Cutera CEO Discusses Q3 2010 Results – Earnings Call Transcript
Cutera Inc. (
)
Q3 2010 Earnings Call Transcript
November 1, 2010 5:00 pm ET
Executives
Kevin Connors – President & CEO
Ron Santilli – EVP & CFO
Analysts
Anthony Vendetti – Maxim Group
Morris Ajzenman – Griffin Securities
Presentation
Operator
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Cutera Inc. Q3 2009 Earnings Call Transcript
By now everyone should have access to the third quarter 2010 earnings release, which went out today at approximately 4.00 pm. Eastern Time. The release is available on the Investor Relations portion of Cutera’s Web site at cutera.com and with its Form 8-K filed today with the SEC and available on its Web site at sec.gov.
Before we begin, Cutera would like to remind everyone that these prepared remarks contain forward-looking statements, including statements concerning domestic and international growth opportunities and strategies; future spending, expense management and execution on various aspects of our operations and business; expectations for increasing revenue, generating cash and improving profitability; the development and commercialization of existing and planned new products; potential revenue growth from strategic alliances and planned new products; and obtaining regulatory clearances. Also, management may make additional forward-looking statements in response to your questions.
These forward-looking statements do not guarantee future performance and therefore you should not rely on them in making an investment decision without considering the risks associated with such statements.
Cutera also cautions you to not place undue reliance on forward-looking statements, which speak only as of the date they were made. Cutera undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date they were made or to reflect the occurrence of unanticipated events.
For a complete list of risk factors that could cause Cutera’s actual results to differ materially from the forward-looking statements, please refer to the section entitled Risk Factors in our most recent 10-Q filed today on November 1, 2010, with the Securities and Exchange Commission.
With that, I’ll turn the call over to company’s President and Chief Executive Officer, Mr. Kevin Connors.
Kevin Connors
Thank you, John. Good afternoon, everyone, and thanks for joining us today to discuss Cutera’s results for third quarter ended September 30, 2010. On today’s call, I will provide an overview of our results and then Ron Santilli, our CFO will provide additional details on our operating financial results. Finally, I will provide some closing comments and open the call for your questions.
Our revenue for the third quarter of 2010 was $12.1 million or approximately flat compared to $12.2 million reported in the third quarter 2009. Our revenue for the nine-month period in 2010 was also approximately flat when compared to same period in 2009. We believe this may indicate that our revenue decline has stabilized and we are hopeful that new products will have a positive impact on our domestic, international results.
In the third quarter, our international revenue grew by 7% compared to third quarter of 2009. This growth was primarily sourced from Japan, with strong contributions from Canada, France, and some international distributors.
Japanese market represents a strategic long-term growth opportunity for us and we are pleased that this market is becoming a larger contributor to our overall revenue.
During the quarter, revenue from the Japanese market was strong, with growth sourced from Products and Upgrades, a solid recurring revenue from our Service and Titan refill business and strong incremental revenue from the Obagi cosmeceutical and radius filler products.
Our U.S. revenue decreased by 13% in the third quarter 2010 compared to third quarter 2009 and represents 35% of our total revenue.
As we had mentioned on previous calls this year, we are looking to improve sales management focus and coordinate our marketing efforts with demands of the U.S. market.
We are continuing to target the core market segments of dermatologists, plastic surgeons, as well as other established medical offices because we believe they offer the best growth opportunities in the current environment.
During the third quarter 2010, roughly 50% of our North American orders came from core physicians and podiatrists. The podiatry specialty is new target market for us and an opportunity to sell our Genesis Plus and other products.
Titan annuity for the third quarter 2010 was $648,000, a decrease of $640,000 from the same quarter in the prior year. This decrease was primarily due to our voluntary recall of certain Titan XL hand pieces.
We provided our eligible customers with a fully refilled Titan XL hand piece, which resulted in lower than normal Titan refill revenue. We anticipate this annuity level to return to previous levels after the impact of the voluntary recall is absorbed.
Adjusting for the decrease in revenue associated with Titan recall, our total revenue would’ve been approximately $12.7 million, an increase of 5% compared to third quarter of 2009. And then into our new cosmeceutical filler sales, the third quarter 2010 sold approximately $1.1 million of these products.
As a reminder, Japan restarted distributing Obagi physician dispensed cosmeceutical products from February 2010 and has been distributing BioForm’s Radiesse products since late 2008. These products augment Cutera laser and light-based products and we are pleased with the initial revenue and profit contributions as well as the cross-selling opportunities these products provide.
Currently, the cosmeceutical fillers and Cutera laser light-based installed base overlaps approximately 10%. This is providing us with a unique opportunity to cross-sell cosmeceutical fillers with our light-based installed base of customers with a great opportunity for us to cross-sell light-based equipment and the cosmeceutical filler installed base to new customers.
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