Syneron Medical Ltd. (ELOS) Q2 2012 Earnings Conference Call August 15, 2012 8:30 am ET Executives Zack Kubow – The Ruth Group Louis P. Scafuri – Chief Executive Officer Asaf Alperovitz – Chief Financial Officer Analysts Richard Newitter – Leerink Swann Jeremy Feffer – Cantor Fitzgerald & Co., Anthony Vendetti – Maxim Group Dalton Chandler – Needham & Company Presentation Operator
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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. Read the rest of this transcript for free on seekingalpha.com