Q4 2019 Earnings Call
Ladies and gentlemen, today's conference is scheduled to begin shortly please continue to standby. Thank you for your patience.
[music].
Our 2019 earnings conference call at this time, all participants starting to listen only mode.
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Thank you operator.
Good afternoon, and welcome to that's Yatra fourth quarter full year 2019 earnings conference call.
I would like to remind everyone that you now remarks today. We will include statements that are considered forward looking statements, but then the meeting all the United States Securities Laws. In addition management may make additional forward looking statements in response to your questions.
Looking statements are based on management's current assumptions and expectations of future events and trends.
You might affect the company's business.
<unk> operations all financial supplements.
A detailed discussion of the risks and uncertainties that the company's basic is contained in its previously filed quarterly report on form 10-Q.
We'll report on form 10-K, but the company will file with the FCC in the next few days.
Actual results may differ materially from those expressed.
Or implied by the forward looking statements.
The company undertakes no obligation to update or review any estimate projection or forward looking statement.
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Financial and other information about mantra is routinely posted and it's accessible on the company's Investor Relations website.
For your W.W. dots Yatra dot com.
Today on that coal, we have Jeff Nugent Sanchez, Chairman and Chief Executive Officer, and pull Little Chief Financial Officer, Senior Vice President Treasurer.
I will turn the call over to Jeff Jeff.
Thanks Ali.
Good afternoon, everyone and thank you for joining us today.
2019 was another pivotal year strong performance demonstrating consistent growth.
And strategic transformation Christiana Trust.
As we made real strides toward our goal of becoming an aggressive world class global a set of stopping.
Q4 in particular was an exceptional quarter as we achieved record net sales in both our business segments, both Russia products and mirror dry.
I'd like to start by highlighting a few the significant accomplishments and how these position us for 2020 and beyond.
Most importantly, she entered achieved record total net sales in the fourth quarter.
$23.2 million Werent overall growth of 22% year on year.
The record net sales is simple brush products and the mirror dry segments.
For the fourth quarter total breast product sales grew 22% year over year to $12.8 billion for the full year 2019.
Breast implant tissue expander sales grew 25% in an overall market that we continue to estimate is flat.
That's further evidence that she entry continues to make sizable share gains.
We saw continued strong growth and augmentation procedures as well as record growth in our tissue expander business as well.
Further during 19, approximately 50% of our implant and expander business came from the reconstruction procedures segment and we believe this reflects what our go forward mix will continue to look like.
This momentum reflects the advantages of our superior product portfolio.
As well as our continued ability to benefit from sea introduced new customer conversion programs and the increasingly deeper penetration of our existing accounts.
The success of or marketing programs and our best in class plastic surgery consultants support our continued confidence in the market share recapture opportunity going forward.
We also achieved the advantage is related to our vertical integration through our acquisition of the Opus breast implant manufacturing operations in Franklin, Wisconsin, which we announced and completed in November of last year.
The strategic financial and operational benefits of having a turnkey vertical operation cannot be overstated.
Putting this dedicated last three ft approves site enables us to accelerate improvements to our product development manufacturing yields and resulting margins all while maintaining the highest quality and safety standards in our peer group.
The results to date or exceeding our expectations as a result at the increased experience and capabilities that we have brought inside the company and the corresponding increase sense of urgency and discipline that they have brought with them.
It complements our ongoing R&D efforts.
That are enabling central to increase our speed to market for both new innovative solutions and support for new international opportunities.
Finally, as we look ahead, we expect to increasingly benefit from the economies of scale as or production continues to ramp up.
Importantly, we remain.
Very focused on strengthening our capital structure and are pleased to announce that today, we raised $60 million through a convertible debt financing with Deerfield management.
This infusion of capital provides us with enhanced financial flexibility and the necessary capital to execute on our strategic initiatives as we continue on our path to statics market leadership and cash flow positive.
Turning to mirror dry the segment continued to demonstrate robust traction and delivered another record quarter growing net sales for quarter four by 22% year on year.
That's to total of 10.4 million for the quarter.
Sales continued to be well balanced across geographies with a continued 50 50 split between North American International.
The mix between capital and consumables also remains close to 50 50 with record U.S. system placements and continued growth in bio tips.
We ended 2019 with a global installed base of approximately 1600 councils of which 40% or in North America and 60% earned international.
In the U.S. as measured by our newly deployed fresh connects system, which automatically captures real time usage information, we've experienced a steady increase in the utilization of our mere dry systems through the second half 2019, and it continues to remain strong so far in Q.
120 20.
This is a significant sign of increased an improved traction.
In 2019, we focus on building awareness Ramiro dry and only.
Noninvasive it is the only noninvasive permanent solution.
For the sweat bothered category.
A significant advantage.
Our market research demonstrated that our target audiences roughly 66% women age 24 to 44.
And following these insights we've rebranded mirror drive with stronger messaging and targeting to that specific age group and demographic.
We're pleased to say that in 19, we were able to drive almost 3 billion people to mirror dry dot com and generated over 100000 leads broader accounts.
Our practice development managers or contribute are continuing to train our accounts on both digital and social media.
Front dress front desk training to help bring consumers into the practice for professional consultation to treatment.
We expect our marketing to continue to increase both these leads and conversions.
Our accounts through 2020.
And looking ahead, we remain focused on leveraging that significant value that we have built into the mirror drive brand.
Turning to the team we added world class talent to see entrant during the prior year, including the appointment of Curt gun houses general manager of mirror dry.
And most recently we've expanded his role to senior VP of global sales responsible for both business segments.
We also announced the appointment of Carlin's and hope to the Central Board of directors in January of this year also.
Caroline brings deep commercial under statics industry experience and her experience and insights will be valuable as we work toward driving continued growth and value creation.
We're very excited to have her and her team.
I also want to emphasize that throughout this year of significant transformation.
We've continued to strategically invest in R&D.
Innovation and commercial initiatives to drive long term growth.
As an organization she entries committed to providing a unique portfolio.
Safe and effective products that help our medical professionals deliver life changing benefits unique life changing benefits to their patients around the world.
Finally, I want to acknowledge the impact of the current global.
Krona virus outbreak.
On all business, particularly ours.
We will expand on this in greater detail as part of our outlook discussion.
First and foremost our hearts are with those impacted and number one priority is keeping our teams partners and patients as safe as possible.
To date, we have not seen any real impact on the breast products segment. It is premature to to really be able to give any kind of advice in terms of the impact in that group.
We have begun to see an impact on the mirror dry segment, which drives approximately 50% of its revenue from markets outside of the U.S.
And particularly from the Asia Pacific market.
Well this is still very early stage and difficult to predict.
The 2020 guidance that Paul will provide includes our current best estimate of the impact on our business. This year, noting that this continues to be ever evolving and very dynamic.
Well, we can't currently predict how long it to what extent to situation will last we remain confident in our overwriting strategy.
Going forward, we are taking mitigating actions and every precaution to help ensure that the safety and well being of our employees customers and their patients.
Remains safe.
With that I'd like to turn it over to Paul and revisit later during the Q and a session Paul Thanks, Jeff.
Jeff mentioned Santoro achieved a record fourth quarter and saw strong growth across both of our segments. We achieved record total net sales of 23.2 million, which equates to a 22% year over year growth.
For the full year 2019, we grew sales 23%.
To 83.7 million above the high ends at both the original guidance, we provided last may and the updated guidance we provided in September.
Net sales for the breast product segment totaled 12.8 million in the fourth quarter 2019, a 22% increase compared to 10.4 million for the same period in 2018.
Net sales were best products and full year 2019 were 46.4 million.
25% increase compared to full year 2018, as Jeff mentioned this growth was primarily driven by continued market share gains from the interest new customer conversion programs and deeper penetration of existing accounts. It mirror dry. We also delivered another record quarter, achieving net sales of 10.4 million or 22% growth.
Off year over year, and full year 2019 that sales were 37.3 million, a 20% increase compared to full year 2018.
Mirror dry growth was driven by continued momentum in both system placements and consumables.
As well as Seattle's cost effective global marketing and brand awareness initiatives launched in early 2019.
Gross profit for the fourth quarter, 2019 was 14.2 million or 61.3% of sales compared to gross profit of 11.4 million, our 59.7% of sales for the same period in 2018.
Gross profit for the full year, 2019 was 50.7 million or 60.6% of sales compared to gross profit, a 41.3 million or 60.6% of sales for 2018.
In terms of organizational efficiency initiative, we remain on track to reduce annual pre tax operating expenses by approximately $10 million at 2020, and another $5 million in 2021.
Importantly savings on this program to date are tracking in line with our expectations based on our progress to date, we remain confident that these actions will create a simpler and more cost efficient operation enable us to create significant value over the long term.
Excluding 1.1 million a restructuring charges related to see entrust organizational efficiency initiative.
Operating expenses for the fourth quarter 2019 were 32.4 million compared to 35.7 million up operating expenses for the same period in 2018, while still achieving a 22% year over year gross revenue growth in the quarter.
Net loss for the quarter, 2019 was 20.2 million or or 41 cents per share compared to a net loss of 24.6 million 86 cents per share for the same period and 18.
Net loss for the full year was 106.8 million.
Our 2.63 per share compared to a net loss of 82.6 million or $3.25 loss per share and full year 2018.
On a non-GAAP basis, the company reported an adjusted EBITDA loss of 14 million and 70 to 72.8 million for the fourth quarter and full year 2019, respectively compared to a loss of 19.4 million and 60 million for the fourth quarter and full year 2018, respectively.
Turning to cash net cash and cash equivalent as of December 2019 was 80 million compared to 121 million as of September Thirtyth 2019.
Uses of cash in the quarter included a 14 million upfront payment and $5 million, a working capital investments associated with our manufacturing acquisition and Franklin, Wisconsin.
Taking the impact of a quite a virus into consideration we expect to achieve full year 2020 total net sales of 94 to 90 million, which represents growth of 12% to 17% compared to sales of 83.7 million in 2019 and breast products. We expect net sales at 55 to 57 million in.
The mirror dry we anticipate net sales of 39 to 41 million.
This is dynamic situation, we are monitoring it closely and staying tight coordination with our sales team at the additions we will provide financial operational updates if our 2020 outlook changes.
As a result of the corner virus.
Impact to the company.
I will now turn the call back over to Jeff for any concluding remarks, Jeff.
Thanks, Paul.
Let me close by saying that I'm incredibly proud of Centrus achievements in 2019.
It was a year of important progress as we advanced our goal of becoming one of the leading providers products in the worldwide breast augmentation and reconstruction markets, we've solidified our position as an industry leader with vertical integration.
Added top talent to our team and continued to grow mirror dry.
Im confident that these accomplishments position sientra from market leadership and strong results in 2020 and beyond.
We're monitoring the Corona virus issue extremely carefully and I'm confident that we will manage this real challenge as successfully as we manage all the past issues over the past several years.
She entered team is one of the strongest and most resourceful I have ever had the experience to work with.
This team is battle tested an exceptionally well qualified to professionally overcome anything that we find in front of us with that let's open up the line for Q an operator.
Thank you as a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound King Please stand by while we compiled the culinary roster.
My first question will come from Alex Nowak with Craig Hallum.
Great.
Thanks, guys and good afternoon, everyone.
No I know this is an ongoing situation here and I just want your help with how to think about.
The current guidance. So I mean, when you say, you're assuming the best current estimates for MYR and dry breast products help us out there from the guidance. So we're hearing reports that APEC sales could be kind of down all of a place in Q1.
Are you assuming a pack business is going to be down in the 50% range from your dry.
No.
It is premature to make that kind of an estimate at this stage. What we're trying to do is indicate what we're beginning to pick up in the Asia Pacific market and unlike we're seeing with so many different businesses. This is such a rapid.
Joe.
Realization.
That we're not prepared to make any more significant estimates at this time, we're we're watching is very closely.
I think is.
It's certainly a primarily a mirror dry.
Situation.
I think as we indicated that is we're not beginning to see any real impact on the breast side.
Certainly from a in international primarily Asia Pacific standpoint.
We're just beginning to understand what that impact is I think one of the pieces of that is that we're still seeing continued procedures, but we're seeing postpone demonstrations for new systems purchases.
But again this is a real time.
No monitoring process and as we're sitting here on this call.
I'm getting tax updating us on a daily basis.
I hope that answers your question, but it is very premature to go any more detail done that.
And I get that as I understand you obviously have limited visibility there just just to go off a piece you mentioned, there and just the last week or so.
The is the implant team in the U.S., having any sort of issue getting into either existing accounts or new accounts, just because the centers are closing up and saying rolling allowing essential staffing.
On the breast side of it on the breast side in the U.S. right, Yes us breast side.
So I've spoken with.
Minimum of 50 of our top plastic surgeon partners.
And they are all admitting that there's very little if any impact that they're seeing.
Number one in their scheduled procedures and you have to understand it within the breast category its was pretty much down the middle between reconstruction and augmentation.
That there is more discretion on the augmentation side.
With much less discretion on the reconstruction side.
I could give you a lot more information that involves.
The priorities that are existing within hospitals, and that's not just the U.S., but international as well.
And as recently as late yesterday.
I'm continuing to get to signal that.
They're just not seeing any real impact.
In breast surgery.
Either side.
And as you indicated this is ramping very quickly. The story today is very different than it was 10 days ago, but even with that fast pace.
Just not getting the kinds of confirmation that is.
Impacting the press product segment.
Okay understood and then just staying abreast for the guidance what are you assuming from.
Underlying market growth are you, assuming a flat market like last year. When we had all the news around breast implants or would you expect that mark to actually grow a little bit this year.
Irrespective.
Without without assuming current of buyers impact of course, but without the impact of that we were assuming it back to a single digit business and as you know Alex our whole growth strategy is on taking share some of the market was flat last year, we grew.
Substantially so we're assuming it was low single digits even in 2020.
Okay for this horse to be 19.
Base assumption continues to call for continued market share gains.
And that we're again watching this closely.
And to Paul's point.
Reconstruction segment has traditionally grown slightly higher than the augmentation side.
But we're still trying to figure this out and right now we just don't see a clear picture to adjust any of our expectations on the pro side.
Okay. Appreciate it thanks.
Thanks out.
Thank you. Our next question comes from Margaret Cancer with William Blair.
Hi, Good afternoon, guys. Thanks for taking my questions.
Hi, Margaret.
Maybe just a follow up and asking a slightly different way.
Yes, when we compare the mirror dry guidance relative to at least adjustments that we have.
And the street estimates it seems like maybe it's $3 million to $5 million below what we had initially expected going into next quarter. So.
Can you guys highlight how much of that is related specifically to add to co bed.
And then give us a sense of how much of that change within that as you asked versus though you ask your systems versus consumables.
Yeah, I think thanks My question Margaret.
What were what we're calling out now which is what we're seeing today, we're not trying to anticipate the entire year. So as the top our business is actually Wes third of Mira dries sits in Asia Pacific.
Better visibility to two months into the quarter. So many calling out is what we're seeing so far with I'll try anticipate the entire year.
That makes sense. So right now we're not breaking out the component we believe what we're seeing.
We have everything that we're seeing that's impacting the guidance is related to kind of iris given where we ended so strong in the fourth quarter last year. Our momentum is very strong. We're also seeing you know we booked up.
Our fresh connect systems to what accounts for about 181 accounts now that we have acts x. active access to state. The we're actually seeing an increase utilization from all activities. We did last year. So the first two months of this year, we actually are seeing utilization, which implies a procedures are happening depending on what regard to what might happen on the console sales.
So I hope that does that help the question.
It does it sounds like it's maybe a little bit more system side, that's maybe the unpredictable bit of this whereas consumables and then as a disposable. So you guys are continuing to see strong growth in.
And hopefully, we'll see that pass throughout the year.
And then maybe I can follow up on that because the utilization increases you guys referenced.
First half 19 second half 19, and then going into 20, especially in the U.S.
How durable are you guys, saying those can you give us any metrics over kind of the same store sales within that.
That you're continuing to see that progression with the accounts that have grown our continue to grow and should continue to grow and yes.
Yes.
Thanks for the question.
With the fresh connect the hundred 81 accounts were seeing last year, a 20, 21% growth year over year Forestar is our accounts that were in within type timeframe. So we're seeing nice 20% growth 21% growth for those so I think we're going to hear is now we're going have a better chance for the first time is going we've always a tip cells is kind of a leading indicator now we have utilized.
Nation and figure out what's really being pulled through.
So that's given our first view into what we actually are seeing that's happening in the.
Real time at discount level.
Okay.
That's helpful. And then just kind of last one and the funds, maybe a little bit bigger picture strategic.
Taking taking out the impact of covert 19 that can you guys just simply as an upsize the impact of new product launches this year and the various product segments and maybe specify the new marketing operations initiatives that you guys have internally.
The top three drivers of growth. Thanks.
Well, we're still on track and and we've indicated that we've got a a rather robust flow of new products.
Including larger sizes.
Size matters.
And a number of things that have been.
Available.
Until we've been able to scale up our new manufacturing facility. So I think like I said my comments that you know thats speeding the the flow of new products to market.
Some of which we've been able to share with you and others that Joe will will elaborate on in more detail.
As we get closer to launch dates so yes I think.
End market, we've talked about this before we've been a bit hamstrung based on the capacity available at our facility, but it's another clear example of the advantage of being able to own it now.
With a greater sense urgency these things are going to come off at a faster clip.
So right now I've got to be careful exactly what I say, but we're happy to share more of that with you later.
And that can occur throughout 2020 to see clear. Thanks, Yes, that's right.
Thank you. Our next question comes from Kyle Rose with Canaccord.
Great. Thank you very much taking the question I everybody fair. So just wanted to.
We could talk about the breast side for a little bit here, just maybe help us understand what your guidance for 2020 contemplates just with respect to new account additions versus going deeper into existing accounts, just trying to understand obviously low single.
Low single digit market growth in 19, you delivered magnitudes of that how do we think about share taking on in 2020.
That's good question.
Yeah last year, if you realize you know we grew the.
Business, 25%, we grew the implant expanded as a 32% and it was a combination of both.
Going deeper within accounts now that we have product and broader with with new accounts, we picked up roughly 400, new implant customers back in 2019, and it's going be more the same in 2020 is again as we saw the 2000 accounts that are peak. So now we're looking at maybe 1200, we're not going back to the 2000 accounts, we used to sell to back in 15. So we're going to continue to go after the new.
Accounts.
Through our marketing programs product differentiation and we're also two pronged you got to reconstructive strategy, which is we've identified the GPL Canadians ever going after.
The amount of effort. This team has been making some of these take six months to a year it actually get on board, but the augmentation reconstruction strategy are quite unique and what they're doing in the recall strategy. Obviously, it's led by the contracting team, but it's led by the Alex to pro and the German span tissue expander, which gets us into the hospital, which gets us a carryover of the expander or sorry, the unplanned so when we get.
I wonder what the expand our hosting a really nice pull through on the implant side of the business. So I must say, it's a little at a more the same this year deeper and broader with obviously more initiatives on the marketing side, which are going to try to experiment with this year and tried to actually drive patient acquisitions to the doctors' practices, whether through digital marketing.
Other patient education of the Doctor, we are going to try to drive patients. These are practice in some pilot program. So we're going to up the up the marketing programs a bit. This year. In addition to just actually making it a sales only.
I think sales.
Sales only effort.
And part of that is.
We're aggressively introducing a new loyalty program.
Both for our existing customers as well as new customers.
Because at the end of the day.
We pay a lot of attention to our competition and we believe that theyre vulnerabilities with both seller again and mentor.
That I think a loyalty program, we've already demonstrated is going to make a difference.
One thing I want to add as well I think we covered it but if we did not want to make sure that in spite of all of this price competition out there, we're holding our asap confidence and I think thats, an indicator of the premium position and credibility that we have across the central Brad.
Great. That's very helpful and then when I think about.
The guidance this year does it contemplate any new Oh U.S. countries with the breast side and then from a manufacturing perspective, you talked about gives you more control over.
Fission fees and costs can you just help us understand where you were asked for both from an inventory availability standpoint, and just kind of that that efficiency.
Program.
That's fair. Thanks for the question internationally, there was no numbers right now contemplated in ours, although we're still we filed.
Paul October 18 for Canada, we've got some very good feedback actually so we're still and we are still anticipating a approval sometime this year at this point I've got nothing into the model for that and we're working on some stuff outside of Asia Pacific, which we can now and Asia Pacific that we can announce one.
Once we're ready to announce it.
In terms of second question was.
Well take us on manufacturing.
I'm, sorry, I apologize.
Actually it's actually ahead of schedule in the integration. So in terms of the work we're doing to integrate that into our business. There has been they're all disruptions and manufacturing from the day, we took possession of that facility in terms of our around the implant supply backward ended last year for around we're going to this year was robust supply around shape as were building up.
As we focused on round most of last year now we're moving into the shape. We're going to be has is how much shape. We build until we really see how much of the shape market has narrowed given its textured, although we have a superior texture across our competitors, but our supply situation is.
We're not talking we went we should have it won't be talking about it this year if that helps.
On implants were very happy with where we are very happy with the progress this money at the Franklin facility.
Okay, great. Thanks for taking the questions.
Thank you all right. Thanks.
Thank you Sir our next question comes from Richard Newitter with SCB link.
Hi, Thanks for taking the questions.
A couple of here how are you.
The cobot 19 commentary I guess can you parse out for us a little further.
What exactly you are not assuming in terms of impact in the U.S. In other words are you right now, mostly just assuming all U.S. impact and then from a timing standpoint.
What.
Assuming there is an impact.
In the first quarter first quarter and second quarter or for the entire year. So if you could ask a regionally and then timing wise, what what is exactly factored in.
Well rich I think.
You consume that leases much of the media that we do.
And Thats a huge question that people are trying to figure out.
That changes daily.
What we're trying to do is share the information that we have.
And that we're not assuming best case, we're not assuming worst case I don't want to overreact I don't want to under react.
But right now we're looking at this.
Certainly extending through the second quarter beyond that we just saw no.
And like I said, the primary impact is going to be on the international front.
And particularly on a mirror dry and again, it's it's not a.
All or nothing proposition, what we're seeing is.
Treatment procedures are continuing to progress.
And is a good indication of that.
Systems sales.
Running into more resistance right now.
We are beginning to see.
Some minor impact relatively minor impact in the U.S.
But there's still no indication that breast is going to be affected.
I don't know how else to it to answer this because.
We've got a lot of very smart people and perhaps maybe.
So smart people, we're trying to make I guess in terms of what to expect we just don't know.
And we're trying to be as transparent as we can be.
And as we learn more we're certainly going to update this.
As we learn.
Alright.
We are anticipating it to be at all across both I guess your wasn't on us.
That's right now it's quite geared more towards ex us and again as Jeff said, we're not anticipating that to continue.
Entire year, we just don't know so we're forecasting what we see today, given we're far enough into the quarter.
But at that point, we're not anticipating this thing just driving out the entire you've got to see at same across business like what we're seeing right now in the quarter.
By the same time, we'd also think continues to drag out and what the implications are for breast longer term breast procedures are booked so far out before finishing up the procedures, we'll know a breath second quarter, where the season starts.
Thanks for both Razzing it today that's correct.
I'd like to reinforce that that's true.
Okay. So that's just not just to summarize a little bit more capital on the Marin dry side, a little more on the marriage rise side altogether, a little more capital within Mira dry and then.
Is it some U.S.
Impact factored in but mostly it's an ex us factor.
In your guidance at least and then with respect to timing if not confined to one Q. There is an impact that's assumed for twoq, but beyond that you havent necessarily gone and dialed anything it is that a fair summary.
Yes, that's a good summary.
Okay. If I if I can follow up on gross margin. The two questions on gross margin that I have are just in light of some of the comments you just made on on mix shift right. If there is a little bit more of a potential kind of U.S. bias and revenue and potentially more within Mira dry.
A to the consumable piece, if its capital that might be seeing bearing a little more the brunt of the co bid 19 impact what could that mean for the gross margin trend in 2020, and the second factor there of course is the manufacturing.
A component so just remind us what we should have been thinking about before covert 19 with respect to your manufacturing impact on gross margin and how deep new mix shifting dynamics might might.
Impact the trend thanks.
All right now.
Margins I would assume that the same for Ford team in the 20, I mean again its.
The overall business Mira dry depend on the mix I would if you have your models out I would assume it's relatively relatively flat year over year.
Okay. So gross margin look similar and 2020 based on your current forecasts situation, yes. It did okay, hi, instead of you about six to 6% to 1% for the full company consolidated basis, nothing has changed on that right now, but I see.
Okay. Thank you.
Maybe one last one here just from a macro standpoint can you just remind us how breast implants. They breast implant industry generally has fared in prior macro economic downturns I know it.
Too premature to say, we're headed to one but just remind us how that business holds up when when growth and the Matt macro outlook slows. Thank you.
Michael Sullivan, if you look at between an injectable the toxins a fillers and implants.
Implants are the first then left out.
Toxins, where the last in the first out and everything else in between.
I was like a capital equipment company that I think thought a lot of the payments dr. only by what they need this business are not stocking anyway. It's obviously procedure growth from the patient and lot of people kept their new appointments, but it felt it felt that before the other non invasive procedure as of August Alex.
Does that help.
Yes. Thank you.
And rich just one other point to that and that is we need to understand the split between augmentation and reconstruction.
Good.
The increase in the reconstruction category.
Much less discretionary and that is.
Historically.
Maintained a healthy coal volume.
That I would expect to continue but at the end of the day, it's a mathematical equation.
In terms of how that mix splits. So yes, it's not a straightforward answer I apologize, but were 50 50 recall dog. So one could argue is that we though we are a little more protected from downturn on outside of the business certainly compared to four or five years ago, yes.
Thank you. Our next question comes from Jon Block with Stifel.
Thanks, John.
Hey, good afternoon.
Couple of financial questions.
And then maybe one or one bigger picture, but only opex. So really good progress in the quarter your highest revenue quarter for 19, your lowest opex quarter for 19, when I look forward is that 10 million opex opportunity on the restructuring how do we think about that in other words is it off the full year hundred 40 million ish Opex number.
Or off the one third run rate that arguably you eggs you exited.
I think about sort of look as if you look at it we don't give all the details if you look at the consensus right now most everyone houses that up $135 million 2020 coming off 100.
$40 million this year.
That's it may dollars in savings is really gear is really more biased to quarters, two three and four.
Yeah, we still have as long as integration work, where people are still on premise still working during their jobs, but it's more bias I look at a 32 and say, it's probably a little under just given timing, we're not going to 32 in the first quarter, but it's not far off what the average will be for all 2020, okay.
And then maybe just a follow up in an important one just to maybe world sort of level set correctly the cadence to the guidance in other words when I look at 2019 about 21% of your full year revenue was derived in the first quarter roughly I'm guessing we should expect it to be lower this year due to the Colgate impact being what we I think all opens most acute.
And once you 20 is there anything Paul that you want to lay out in terms of the gating or the cadence to 2020 reps.
Not yet I mean, obviously you know the first quarter is always weaker lower not weaker lower for the mirror dry southern console does have a big normally fourth quarter console.
Rast, it's not one of your bear quarters, obviously number quarter was the biggest picture. So in terms of mix, it's probably going to be very similar of a mix.
As a percentage.
At quarter to across the board has still your traditionally or biggest quarter and this fall by core for.
Okay.
I would assume a similar cadence yes, okay.
Jeff You mentioned you guys are holding price.
With your press products Division, just maybe how is the competition trying to fight back you're taking share. It is strictly price on their end is a bundling is there anything notable to call out between one of your competitors versus that of the other thanks for your time best.
Yes, John the best way to to answer that is that the normal pricing aggressiveness is continuing but what we're seeing is that mentor continues to be it's a very low end.
And we continue to take market share away from them.
Well again.
Hello, again has given.
More.
Yes.
Importance to be able to gain back market share with whatever it takes and as you know a major.
A major advantage. They have is this bundling so what we're seeing is increased price reductions.
Either implemented through increased advantages in bundling or straight out right.
Land.
Pricing, but in spite of that you step back and look at to share that we're taking mid 30% share growth.
And that.
We're keeping our MSP constant.
Which is a significant message all by itself but.
Just getting more aggressive and we know that they've got issues that they're dealing with that we've discussed before.
Okay Fair enough. Thanks, guys. Thanks, John Thank you.
Our next question comes from Anthony Vendetti with Maxim Group.
Thanks.
Hi, guys.
I just wanted.
Hi, just wanted to talk a little bit about the R&D spending about three to 4 million a quarter you mentioned some of the new if some new products coming out but can you can you tell is kind of where most of that R&D is focused is it mostly focused on.
Extensions and the breast products segment or are you looking for improvements and then they would try system or something that.
Well that's been.
Yes, so most of the terms of pure develop and most of the spending right now at this point is on the.
On the breast business side also an R&D, we have our regulatory and there was lot as opposed to approval study, which we've increased the spend all last year to get better.
Retention rates on the patient side.
So it's kind of again, there was R&D development in there and some clinical and there the clinical it'll be the post approval studies. There is some obviously some minor work being done on mirror dry on new indications.
As we mentioned in the last year long reference right now on the mirror dry side.
Is to execute against underarm sweat, that's where the market is right now that's where most efforts are the breast side, we've talked about a feeling for larger sizes gel size. There's a few other elements that we could talk about once they get launched but most development today isn't breast implants.
Okay and then.
And then just based on completing the acquisition and the Opus manufacturing operation.
We can see most did that impact in 2020, and whats what should that impact look like today.
Margin impact or how should we look at that.
I mean theres two is looking at one instrument and does that actually operational efficiency standpoint, we're we're not putting a purchase orders and we haven't imagine a 90 120 day terms, we can decide at our decision when we when we shuffle around between our product line, so that the speed to actually develop and make what we what is our discretion speed.
The market for some of our R&D work, we get there just a pure flexibility standpoint from not going to a third party to actually do it ourselves is hard to quantify but it makes our database life easier, even just from managing working capital leverage levels better.
Sure as my cost standpoint, we've I was clear last year that you are the first year of this thing it does it cost we're going to be impacted overall consolidated central that's why we called the margin impact about two to 300 basis points impact, which I think most everybody is built into their models for this year.
We believe by 2021 that cost structure on a cash basis will get back to what we were paying but when you sit on 10 11 months of inventory I'll be selling through that into 2021. So the real real impact on margins I think most people have anticipated 2022 on forward, but the benefits from owning it.
Our real today flexibility speed to market and just managing our destiny, which we really couldn't truly do especially when you're seeing a 600 skews you didn't have that flexibility working with our third party manufacturing partner.
Okay makes sense all right guys. Thanks appreciate it.
Thank you Anthony.
Thank you.
Ladies and gentlemen, thank you for participating in today's question and answer session I would now like to turn the call back over to management for any further remarks.
Yes, thank you operator.
We appreciate everyone's attention and interest in Cintra, we are very.
Pleased with the results that we've shared with you today.
We understand that there are some headwinds that.
We believe that we are particularly.
Qualified to deal with.
And that our commitment to you is too.
Give you updates is.
Transparently as we possibly can so with that.
Thank you all very much and have a great rest of the day. Thank you. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
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