First Quarter 2009 Financial Results
Revenues for the three months ended March 31, 2009 were $14.8 million, reflecting the continued effects of the global economic recession and the continued restrictive credit environment in the aesthetic laser industry. Revenues for the comparable period of 2008 were $36.8 million. Gross margin for the first quarter of 2009 was 60.9% of total revenues, against 66.3% for the same period of 2008. The quarter-over-quarter decline in gross margin reflected the higher percentage of laser revenue from international markets, which tend to have a lower sales price through third-party distributors than sales made through the North American direct distribution.
“Aesthetic laser capital equipment spending was down significantly in the first quarter of 2009 against the same period of 2008, affecting all of our product lines and geographies,” said Cynosure president and chief executive officer Michael Davin. “The global recession has restricted credit for many practitioners, and we believe it has discouraged those with borrowing capacity from buying equipment until the economic forecast brightens. The first two months of the first quarter were very slow; however, we were pleased that March order volume picked up slightly. We have continued to reduce expenses in response to our lower revenue levels.”
As Cynosure announced previous month, in addition to steps it took in the fourth quarter of 2008 the company implemented a number of first quarter cost-cutting measures designed to generate an annualized operating expense savings of between $14 million and $18 million in 2009 against 2008 levels. Among these steps, Cynosure reduced its employees to 271 from 285 at the end of 2008 and further cut planned spending for various programs.
“Although we have moved aggressively to lower costs, we also have focused on retaining the people, technology assets and R&D innovations that we believe are crucial to the long-term success of our company,” Davin said. “Our experienced direct sales force, outstanding product portfolio and unique intelligent-delivery systems have helped to establish Cynosure as a leader in the aesthetic industry, and remain vital to our organization as we go forward.”
Business Outlook
“Despite a challenging first quarter, we remain encouraged about the prospects for the laser aesthetic industry and are committed to taking the steps necessary to manage the business profitably for the long term,” Davin said. “Our recent opening of a direct sales office in Korea, the introduction of new products such as Elite MPX, and investments in technological enhancements such as SmartSense with ThermaGuide, are all integral to our long-term growth strategy.”
