Cutera Management Discusses Q2 2012 Results - Earnings Call Transcript

Cutera (CUTR)

Q2 2012 Earnings Call

August 06, 2012 5:00 pm ET

Executives

John Mills - Senior Managing Director

Kevin P. Connors - Chief Executive Officer, President and Director

Ronald J. Santilli - Chief Financial Officer, Principal Accounting Officer and Executive Vice President of Finance & Administration

Analysts

Dalton L. Chandler - Needham & Company, LLC, Research Division

Morris Ajzenman - Griffin Securities, Inc., Research Division

Michael A. Dinerman - Piper Jaffray Companies, Research Division

Anthony V. Vendetti - Maxim Group LLC, Research Division

Larry Haimovitch - Haimovitch Medical Technology Consultants

David Levy

Presentation

Operator

Greetings, and welcome to the Cutera, Inc. Second Quarter 2012 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, John Mills of ICR. Thank you, Mr. Mills. You may begin.

John Mills

Thank you. By now, everyone should have access to the second quarter 2012 earnings release, which went out at approximately 4:00 p.m. Eastern time today. The release is available on the Investor Relations portion of Cutera's website at cutera.com, and with its Form 8-K filed today with the SEC and available its website 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 Cutera's operations and business; expectations for increasing revenue, generating cash, improving gross margins and profitability; the development and commercialization of existing and planned new products; potential revenue growth from strategic alliances and planned new products; and financial performance and integration risk associated with the Iridex aesthetic business unit acquisition.

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 risk 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 the company's most recent 10-Q, filed on August 6, 2012, with the Securities and Exchange Commission. And with that, it's my pleasure to turn the call over to company's President and Chief Executive Officer, Mr. Kevin Connors.

Kevin P. Connors

Thank you, John. Good afternoon, everyone. Thanks for joining us today to discuss Cutera's results for the second quarter ended June 30, 2012.

On today's call, I'll provide an overview of our company performance, and then Ron Santilli, our CFO, will provide an overview of our financial results. Finally, I'll provide some closing comments and open the call to your questions.

We are encouraged with our 32% second quarter 2012 revenue growth compared to the second quarter 2011 with our U.S. revenue increasing by 38% and international revenue improving by 28%. The U.S. market for prosthetic systems continues to improve, and we believe our North American sales organization is well-positioned to continue to generate improved record growth for the future.

Our international revenue growth was driven primarily from Canada, France and many countries in our Asia-Pacific region. From our product perspective, a significant amount of our growth this quarter was driven from continued increase and shipments of our Excel V product. Excel V is our premier vascular product that continues to gain traction in the marketplace. In addition, demand for our flagship Xeo platform also continues to remain strong and it contributed to the revenue growth this quarter.

Our Customer Service business experienced significant growth this quarter and Ron will discuss this in more detail shortly. We have expanded our North American sales team from 26 territories 1 year ago to 36 territories today. We have 9 U.S. territories dedicated to podiatry, the podiatry market, and to focus on the sales of our GenesisPlus. We will continue to monitor the size of this opportunity, and we will expand our territory size as our sales performance supports it.

Turning to research and development. Revenue shipments of our truSculpt product designed for the fast-growing non-invasive body contouring market commences in the third quarter 2012. The truSculpt radio frequency technology is the latest breakthrough in non-invasive body contouring that preferentially heats and destroys subcutaneous adipose tissue or fat sales without damage overlying skin. And one or more treatments, stubborn areas of fat are naturally eliminated to sculpt body contours with no downtime. This product received a CE Mark approval for fat reduction and body sculpting in January 2012, and has a 510(k) clearance for deep tissue heating and the treatment of cellulite for certain specific indications.

We are pleased with the initial market acceptance of this product and believe it will play an important role in our revenue growth in the future. Now I'd like to turn the call over to Ron to discuss our financials in more detail.

Ronald J. Santilli

Thanks, Kevin, and thanks to all of you for joining us today on our second quarter 2012 conference call. Second quarter 2012 revenue was $19.6 million or 32% higher than the second quarter of 2011. Net loss for the second quarter 2012 was $1.5 million or $0.10 per diluted share. Adjusting our $1.5 million loss for noncash, stock-based compensation of $787,000 and depreciation and amortization of $425,000, our net loss would have been $254,000 or $0.02 per diluted share.

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