Cutera Reports First Quarter 2014 Results

BRISBANE, Calif., May 8, 2014 (GLOBE NEWSWIRE) -- Cutera, Inc. (Nasdaq:CUTR), a leading provider of laser and other energy-based aesthetic systems for practitioners worldwide, today reported financial results for the first quarter ended March 31, 2014.

Key highlights for the first quarter of 2014 were as follows:

  • Revenue grew 1% to $16.2 million, compared to the first quarter of 2013.
  • Gross margin improved slightly to 55%, compared to 54% in the first quarter of 2013.
  • Net loss was $3.6 million, or $0.26 per diluted share. Non-cash expenses for stock-based compensation, depreciable and intangible amortization totaled $1.0 million for the quarter. This loss reflects ramp-up expenses related to the expanded North American sales force and other commercial initiatives.
  • Showcased two new products, Excel HR and Enlighten. Commercialization plans for these products remain on schedule.
  • Cash and marketable securities position remains strong at $83.8 million.

Kevin Connors, President and CEO of Cutera, stated, "Our international revenue increased by 7% led primarily by the growth in revenue from our global distributor network and Japan, despite the continued unfavorable foreign exchange pressure. However, our US revenue declined by 7% as we continued to restructure and expand our sales force.

"We have made significant progress in our sales force expansion initiatives and expect to complete our hiring in North America well ahead of schedule. As we have recently hired a record number of field sales people in North America, and it takes them time to ramp-up, we expect the full productivity impact to be experienced in the second half of 2014. We plan to continue investments into our commercial channels to capture greater market share with our expanded suite of product offerings.

"Our product development efforts remain on schedule to commence shipments in the second quarter of 2014 of Excel-HR, our dual wave length premium hair removal product. We expect shipments of our Enlighten product for the removal of benign pigment lesions and tattoos, to commence in the second half of 2014. Enlighten has received CE Mark approval and is currently pending 510(k) clearance by the FDA. We expect to commence commercial shipments of Enlighten in the second half of 2014 (with U.S. shipments subject to FDA clearance). We are looking forward to the launch of these two products and the impact they are expected to have on revenue for the second half of 2014.

"We believe the market is healthy for aesthetic light and energy based systems and we believe that our broad range of products, recently expanded sales force, and the expected launch of our new products, strategically positions us to capture a larger share of the market."

Conference Call

The conference call to discuss these results is scheduled to begin at 2:00 p.m. PT (5:00 p.m. ET) on May 8, 2014. Participating in the call will be Kevin Connors, President and Chief Executive Officer, and Ron Santilli, Executive Vice President and Chief Financial Officer. The call will be broadcast live over the Internet hosted at the Investor Relations section of Cutera's website at www.cutera.com, and will be archived online within one hour of its completion through 8:59 p.m. PT (11:59 p.m. ET) on May 22, 2014. In addition, you may call 1-877-705-6003 to listen to the live broadcast.

About Cutera, Inc.

Brisbane, California-based Cutera is a leading provider of laser and other energy-based aesthetic systems for practitioners worldwide. Since 1998, Cutera has been developing innovative, easy-to-use products that enable physicians and other qualified practitioners to offer safe and effective aesthetic treatments to their patients. For more information, call 1-888-4CUTERA or visit www.cutera.com.

This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Specifically, statements concerning Cutera's ability to increase revenue, improve cash generation from operations, improve gross and net operating margins, develop and commercialize existing and new products and applications, expected launch date of planned new products, ability to grow the Company's market share, realize benefits from additional investment and the expansion of its sales force and statements regarding long-term prospects and opportunities in the laser and other energy-based equipment aesthetic market are forward-looking statements within the meaning of the Safe Harbor. Forward-looking statements are based on management's current, preliminary expectations and are subject to risks and uncertainties, which may cause Cutera's actual results to differ materially from the statements contained herein. Potential risks and uncertainties that could affect Cutera's business and cause its financial results to differ materially from those contained in the forward-looking statements include those related to the Company's efforts to improve sales productivity, hire and retain qualified sales representatives, improve revenue growth and profitability through leveraging operating expenses; the Company's ability to successfully develop and launch new products and applications and market them to both its installed base and new customers; the length of the sales cycle process; unforeseen events and circumstances relating to the Company's operations; government regulatory actions; and those other factors described in the section entitled, "Risk Factors" in its most recent Form 10-Q as filed with the Securities and Exchange Commission on May 8, 2014. Undue reliance should not be placed on forward-looking statements, which speak only as of the date they are 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. Cutera's financial performance for the first quarter ended March 31, 2014, as discussed in this release, is preliminary and unaudited, and subject to adjustment.

CUTERA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
March 31, December 31, March 31,
2014 2013 2013
Assets
Current assets:
Cash and cash equivalents $ 10,743 $ 16,242 $ 17,272
Marketable investments 73,079 66,831 70,821
Accounts receivable, net 6,588 9,679 6,814
Inventories 9,640 9,006 11,091
Deferred tax asset 31 31 39
Other current assets and prepaid expenses 2,404 1,507 1,511
Total current assets 102,485 103,296 107,548
Property and equipment, net 1,358 1,362 1,312
Deferred tax asset, net of current portion 337 329 518
Intangibles, net 1,825 2,019 2,392
Goodwill 1,339 1,339 1,339
Other long-term assets 21 324 362
Total assets $ 107,365 $ 108,669 $ 113,471
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 2,483 $ 1,820 $ 2,161
Accrued liabilities 7,805 9,328 7,087
Deferred revenue 8,058 7,494 6,766
Total current liabilities 18,346 18,642 16,014
Deferred revenue, net of current portion 4,324 4,340 2,538
Income tax liability 118 108 320
Other long-term liabilities 1,200 1,314 1,449
Total liabilities 23,988 24,404 20,321
Stockholders' equity:
Common stock 14 14 14
Additional paid-in capital 101,541 98,820 105,089
Accumulated deficit (18,230) (14,620) (12,036)
Accumulated other comprehensive income 52 51 83
Total stockholders' equity 83,377 84,265 93,150
Total liabilities and stockholders' equity $ 107,365 $ 108,669 $ 113,471
CUTERA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended
March 31, December 31, March 31,
2014 2013 2013
Net revenue $ 16,189 $ 22,239 $ 15,967
Cost of revenue 7,303 9,202 7,417
Gross profit 8,886 13,037 8,550
Operating expenses:
Sales and marketing 7,331 7,804 6,456
Research and development 2,644 2,438 2,121
General and administrative 2,564 3,135 2,289
Total operating expenses 12,539 13,377 10,866
Loss from operations (3,653) (340) (2,316)
Interest and other income, net 80 105 135
Loss before income taxes (3,573) (235) (2,181)
Provision (benefit) for income taxes 37 43 (18)
Net loss $ (3,610) $ (278) $ (2,163)
Net loss per share:
Basic $ (0.26) $ (0.02) $ (0.15)
Diluted $ (0.26) $ (0.02) $ (0.15)
Weighted-average number of shares used in per share calculations:
Basic 14,021 14,016 14,408
Diluted 14,021 14,016 14,408
CUTERA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended
March 31, December 31, March 31,
2014 2013 2013
Cash flows from operating activities:
Net loss $ (3,610) $ (278) $ (2,163)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Stock-based compensation 625 740 820
Depreciation and amortization 331 331 320
Other 97 200 34
Changes in assets and liabilities:
Accounts receivable 3,091 (2,204) 2,027
Inventories (634) 1,415 23
Other current assets and prepaid expenses (792) 133 60
Other long-term assets 303 24 35
Accounts payable 663 (280) 54
Accrued liabilities (1,534) 1,506 (2,504)
Other long-term liabilities (70) (55) (56)
Deferred revenue 548 1,244 584
Income tax liability 10 39 (92)
Net cash provided by (used in) operating activities (972) 2,815 (858)
Cash flows from investing activities:
Acquisition of property, equipment and software (239) (24) (174)
Disposal of property and equipment 63
Acquisition of intangible (155)
Proceeds from sales of marketable investments 3,200 3,470 500
Proceeds from maturities of marketable investments 7,240 9,715 11,050
Purchase of marketable investments (16,791) (12,946) (20,473)
Net cash provided by (used in) investing activities (6,590) 123 (9,097)
Cash flows from financing activities:
Repurchases of common stock (2,408)
Proceeds from exercise of stock options and employee stock purchase plan 2,096 589 3,717
Payments on capital lease obligations (33) (37) (36)
Net cash provided by (used in) financing activities 2,063 (1,856) 3,681
Net increase (decrease) in cash and cash equivalents (5,499) 1,082 (6,274)
Cash and cash equivalents at beginning of period 16,242 15,160 23,546
Cash and cash equivalents at end of period $ 10,743 $ 16,242 $ 17,272
CUTERA, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(in thousands, except percentage data)
(unaudited)
Three Months Ended % Change
Q1 Q4 Q1 Q1 '14 Vs. Q1 '14 Vs
2014 2013 2013 Q4 '13 Q1 '13
Revenue By Geography:
United States $ 6,017 $ 10,338 $ 6,488 -42% -7%
International 10,172 11,901 9,479 -15% +7%
$ 16,189 $ 22,239 $ 15,967 -27% +1%
International as a percentage of total revenue 63% 54% 59%
Revenue By Product Category:
Products and upgrades $ 9,484 $ 15,703 $ 9,197 -40% +3%
Service 4,437 4,390 4,444 +1% -0%
Titan and truSculpt hand piece refills 1,041 1,044 1,190 -0% -13%
Dermal fillers and cosmeceuticals 1,227 1,102 1,136 +11% +8%
$ 16,189 $ 22,239 $ 15,967 -27% +1%
Three Months Ended
Q1 Q4 Q1
2014 2013 2013
Pre-tax Stock-Based Compensation Expense:
Cost of revenue $ 132 $ 154 $ 159
Sales and marketing 71 165 199
Research and development 124 104 101
General and administrative 298 317 361
$ 625 $ 740 $ 820

CONTACT: Cutera, Inc. Ron Santilli Chief Financial Officer 415-657-5500 Investor Relations John Mills Integrated Corporate Relations, Inc. 310-954-1105 john.mills@icrinc.comSource:Cutera, Inc.