10-Q 1 staa-10q_20220701.htm 10-Q staa-10q_20220701.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:    July 1, 2022

Or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number: 0-11634

 

STAAR SURGICAL COMPANY

(Exact Name of Registrant as Specified in its Charter)

 

Delaware

95-3797439

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

25651 Atlantic Ocean Drive
Lake Forest, California

 

92630

(Address of Principal Executive Offices)

(Zip Code)

 

(626303-7902

(Registrant’s Telephone Number, Including Area Code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common

STAA

NASDAQ

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes      No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

Emerging growth company

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes      No 

The registrant has 48,038,340 shares of common stock, par value $0.01 per share, issued and outstanding as of August 5, 2022.

 


 

STAAR SURGICAL COMPANY

 

INDEX

 

 

 

 

PAGE

NUMBER

 

 

 

 

PART I – FINANCIAL INFORMATION

 

1

 

 

 

 

ITEM 1

FINANCIAL STATEMENTS

 

1

 

 

 

 

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

16

 

 

 

 

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

21

 

 

 

 

ITEM 4.

CONTROLS AND PROCEDURES

 

21

 

 

 

 

PART II – OTHER INFORMATION

 

21

 

 

 

 

ITEM 1.

LEGAL PROCEEDINGS

 

21

 

 

 

 

ITEM 1A.

RISK FACTORS

 

22

 

 

 

 

ITEM 4.

MINE SAFETY DISCLOSURES

 

22

 

 

 

 

ITEM 5.

OTHER INFORMATION

 

22

 

 

 

 

ITEM 6.

EXHIBITS

 

22

 

 

 


 

PART I – FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

STAAR SURGICAL COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value amounts)

(Unaudited)

 

 

 

July 1, 2022

 

 

December 31, 2021

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

202,490

 

 

$

199,706

 

Accounts receivable trade, net of allowance for credit losses of

   $55 and $43, respectively

 

 

62,811

 

 

 

43,531

 

Inventories, net

 

 

18,089

 

 

 

17,274

 

Prepayments, deposits and other current assets

 

 

13,066

 

 

 

10,900

 

Total current assets

 

 

296,456

 

 

 

271,411

 

Property, plant and equipment, net

 

 

42,813

 

 

 

35,912

 

Finance lease right-of-use assets, net

 

 

420

 

 

 

506

 

Operating lease right-of-use assets, net

 

 

30,363

 

 

 

31,310

 

Intangible assets, net

 

 

184

 

 

 

218

 

Goodwill

 

 

1,786

 

 

 

1,786

 

Deferred income taxes

 

 

3,217

 

 

 

3,813

 

Other assets

 

 

786

 

 

 

822

 

Total assets

 

$

376,025

 

 

$

345,778

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

12,716

 

 

$

8,699

 

Obligations under finance leases

 

 

166

 

 

 

127

 

Obligations under operating leases

 

 

3,708

 

 

 

3,283

 

Allowance for sales returns

 

 

5,550

 

 

 

4,816

 

Other current liabilities

 

 

24,374

 

 

 

31,877

 

Total current liabilities

 

 

46,514

 

 

 

48,802

 

Obligations under finance leases

 

 

295

 

 

 

382

 

Obligations under operating leases

 

 

26,880

 

 

 

28,269

 

Deferred income taxes

 

 

1,037

 

 

 

811

 

Asset retirement obligations

 

 

169

 

 

 

198

 

Pension liability

 

 

1,823

 

 

 

8,758

 

Total liabilities

 

 

76,718

 

 

 

87,220

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, $0.01 par value; 60,000 shares authorized: 48,024 and

   47,716 shares issued and outstanding at July 1, 2022 and

   December 31, 2021, respectively

 

 

480

 

 

 

477

 

Additional paid-in capital

 

 

387,328

 

 

 

373,519

 

Accumulated other comprehensive loss

 

 

249

 

 

 

(4,048

)

Accumulated deficit

 

 

(88,750

)

 

 

(111,390

)

Total stockholders’ equity

 

 

299,307

 

 

 

258,558

 

Total liabilities and stockholders’ equity

 

$

376,025

 

 

$

345,778

 

 

See accompanying notes to the condensed consolidated financial statements.

 

1


 

STAAR SURGICAL COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

July 1, 2022

 

 

July 2, 2021

 

 

July 1, 2022

 

 

July 2, 2021

 

Net sales

 

$

81,101

 

 

$

62,367

 

 

$

144,301

 

 

$

113,119

 

Cost of sales

 

 

17,229

 

 

 

13,164

 

 

 

31,165

 

 

 

24,774

 

Gross profit

 

 

63,872

 

 

 

49,203

 

 

 

113,136

 

 

 

88,345

 

Selling, general and administrative expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

13,983

 

 

 

11,441

 

 

 

25,923

 

 

 

21,653

 

Selling and marketing

 

 

24,233

 

 

 

18,853

 

 

 

41,503

 

 

 

32,054

 

Research and development

 

 

8,636

 

 

 

8,260

 

 

 

16,577

 

 

 

16,519

 

Total selling, general and administrative expenses

 

 

46,852

 

 

 

38,554

 

 

 

84,003

 

 

 

70,226

 

Operating income

 

 

17,020

 

 

 

10,649

 

 

 

29,133

 

 

 

18,119

 

Other expense, net:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income (expense), net

 

 

43

 

 

 

(5

)

 

 

37

 

 

 

(12

)

Loss on foreign currency transactions

 

 

(1,860

)

 

 

(131

)

 

 

(2,775

)

 

 

(1,430

)

Royalty income

 

 

177

 

 

 

151

 

 

 

450

 

 

 

311

 

Other income (expense), net

 

 

89

 

 

 

51

 

 

 

151

 

 

 

(34

)

Total other income (expense), net

 

 

(1,551

)

 

 

66

 

 

 

(2,137

)

 

 

(1,165

)

Income before income taxes

 

 

15,469

 

 

 

10,715

 

 

 

26,996

 

 

 

16,954

 

Provision for income taxes

 

 

2,431

 

 

 

2,148

 

 

 

4,356

 

 

 

3,395

 

Net income

 

$

13,038

 

 

$

8,567

 

 

$

22,640

 

 

$

13,559

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.27

 

 

$

0.18

 

 

$

0.47

 

 

$

0.29

 

Diluted

 

$

0.26

 

 

$

0.17

 

 

$

0.46

 

 

$

0.27

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

47,889

 

 

 

47,099

 

 

 

47,822

 

 

 

46,858

 

Diluted

 

 

49,223

 

 

 

49,491

 

 

 

49,264

 

 

 

49,373

 

 

See accompanying notes to the condensed consolidated financial statements.

2


STAAR SURGICAL COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

July 1, 2022

 

 

July 2, 2021

 

 

July 1, 2022

 

 

July 2, 2021

 

Net income

 

$

13,038

 

 

$

8,567

 

 

$

22,640

 

 

$

13,559

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Defined benefit plans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in plan assets

 

 

2,593

 

 

 

(457

)

 

 

6,661

 

 

 

2,627

 

Reclassification into other income (expense), net

 

 

33

 

 

 

120

 

 

 

85

 

 

 

240

 

Foreign currency translation loss

 

 

(1,502

)

 

 

(111

)

 

 

(2,516

)

 

 

(1,227

)

Tax effect

 

 

188

 

 

 

69

 

 

 

67

 

 

 

69

 

Other comprehensive income (loss), net of tax

 

 

1,312

 

 

 

(379

)

 

 

4,297

 

 

 

1,709

 

Comprehensive income

 

$

14,350

 

 

$

8,188

 

 

$

26,937

 

 

$

15,268

 

 

See accompanying notes to the condensed consolidated financial statements.

 

3


 

STAAR SURGICAL COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

Common

Stock Shares

 

 

Common

Stock Par

Value

 

 

Additional

Paid-In

Capital

 

 

Accumulated

Other

Compre-

hensive

Income

(Loss)

 

 

Accumulated

Deficit

 

 

Total

 

Balance, at April 1, 2022

 

 

47,810

 

 

$

478

 

 

$

378,690

 

 

$

(1,063

)

 

$

(101,788

)

 

$

276,317

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,038

 

 

 

13,038

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

1,312

 

 

 

 

 

 

1,312

 

Common stock issued upon exercise of options

 

 

202

 

 

 

2

 

 

 

2,232

 

 

 

 

 

 

 

 

 

2,234

 

Stock-based compensation

 

 

 

 

 

 

 

 

6,406

 

 

 

 

 

 

 

 

 

6,406

 

Unvested restricted stock

 

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vested restricted and performance stock

 

 

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, at July 1, 2022

 

 

48,024

 

 

$

480

 

 

$

387,328

 

 

$

249

 

 

$

(88,750

)

 

$

299,307

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, at April 2, 2021

 

 

46,857

 

 

$

469

 

 

$

348,063

 

 

$

(3,457

)

 

$

(130,899

)

 

$

214,176

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,567

 

 

 

8,567

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(379

)

 

 

 

 

 

(379

)

Common stock issued upon exercise of options

 

 

530

 

 

 

5

 

 

 

7,871

 

 

 

 

 

 

 

 

 

7,876

 

Stock-based compensation

 

 

 

 

 

 

 

 

4,382

 

 

 

 

 

 

 

 

 

4,382

 

Unvested restricted stock

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vested restricted stock

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, at July 2, 2021

 

 

47,391

 

 

$

474

 

 

$

360,316

 

 

$

(3,836

)

 

$

(122,332

)

 

$

234,622

 

 

See accompanying notes to the condensed consolidated financial statements.

4


 

STAAR SURGICAL COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

 

 

 

Six Months Ended

 

 

 

Common

Stock Shares

 

 

Common

Stock Par

Value

 

 

Additional

Paid-In

Capital

 

 

Accumulated

Other

Compre-

hensive

Income

(Loss)

 

 

Accumulated

Deficit

 

 

Total

 

Balance, at December 31, 2021

 

 

47,716

 

 

$

477

 

 

$

373,519

 

 

$

(4,048

)

 

$

(111,390

)

 

$

258,558

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22,640

 

 

 

22,640

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

4,297

 

 

 

 

 

 

4,297

 

Common stock issued upon exercise of options

 

 

251

 

 

 

3

 

 

 

3,143

 

 

 

 

 

 

 

 

 

3,146

 

Stock-based compensation

 

 

 

 

 

 

 

 

10,666

 

 

 

 

 

 

 

 

 

10,666

 

Unvested restricted stock

 

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vested restricted and performance stock

 

 

50

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, at July 1, 2022

 

 

48,024

 

 

$

480

 

 

$

387,328

 

 

$

249

 

 

$

(88,750

)

 

$

299,307

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, at January 1, 2021

 

 

46,448

 

 

$

464

 

 

$

338,194

 

 

$

(5,545

)

 

$

(135,891

)

 

$

197,222

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,559

 

 

 

13,559

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

1,709

 

 

 

 

 

 

1,709

 

Common stock issued upon exercise of options

 

 

906

 

 

 

9

 

 

 

14,101

 

 

 

 

 

 

 

 

 

14,110

 

Stock-based compensation

 

 

 

 

 

 

 

 

8,021

 

 

 

 

 

 

 

 

 

8,021

 

Unvested restricted stock

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vested restricted stock

 

 

34

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

1

 

Balance, at July 2, 2021

 

 

47,391

 

 

$

474

 

 

$

360,316

 

 

$

(3,836

)

 

$

(122,332

)

 

$

234,622

 

 

See accompanying notes to the condensed consolidated financial statements.

 

5


 

STAAR SURGICAL COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Six Months Ended

 

 

 

July 1, 2022

 

 

July 2, 2021

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

22,640

 

 

$

13,559

 

Adjustments to reconcile net income to net cash provided by

   operating activities:

 

 

 

 

 

 

 

 

Depreciation of property, plant, and equipment

 

 

2,024

 

 

 

1,754

 

Amortization of intangibles

 

 

15

 

 

 

17

 

Deferred income taxes

 

 

 

 

 

845

 

Change in net pension liability

 

 

52

 

 

 

(27

)

Loss on disposal of property and equipment

 

 

 

 

 

2

 

Stock-based compensation expense

 

 

9,648

 

 

 

7,322

 

Provision for sales returns and bad debts

 

 

800

 

 

 

932