Palomar Medical Technologies, (PMTI)

Q2 2010 Earnings Call

July 29, 2010 11:30 am


Kerry McAnistan - Investor Relations Assistant

Dan Valente - Chairman

Joe Caruso - President and Chief Executive Officer

Paul Weiner - Chief Financial Officer


Dalton Chandler - Needham & Co

Anthony Vendetti – Maxim Group

Bill Plovanic - Canaccord


Excuse me everyone, welcome to Palomar Medical Technologies Second Quarter 2010 Financial Results Conference Call. Please be aware that each of your line is in a listen-only mode. At the conclusion of Palomar’s presentation, we will open the floor for questions. At that time, instructions will be given as of the procedure to follow if you would like to ask a question.

I would now like to turn the conference over to Kerry McAnistan, Investor Relations Assistant of Palomar. Miss McAniston, you may begin.

Kerry McAnistan

Good morning and welcome to the Palomar Medical Technologies second quarter 2010 conference call. Before we start this morning's call, there are a couple of items we would like to cover. This conference call is on a recorded line and you may access the webcast replay at Palomar’s website,, through Thursday, August 5.

Various remarks that we make about future expectations, plans and prospects for the company constitute forward-looking statements for purposes of the Safe Harbor provision under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Form 10-K for the year ended December 31, 2009, and the company's quarterly reports on Form 10-Q, which are on file with the SEC and available through Palomar's website.

The information in this conference call related to projections or other forward-looking statements may be relied upon subject to the previous Safe Harbor statement as of the date of this call. The information in this conference call is the property of Palomar and could not be reproduced, recorded or otherwise published without the expressed prior written consent of the company.

Joining us this morning are Dan Valente, Chairman; Joe Caruso, President and Chief Executive Officer; and Paul Weiner, Chief Financial Officer. I would now like to turn the call over to Dan.

Dan Valente

Thanks, Kelly. Thank you all for tuning into this conference call. We have made up initial -- in operating goals again for the second quarter. As you know, Palomar will be entering a new and exciting phase in achieving the company’s direct-to-consumer commercialization goal. The [indiscernible] our plans to introduce our first home product by the end of 2010. Now let’s hear from Joe Caruso, President and our CEO

Joe Caruso

Thank you Dan. As the economy remains weak, it continues to affect the aesthetic device business in the short term. However, we have seen signs of stabilization with an increase in position confidence and an increase in lead generation and demos. We have yet to see any material change in the availability of credit for our customers. Fortunately, Palomar’s products are very well positioned for these challenging times. Even in this environment, our products make economic sense to our customers due to their high reach on an investment profile and the flexibility of our platform.

We also continue to add technology in product configurations that fit into today’s economy. Our sales force has the ability to march our technology to fit not only the clinical needs of our customers but their financial constraints as well. We also benefit from a diversified business model that includes a significant portion of our revenues being derived from multiple sources. 41% of our revenues during the second quarter were generated from sources other than one time capital equipment sales.

During the second quarter, we opened an office in Tokyo, Japan. We have hired direct sales and marketing staff as well as set up people or peer capability with service technicians. This office will not only service the Japanese market but helps support our office in other Asian countries.

We continue to focus on executing our diversified strategy by addressing the professional light-based aesthetic market today, working -- driving our technology directly to the consumer market and capitalizing on the value of our extensive client portfolio. This business model has enabled us to invest more in research and development than our competitors and we will continue to do so. We experienced an increase in revenue as compared to the same period last year.

Quarterly revenue over the past four quarters has remained relatively constant indicating that we may have reached the stability point in this difficult economy. Even with this lower level of revenue, we were able to achieve good gross margins during the quarter. Average selling prices also remained stable for our products. Paul will give us more detail during his comments in just a few minutes on the financial results for the quarter.

This year at the American Academy of Dermatology meeting in Miami, we launched a new platform system called Addison. It is positioned to penetrate the ever growing skin rejuvenation market. It combines the best of our non-ablative and ablative fractional laser technologies with total facial IPL technology; this combination of technologies can be used to provide my other treatments, plutonium texture up to the more aggressive fractional ablated laser treatments for wrinkles. Physicians are able to have the multiple tools they need for an overall best in class treatment protocol depending on individual age, skin condition, potential down time, and financial constraints at even more attractive price point.

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