Staar China sales miss

 

• Net Sales: $313.9 million for fiscal 2024, a decline of 3% compared to $322.4 million in fiscal 2023.

• ICL Sales Outside China: $152 million, with growth of 17% in Q4 and 13% for fiscal 2024.

• ICL Sales in China: $161 million for fiscal 2024, down 13% year over year.

• Net Loss: $20.2 million for fiscal 2024 compared to net income of $21.3 million in fiscal 2023.

• Gross Margin: 76.3% for fiscal 2024, down 210 basis points.

• Cash Equivalents and Investments: $230.5 million at the end of fiscal 2024.

• Accounts Receivable: Approximately $78 million at December 27, 2024, expected to be fully collected in the first half of 2025.

• Adjusted EBITDA Loss: Expected to be approximately $30 million per quarter in the first half of 2025.

• Capital Expenditures: Expected to be approximately $15 million for fiscal 2025.

• .

Positive Points

• Staar Surgical Co (NASDAQ:STAA) reported strong growth in ICL sales outside of China, with a 17% increase in the fourth quarter and 13% for the full year 2024.

• The company achieved a 22% growth in ICL sales in the Americas during the fourth quarter, outpacing the overall refractive market decline.

• Staar Surgical Co (NASDAQ:STAA) saw a 9% growth in ICL sales in EMEA and a 20% growth in APAC (excluding China) in the fourth quarter.

• The company has a strong balance sheet with $230.5 million in cash equivalents and no debt, providing resilience during economic challenges.

• Staar Surgical Co (NASDAQ:STAA) continues to invest in commercial strategies and product pipeline, particularly in markets with potential for double-digit growth.

Negative Points

• The company faced significant challenges in China, with a 13% decline in ICL sales for the full year 2024 due to weak consumer confidence and economic conditions.

• A $27.5 million order to China was shipped but not recognized as revenue due to extended payment terms, impacting fiscal 2024 results.

• Staar Surgical Co (NASDAQ:STAA) anticipates minimal China ICL sales in the first half of 2025 due to elevated inventory levels.

• The company reported a net loss of $20.2 million in fiscal 2024, compared to a net income of $21.3 million in fiscal 2023.

• Gross margin decreased in the fourth quarter due to unrecognized revenue and costs related to manufacturing expansion and temporary facility idling.

Q & A Highlights

Q: Can you explain the significant decline in global units and the impact of pricing during the quarter? A: The decline is primarily due to the fall in China sales, which significantly impacted overall revenue and unit sales. (Patrick Williams, CFO)

Q: What are the assumptions behind the 2025 guidance, especially regarding the expected slowdown in refractive volumes? A: The guidance assumes a challenging year with a 5-10% decline in the Americas' refractive market, flat growth in EMEA and APAC excluding China, and a potential rebound in China in the second half, influenced by government stimulus. (Thomas Frinzi, CEO; Patrick Williams, CFO)

Q: How did the China inventory issues arise, and what measures are being taken to prevent future risks? A: Elevated inventory levels were identified as we exited 2024, leading to reduced shipments in the first half of 2025. The company is focusing on sell-through rather than sell-in to manage inventory levels effectively. (Patrick Williams, CFO)

Q: What is the impact of the new competitor, Ibright, in China, and how does it affect your guidance? A: Ibright's entry is not seen as a major factor in the distributor's actions. The competition validates the market opportunity, but STAAR's established position and relationships in China are expected to mitigate competitive impacts. (Thomas Frinzi, CEO)

Q: How are you addressing the challenges in China, and what is the outlook for the second half of 2025? A: The focus is on managing sell-through and reducing inventory levels. The outlook for the second half depends on consumer confidence and potential government stimulus, with expectations for a rebound in demand. (Thomas Frinzi, CEO; Patrick Williams, CFO)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

https://finance.yahoo.com/news/staar-surgical-co-staa-q4-071303461.html