Syneron Medical Ltd. (ELOS)
Q2 2012 Earnings Conference Call
August 15, 2012 8:30 am ET
Zack Kubow – The Ruth Group
Louis P. Scafuri – Chief Executive Officer
Asaf Alperovitz – Chief Financial Officer
Richard Newitter – Leerink Swann
Jeremy Feffer – Cantor Fitzgerald & Co.,
Anthony Vendetti – Maxim Group
Dalton Chandler – Needham & Company
Previous Statements by ELOS
» Syneron Medical's CEO Hosts Investor Meeting Conference (Transcript)
» Syneron Medical's CEO Discusses Q1 2012 Results - Earnings Call Transcript
» Syneron Medical's Management Presents at the Lazard Capital Markets 8th Annual Healthcare Conference (Transcript)
» Syneron Medical's CEO Discusses Q4 2011 Results - Earnings Call Transcript
Good day, ladies and gentlemen, and welcome to the Syneron Medical’s second quarter 2012 earnings 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, this conference is being recorded.
I would now like to turn the call over to your host, Zack Kubow with The Ruth Group. You may begin.
Thank you, operator. I would like to welcome you to Syneron Medical’s second 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 Securities and Exchange Commission. 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 second quarter results press release on the Investor Relation’s page at www.syneron.com.
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.
Louis P. Scafuri
Thank you Zack, and welcome to Syneron’s second quarter 2012 conference call. We achieved strong financial results in the second quarter, headline by another quarter with record revenue. This was driven by our recent new product launches and the strength of Syneron’s global channel to market capabilities. Clearly our commitments provide a broad range of innovative clinically validated aesthetic products that meet the needs of our customers, it allowing us to win in the marketplace.
During the quarter, we also benefited from better leverage of our fixed cost and infrastructure, particularly in the PAD segment, which drove improved operating margin, profitability for the consolidated business.
I’ll begin today’s call with a brief overview of our financial results followed by a review of the key drivers in the PAD and EBU segments for the second quarter and beyond.
Total revenue in the second quarter 2012 was $68.1 million, up 12% over the prior year; this marks our eighth consecutive quarter of double-digit year-over-year sales growth and our third consecutive quarter of new record revenue level. International sales grew 16% during the second quarter, mainly driven by the strong performance in ENMEA and Asia with eTwo and eLase products continue to perform well.
North American sales were up 5% year-over-year, which was attributable to the temporary delay in obtaining regulatory clearance for the highly anticipated release of the elos Plus Aesthetic Work Station. We obtained a regulatory approval to this important product late in the second quarter and expect to record strong sales of the elos Plus in North America this quarter.
Recurring revenue, which includes service and consumables, was up 13% representing approximately 32% of the total PAD sales.
In the PAD segment, revenue increased 12% and operating income was $7 million, or a 11.4% of PAD sales.
In EBU, revenue rose 13% driven by strong growth in Syneron Beauty and elure, which was partially offset by the voluntary field action in the LiteTouch Dental Laser business in Europe.
Excluding the Dental business, which recorded minimal revenue in the quarter, EBU revenue was up 40% year-over-year. We remain on track to complete the dental voluntary replacement by the end of the year. Overall the EBU continue to generate an operating loss for the quarter as we continue to invest in this high growth segment of the business.
On a consolidated basis, we achieved non-GAAP operating income of $3.1 million and non-GAAP EPS of $0.05 per share. This is our seventh consecutive quarter of non-GAAP profitability.
During the second quarter, we continue to execute on our growth strategy including new product launches integrating the Ultrashape business, as well as initiating our Ultrashape FDA clinical trial.
In June, we launch the elos Plus Work Station into the European and Asian market at the 9th Annual Spring Symposium of the EADV meeting in Verona, Italy. The elos Plus system utilizes the Syneron proprietary elos technology, which combines optical energy and bipolar radiofrequency energy. The elos Plus has the ability to deliver a full range of aesthetic treatments and is equipped with the most advanced features for optimum, speed, safety and efficacy. We have received positive feedback on the comprehensive and versatile treatment capabilities of the system. It also features our flagships sublative, sublime and multi-treatment applicators which offer users and patients, alike superior results and treatment experiences.