Aesthetic laser maker Candela
The manufacturer of lasers for hair removal, wrinkle smoothing, and tattoo erasing reported a record $37.7 million in revenues for the second quarter, a 34% increase over 2005. That easily surpassed analyst forecasts of $33 million. Earnings jumped 171% to $0.19 per share. Margins also continued to improve, with gross margins crossing into the company's targeted 50% range. Both operating and net margins showed big improvements, too.
While margins still lag behind competitor Palomar Medical Technologies
Candela may owe these results partly to its recently cemented distribution deal with McKesson
One of the best things about a Candela conference call is its brevity. Management provides a succinct overview of the numbers it issues in its press release and immediately turns the call over to questions. A change from prior calls, however -- aside from no longer providing guidance -- was management ceasing its breakdown of products by market segment. It had been a meaningless effort anyway, since management arbitrarily assigned percentages to hair removal, tattoo removal, varicose vein elimination, and such. Since a laser can perform multiple functions, management had to guess what they were actually being used for.
Gone also was the flowery language that CEO Gerard Puorro had used in previous calls. No longer did he describe sales as "white hot," though admittedly, he would have been justified this time. Appropriately, he let the numbers speak for themselves.
Investors responded in kind. In midday trading, the stock soared 30%, perhaps exhibiting some pent-up enthusiasm for the results that long-time shareholders knew the company could produce. Last quarter, I said I wanted Candela to show me successive good news, and that's just what it has done. Let's hope that the second half of the year is every bit as good as the first -- if not better.
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