Start Time: 16:30
End Time: 18:01
Biolase, Inc. (BIOL)
Q2 2012 Earnings Call
August 8, 2012 04:30 p.m. ET
Matt Clawson – IR, Allen & Caron
Federico Pignatelli – Chairman & CEO
Fred Furry – COO & CFO
Dalton Chandler – Needham & Co
Greg Garner – Singular Research
Chris Sassouni – Eagle Asset Management
Lenny Brecken – Brecken Capital
Good day, ladies and gentlemen, and thank you for standing by. Welcome to the BIOLASE 2012 Second Quarter and Six Months Results Conference Call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for question. (Operator Instructions) This conference is being recorded today, Wednesday August 8, 2012.
And I’d now like to turn the conference over to our host Mr. Matt Clawson of Allen & Caron. Please go ahead.
Thank you, Kelly. Good afternoon everyone and thank you all for joining us today for BIOLASE’s 2012 second quarter and six months results conference call. You should have all received a copy by e-mail this morning of the release announcing the company’s results for the second quarter and six months ended June 30, 2012.
Before we get started, I’ve been asked to make the following statements. The words and phrases can be, may affect, may depend, believe, estimate, project and similar words and phrases are intended to identify forward-looking statements. Forward-looking statements are subject to various known and unknown risks and uncertainties and BIOLASE cautions you that any forward-looking information provided is not a guarantee of future performance. Actual results could differ materially from these anticipated in the forward-looking statements due to a number of factors, some of which are beyond BIOLASE’s control and may be discussed in BIOLASE’s filings with the Securities and Exchange Commission. All such forward-looking statements are current only as of the date on which statements are made.
BIOLASE does not undertake any obligation to publicly update any forward-looking statements to reflect events or circumstances after the date on which the statement was made or reflect current unanticipated events.
Also, as a quick reminder, a replay of the call will be available on the BIOLASE website at www.biolase.com. The company’s 2012 second quarter and six months results can also be found on the company’s quarterly report on Form 10-Q, which the company will file with the Securities and Exchange Commission tomorrow.
With me on the call today from BIOLASE are Federico Pignatelli, Chairman and Chief Executive Officer; and Fred Furry, Chief Operating Officer and Chief Financial Officer. Federico and Fred will review the prepared remarks, including an update on the business, operational performance and outlook. There will be a question-and-answer session at the end of the call followed by a few closing remarks. During our question-and-answer session, we will limit each call to one question and a follow-up question as time permits.
Good afternoon, and thank you, Matt. I want to welcome all of you to our second quarter six months results conference call. Thank you for participating. Today, we will review the progress and various accomplishments achieved by BIOLASE during the second quarter of 2012, as well as our comments on our progress in key initiatives that will impact the coming periods.
First, let me briefly recap the 2012 second quarter. Net revenues in the second quarter were $12.2 million, compared to $12.1 million in the prior quarter period. However, the 2012 second quarter was negatively impacted by the accounting consequences for this year’s repurchase of Waterlase MD Turbo laser systems from Henry Schein, our former exclusive global distributor in connection with the 2012 termination agreement. These will be discussed later by our CFO, Fred Furry. But both revenues and net cost of revenues were reduced by $1.1 million as a result of the transaction. There was no impact to gross profit where accounting for the transaction certainly impacted our net revenues and cloud the progress we made this quarter.
Our gross revenue from operations were actually $13.3 million before the impact of this transaction, which was within our range of guidance for the quarter of $13 million to $14 million. Our overall revenues were also affected by the lack of FDA clearance for our newly launched EPIC 10 and the result is still remarkable because of the growth of our Waterlase product line.
Our gross revenues from operations of $13.3 million for the 2012 second quarter excluding the effects of the Schein transaction represents an increase of $3.3 million or 33% compared to non-GAAP revenues of $10 million for the 2011 second quarter after excluding the effects of the prepaid purchase order from Schein in that quarter.
To give you more insight into the growth of our core business, let’s look at our core product line, the Waterlase system. Excluding the inventory repurchase sales, direct sales of Waterlase systems during the 2012 second quarter totaled $8.2 million. This is an increase of 48% compared to $5.6 million in the second quarter ended June 30, 2011 when excluding sales of $2.1 million to Schein to satisfy one-time prepaid purchase order during the 2011 second quarter.
Excluding the inventory of repurchase for the second quarter of 2012, sales of Waterlase system totaled $16.2 million for the first six months of 2012, an increase of $6.3 million or 63% over the same period of 2011, excluding a $2.1 million in sales of Waterlase iPlus system to Schein to satisfy one-time prepaid purchase orders in the first six months of 2011. We believe that these more accurately illustrate the growth of our core business. Again Fred will expand on this further when we discuss the financial details.
Now, I would like to walk through some of the operational and strategic highlights from the period, which we expect to have a positive impact on the company’s performance in 2012 and beyond. The second quarter was again a time of extensive activity internally and externally. We made several important operational moves that were all strategically designed to do two things. First, to become the dental industry’s top provider of high-end technology solutions with our patented laser technology as the central core of the business, and, second, to continue our efforts in becoming a true multi-product, multiplatform company.
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