Syneron Medical, Ltd. (ELOS)
Q1 2012 Earnings Call
May 9, 2012, 8:30 a.m. ET
Zack Kubow – The Ruth Group
Louis Scafuri – CEO
Asaf Alperovitz – CFO
Dr. Shimon Eckhouse – Chairman
Richard Newitter – Leerink Swann
Anthony Vendetti – Maxim Group
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Good day, ladies and gentlemen, and welcome to the Syneron Medical Q1 2012 Results conference call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions). As a reminder, today’s conference is being recorded.
I’d now like to turn the conference to your host, Mr. Zack Kubow of The Ruth Group. Please go ahead.
Thank you, operator. I’d like to welcome you to Syneron Medical’s first quarter 2012 conference call.
Statements on this call may be forward-looking within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 relating to the company’s future events or future performance, including statements with respect to Syneron’s expectations regarding, but not limited to, the financial forecast for 2012, the launch of new products and the maintenance of a leadership position in core and non-core markets.
Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the company’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied in any forward-looking statements. These risks may include, but are not limited to the risk factors set forth under the heading Risk Factors in Syneron’s annual report on Form 20-F, filed with the SEC. These factors are updated from time to time through the filing of reports and registration statements with the SEC. These statements are only predictions and Syneron cannot guarantee that they will, in fact, occur.
The company does not assume any obligation to update the forward-looking statements discussed in today’s conference call.
Finally, this presentation includes non-GAAP financial measures. Syneron provides reconciliation information at the end of the first quarter results press release on the Investor Relation’s page at
Speaking on the call today are Syneron’s CEO, Louis Scafuri and Syneron’s CFO, Asaf Alperovitz. Shimon Eckhouse, Syneron’s Chairman of the Board, is also on the call and will be available for questions during the Q&A portion at the conclusion of management’s prepared remarks.
Now, I’d like to turn the call over to Lou.
Thank you, Zack, and welcome to Syneron’s first quarter 2012 conference call.
The first quarter was a great start to the year for Syneron with new levels of record revenue. Underpinning these results was a strong adoption of our recent new product launches and the completion of the acquisition of Ultrashape.
Ultrashape is a key strategic move for us that provides immediate entry into the attractive and high-growth body contouring market segment for the non-invasive fat cell destruction.
Other strategic moves in the quarter include the enhancement of our technology pipeline and intellectual property portfolios through our acquisition of Transformer Medical and our equity investment in Juvenis. These major initiatives add to our existing pipeline of new products in both professional aesthetic device and emerging business unit segments.
Each initiative offers a significant opportunity to expand our product offering and drive top-line growth. We will maximize these opportunities by leveraging our worldwide infrastructure, strong channel-to-market capabilities to strive our innovative science-based aesthetics products suite to market.
I’d like to offer a brief overview of our financial results followed by a review of some of the key drivers in the PAD and EBU segments to the quarter and beyond.
Total revenue in the first quarter 2012 was $62.7 million, up 26% over the prior year; another record quarter for Syneron. This marks our seventh consecutive quarter of double-digit year-over-year sales growth.
International sales grew 24% during the first quarter. These results were mainly driven by strong performance in ENMEA and Japan and successful continued rollout of our eTwo and eLace products.
North American sales rose 30% year over year. Of major significance in North America results is the launch of the GentleMax Pro during the quarter and market traction from our other recently-launched products.
Recurring revenue, which includes service and consumables, were up 4% representing approximately 31% of total PAD sales.
In the PAD segment, revenue increased 21% and non-GAAP operating income was $4.6 million, or 8.1% of PAD sales.
In EBU, revenue rose 111%. The EBU continued to generate an operating loss for the quarter. In addition, EBU sales were negatively impacted by the previously-announced voluntary field action we had [inaudible] the Lifetouch laser systems in Europe, which resulted in virtually no revenue for the product in the quarter.
We regained CE preformity to the Lifetouch system and remain on track to fully address the issue by the end of the third quarter of this year.
Excluding the Lifetouch business, EBU sales from Syneron Beauty Products and elure increased over 250% over the prior year, demonstrating the continued high-growth trajectory for this segment.
On a consolidated basis, we achieved non-GAAP operating income of over $700,000 and non-GAAP earnings of $0.02 per share. This is our sixth consecutive quarter of non-GAAP profitability.
During first quarter, we completed several important operational milestones that will contribute to both our near-term and long-term success.
In February, we acquired Ultrashape, paving the way for our entry into non-invasive fat cell destruction and body sculpting market. Since the closing, we’ve been working closely with our new colleagues from Ultrashape to integrate the business with Syneron.