: 78126203. 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. Forward-looking statements in this press release include the anticipated timetable for completion of clinical trials for UltraShape and elure™;the success of our cost reduction initiatives to be reflected in our second half results and the expectation that EBU losses will narrow and that we will reach breakeven operating results by the end of 2013. 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 PAD: Professional Aesthetic Device segment, which includes the results of the Syneron and Candela device businesses. ^2 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. 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 September September 30, 30, 30, 2013 2012 2013 2012 Revenues $ $ $ $ 62,664 60,132 192,633 190,862 Cost of revenues 30,751 28,151 95,122 90,468 Gross profit 31,913 31,981 97,511 100,394 Operating expenses: Sales and marketing 19,260 18,768 61,439 59,111 General and 6,445 8,235 20,608 25,487 administrative Research and 7,007 7,206 22,956 21,630 development Other expenses (income) 327 (84) 870 237 Total operating expenses 33,039 34,125 105,873 106,465 Operating loss (1,126) (2,144) (8,362) (6,071) Financial Income 77 378 (298) 976 (expenses), net Loss before taxes on (1,049) (1,766) (8,660) (5,095) income (tax benefit) Taxes on income (tax 227 526 (493) 2,197 benefit) Loss before (1,276) (2,292) (8,167) (7,292) non-controlling interest Net loss attributable to - - 100 776 non-controlling interest Loss attributable to $ $ $ $ Syneron shareholders (1,276) (2,292) (8,067) (6,516) Loss per share: Basic and Diluted Loss before $ $ $ $ non-controlling (0.04) (0.06) (0.23) (0.20) interest Net loss attributable to non-controlling - - - 0.02 interest Net loss attributable $ $ $ $ to Syneron shareholders (0.04) (0.06) (0.23) (0.18) Weighted average shares outstanding: Basic and Diluted 36,064 35,508 35,826 35,437 Syneron Medical Ltd. Condensed Consolidated Balance Sheets (in thousands) September 30, December 31, 2013 2012 (*) (Unaudited) Assets Current assets: Cash and cash equivalents $ $ 30,743 66,359 Short-term bank deposits 15,010 20,520 Available-for-sale marketable 35,298 41,136 securities Trade receivable, net 56,826 50,023 Other accounts receivables and 13,353 12,563 prepaid expenses Inventories 46,116 36,862 Total current assets 197,346 227,463 Long-term assets: Severance pay fund 617 600 Long-term deposits and others 2,006 1,879 Long-term available-for-sale 29,288 7,966 marketable securities Investment in affiliated company 1,000 1,000 Property and equipment, net 7,182 6,148 Intangible assets, net 25,072 30,433 Goodwill 25,219 25,219 Deferred taxes 17,697 18,390 Total long-term assets 108,081 91,635 Total assets $ 305,427 $ 319,098 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ $ 21,126 19,926 Deferred revenues 12,594 11,986 Other accounts payable and accrued 38,158 49,889 expenses Total current liabilities 71,878 81,801 Long-term liabilities: Contingent consideration liability 7,557 6,750 Deferred revenues 3,428 3,924 Warranty accruals 705 708 Accrued severance pay 699 691 Deferred taxes 2,486 3,095 Total long-term liabilities 14,875 15,168 Stockholders' equity: 218,674 222,129 Total liabilities and stockholders' equity $ 305,427 $ 319,098 (*) 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, 2013 2012 Cash flows from operating activities: Net loss before non-controlling interest $ $ (8,167) (7,292) Adjustments to reconcile net loss to net cash used by operating activities: Non-cash items reported in discontinued operations Share-based compensation 3,305 3,365 Depreciation and amortization 7,882 7,937 Impairments of intangible assets - 780 Realized loss, changes in accrued interest and amortization 812 (337) of premium (discount) on marketable securities Revaluation of contingent liability 807 (580) Changes in operating assets and liabilities Trade receivable, net (7,068) (5,349) Inventories (10,078) (11,940) Other accounts receivables (875) 262 Deferred taxes 83 1,430 Accounts payable 1,333 (2,466) Deferred revenue 344 160 Accrued warranty accruals (131) 19 Other accrued liabilities (6,464) (5,797) Net cash used in operating activities (18,217) (19,790) Cash flows from investing activities: Purchases of property and equipment (2,930) (1,125) Proceeds from the sale or maturity of 34,178 49,869 marketable securities Purchase of marketable securities (50,510) (25,549) Proceeds from short-term bank deposits, net 5,513 2,906 Investments in affiliated company - (1,000) Net cash paid in acquisition of subsidiaries - (15,050) Other investing activities (118) (112) Net cash provided by (used in) investing (13,867) 9,939 activities Cash flows from financing activities: Short term bank credit, net - (1,082) Acquisition of shares held by (5,156) (7,200) non-controllingshareholders ofa subsidiary Proceeds from exercise of stock options 3,121 1,366 Net cash used in financing activities (2,035) (6,916) Effect of exchange rates on cash and cash (1,497) (91) equivalents Net decrease in cash and cash equivalents (35,616) (16,858) Cash and cash equivalents at beginning of 66,359 62,319 period Cash and cash equivalents at end of period $ $ 30,743 45,461 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 September September 30, 30, 30, 2013 2012 2013 2012 GAAP operating loss $ $ $ $ (1,126) (2,144) (8,362) (6,071) Stock-based 979 894 3,305 3,365 compensation Amortization of 1,672 1,986 5,369 5,870 intangible assets Other non-recurring 539 961 3,734 2,335 items Non-GAAP operating $ $ $ $ income 2,064 1,697 4,046 5,499 GAAP net Loss $ $ $ $ attributable to Syneron (1,276) (2,292) (8,067) (6,516) shareholders Stock-based 979 894 3,305 3,365 compensation Amortization of 1,672 1,986 5,369 5,870 intangible assets Other non-recurring 539 961 3,734 2,335 items Income tax (393) (538) (1,498) (1,636) adjustments Non-GAAP net Income attributable to Syneron $ $ $ $ shareholders 1,521 1,011 2,843 3,418 Income (Loss) per share: Basic GAAP net Loss per share attributable to Syneron $ $ $ $ shareholders (0.04) (0.06) (0.23) (0.18) Stock-based 0.03 0.03 0.09 0.09 compensation Amortization of 0.05 0.06 0.15 0.17 intangible assets Other non-recurring 0.01 0.03 0.10 0.07 items Income tax (0.01) (0.02) (0.04) (0.05) adjustments Non-GAAP net Income per share attributable to $ $ $ $ Syneron shareholders 0.04 0.03 0.08 0.10 Diluted GAAP net Loss attributable to Syneron $ $ $ $ shareholders (0.04) (0.06) (0.22) (0.18) Stock-based 0.03 0.02 0.09 0.09 compensation Amortization of 0.05 0.06 0.15 0.16 intangible assets Other non-recurring 0.01 0.03 0.10 0.07 items Income tax (0.01) (0.01) (0.04) (0.05) adjustments Non-GAAP net Income per share attributable to $ $ $ $ Syneron shareholders 0.04 0.03 0.08 0.10 Weighted average shares outstanding: Basic 36,064 35,508 35,826 35,437 Diluted 36,196 35,875 36,058 35,866 SOURCE Syneron Medical Ltd. Website: http://www.syneron-candela.com Contact: Hugo Goldman, Chief Financial Officer, Syneron Medical, Email: email@example.com; or Zack Kubow, The Ruth Group, 646-536-7020, Email: firstname.lastname@example.org
Syneron Reports Third Quarter 2013 Results
Press spacebar to pause and continue. Press esc to stop.