Syneron Medical Ltd. ( ELOS) Q4 2011 Earnings Call February 9, 2012 8:30 am ET Executives Dr. Shimon Eckhouse – Chairman Louis Scafuri – Chief Executive Officer Asaf Alperovitz – Chief Financial Officer Analysts Anthony Vendetti – Maxim Group Dalton Chandler – Needham & Co. Jeremy Feffer – Cantor Fitzgerald Richard Newitter – Leerink Swann Presentation Operator
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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 fourth quarter results press release on the Investor Relations page at www.syneron.com. Speaking on the call today are Syneron’s CEO, Lou 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 Scafuri Thank you, Zack, and welcome to Syneron’s Fourth Quarter and Year-End 2011 conference call. The fourth quarter capped off a year of significant accomplishments and growth for the Company. Total revenue grew 20.5% for the year, up to 228 million driven by the strength of our worldwide infrastructure and channel to market capabilities, our strong technology platform, and our unwavering focus on our customers and the patients they serve. In the past segment, we made several important new product introductions and further strengthened our relationships with our customers and industry key opinion leaders. Yesterday we announced the acquisition of Ultrashape, which further strengthens our PAD segment product portfolio and provides immediate entry into the large and growing market for non-invasive body sculpting.
Ultrashape has developed a best-in-class focused ultrasound system that safely and effectively destroys fat cells. Their technology is highly synergistic with our body contouring products and we believe there is a significant growth opportunity to distribute Ultrashape’s products through our global sales and distribution channels.In the (inaudible) segment, we formed Syneron Beauty to focus on driving adoption of our home use product and began rolling out elure to key aesthetic physicians in the United States. Overall, we believe we are well positioned to expand our leadership position in the aesthetic industry. Now let me turn to a review of our fourth quarter financial results and our operational progress, followed by a detailed commentary on the Ultrashape acquisition. Total revenue in the fourth quarter 2011 was a record $61 million, up 14% over the prior year. This represents our sixth consecutive quarter of double-digit year-over-year sales growth. International markets grew 14% during the quarter driven primarily by strong performance in Europe, Middle East and Africa, and strong sales of our recently introduced e2 and eLase products. North American sales grew 14.5% year-over-year with another quarter of strong sales of the GentleLASE Pro. Recurring revenue, which includes service and consumable revenue, grew 8% and represented approximately 29% of the total PAD sales. While this represents solid consistent financial growth, our top line was affected by several factors. During the quarter, we had a temporary reduction in consumable and service revenue to one of our largest North American customers which underwent a restructuring. This customer has now completed its restructuring and we expect sales to this customer in the first quarter of 2012 to return to historical levels. In the fourth quarter, we went direct into major markets in the rapidly growing Chinese market and also in the U.K. We’re now in the process of assuming full control of our joint venture in China to capitalize on our recent approval of Syneron products and on the significant and growing demand for aesthetic procedures in the Chinese market. In addition, in December we began commercial manufacturing of the GentleMAX Pro, our next generation multiple wavelength laser workstation that provides best-in-class treatments for permanent hair reduction and treatment of vascular and pigmented lesions. We’ve received very positive feedback on the new GentleMAX Pro, which will be launched during the first quarter of 2012. Our customers are eagerly awaiting its launch and some of them may have delayed their fourth quarter purchases in anticipation of ordering GentleMAX Pro once launched. Our continued top line growth supports our belief that in 2012 we will present strong growth for both our PAD and EBU segments. Read the rest of this transcript for free on seekingalpha.com