Exactech Inc.

$EXAC - Nasdaq - Healthcare Equipment/Supplies
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Press Release $EXAC Exactech Inc.

0 COMMENTs 23 Jul
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Exactech Q2 Net Income up 23% to $3.7 Million. Diluted EPS $0.27 vs. $0.23. Worldwide Sales Up 10% to $60.6 Million. U.S. Sales Increased 13%

YTD Revenue Up 5% to $119.9M, Net Income $7.6M, EPS $0.56

GAINESVILLE, Fla.--(BUSINESS WIRE)-- Exactech, Inc. (Nasdaq: EXAC), a developer and producer of bone and joint restoration products for hip, knee, shoulder, spine and biologic materials, announced today sales of $60.6 million for the second quarter of 2013, a 10% increase over $55.2 million in the second quarter of 2012. Net income was $3.7 million, or $0.27 per diluted share, compared to $3.0 million, or $0.23 per diluted share, in the same quarter a year ago.

Second Quarter Segment Performance

  • Knee implant sales remained flat at $21.0 million
  • Extremity implant sales increased 36% to $16.3 million
  • Hip implant sales increased 3% to $10.6 million
  • Biologic and Spine sales increased 15% to $6.8 million
  • Other sales decreased 2% to $5.9 million

Six Months Highlights and Segment Performance

For the first six months of 2013 revenue was $119.9 million, an increase of 5% over $113.8 million for the comparable period last year. Net income for the first six months of 2013 increased 20% to $7.6 million, or $0.56 per diluted share compared to $6.3 million, or $0.48 per diluted share for the first six months of 2012. First six month product revenues were as follows:

  • Knee implant revenue decreased 2% to $41.5 million
  • Extremity implant revenue increased 28% to $32.0 million
  • Hip implant revenue decreased 1% to $21.0 million
  • Biologic and spine revenue increased 6% to $12.9 million
  • Other products revenue decreased 5% to $12.5 million

Management Comment

Exactech Chairman and CEO Dr. Bill Petty said, “This was a strong quarter for Exactech. We were pleased with our bottom line performance with a 23% gain in net income and welcomed operating margin expansion. Our overall revenue gain of 10% was led by 36% growth in our shoulder sales and a 15% rise in revenue in our biologic and spine category. We are especially pleased with the continued robust growth of the Equinoxe shoulder. This ongoing success is due to the clinical advantages of the system that provide improved patient outcomes. Surgeons recognize these advantages and appreciate the excellent educational programs that Exactech offers to improve their ability to use the system to its full potential. We believe we are poised for continued growth with this offering and renewed growth for our hip and knee systems as we continue to introduce new products in these lines and expand our distribution channels.”

Exactech President David Petty said, “U.S. sales increased 13% to $39.9 million compared with $35.2 million in the second quarter a year ago. International sales increased 4% to $20.7 million. U.S. sales represented 66% of total sales and international sales were 34% of the total. For the first six months of 2013, U.S. sales rose 9% to $78.8 million compared with $72.0 million in 2012. International sales for the first six months of 2013 decreased 2% to $41.0 million and decreased to 34% of total sales from 37% of total sales for the first six months of 2012 due to relative weakness in some European markets. On a constant currency basis, international sales increased 7% and worldwide sales grew 11% for the second quarter.”

Chief Financial Officer Jody Phillips said, “Our focus on operating margin expansion during 2013 continues to pay off as we have expanded our operating profit during the first six months of the year to 10.2% of sales from 9.2% of sales during the first six months of 2012. We achieved this despite the gross margin decrease to 68.5% during the quarter as compared to 68.8% for the second quarter of 2012 primarily as a result of the impact of the Medical Device Excise Tax. Total operating expenses for the second quarter increased 8% to $35.3 million and as a percentage of sales decreased to 58% from 59% for the second quarter of 2012. We continue to feel that we are on track with our 2013 financial performance plan.”

Looking forward, Exactech narrowed its 2013 sales guidance to $237 - $241 million and its diluted EPS target to $1.05 – $1.09. For the third quarter ending September 30, 2013, the company said it anticipates sales of $54 - $56 million and diluted EPS of $0.20 - $0.22. The foregoing statements regarding targets for the quarter and full year are forward-looking and actual results may differ materially. These are the company’s targets, not predictions of actual performance.

The financial statements are below.

Conference Call

The company has scheduled a conference call at 10:00 a.m. Eastern Time on Wednesday, July 24. The call will cover the company’s first quarter results. CEO Bill Petty will open the conference call and a question-and-answer session will follow.

To participate in the call, dial 1-877-941-8416 any time after 9:50 a.m. Eastern on July 24th. International and local callers should dial 1-480-629-9808. A live webcast of the call will be available at http://www.hawkassociates.com/profile/exac.cfm or http://public.viavid.com/index.php?id=105311.

This call will be archived for approximately 90 days.

About Exactech

Based in Gainesville, Fla., Exactech develops and markets orthopaedic implant devices, related surgical instruments and biologic materials and services to hospitals and physicians. The company manufactures many of its orthopaedic devices at its Gainesville facility. Exactech’s orthopaedic products are used in the restoration of bones and joints that have deteriorated as a result of injury or diseases such as arthritis. Exactech markets its products in the United States, in addition to more than 30 markets in Europe, Latin America, Asia and the Pacific. Additional information about Exactech, Inc. can be found at http://www.exac.com. Copies of Exactech’s press releases, SEC filings, current price quotes and other valuable information for investors may be found at http://www.exac.com and http://www.hawkassociates.com.

An investment profile on Exactech may be found at http://www.hawkassociates.com/profile/exac.cfm. To receive future releases in e-mail alerts, sign up at http://www.hawkassociates.com/about/alert.

This release contains various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which represent the company’s expectations or beliefs concerning future events of the company’s financial performance. These forward-looking statements are further qualified by important factors that could cause actual results to differ materially from those in the forward-looking statements. These factors include the effect of competitive pricing, the company’s dependence on the ability of third party manufacturers to produce components on a basis which is cost-effective to the company, market acceptance of the company’s products and the effects of government regulation. Results actually achieved may differ materially from expected results included in these statements.

EXACTECH, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(in thousands)

 
  (unaudited)   (audited)
June 30, December 31,
  2013   2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 5,689 $ 5,838
Trade receivables, net of allowances of $1,098 and $1,012 54,918 48,073
Prepaid expenses and other assets, net 3,026 2,877
Income taxes receivable 1,132 502
Inventories, current 71,856 70,699
Deferred tax assets   2,348   2,229
Total current assets 138,969 130,218
 
PROPERTY AND EQUIPMENT:
Land 2,210 2,211
Machinery and equipment 34,471 33,158
Surgical instruments 92,237 85,115
Furniture and fixtures 3,798 3,858
Facilities 18,018 18,033
Projects in process   424   643
Total property and equipment 151,158 143,018
Accumulated depreciation   (68,808 )   (61,586 )
Net property and equipment 82,350 81,432
 
OTHER ASSETS:
Deferred financing and deposits, net 903 866
Non-current inventory 9,341 5,410
Product licenses and designs, net 10,033 10,534
Patents and trademarks, net 2,107 2,217
Customer relationships, net 878 1,108
Goodwill   13,303   13,356
Total other assets   36,565   33,491
TOTAL ASSETS $ 257,884 $ 245,141
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable $ 16,321 $ 14,773
Income taxes payable 1,527 2,188
Accrued expenses 10,718 11,726
Other current liabilities 250 250
Current portion of long-term debt   3,000   2,625
Total current liabilities 31,816 31,562
 
LONG-TERM LIABILITIES:
Deferred tax liabilities 2,938 3,186
Line of credit 17,314 12,197
Long-term debt, net of current portion 24,750 26,250
Other long-term liabilities   699   1,049
Total long-term liabilities   45,701   42,682
Total liabilities 77,517 74,244
 
COMMITMENTS AND CONTINGENCIES
 
SHAREHOLDERS’ EQUITY:
Common stock 135 133
Additional paid-in capital 66,959 63,918
Accumulated other comprehensive loss, net of tax (5,955 ) (4,797 )
Retained earnings   119,228   111,643
Total shareholders’ equity   180,367   170,897
 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 257,884 $ 245,141

EXACTECH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(Unaudited)
       
Three Month Periods Six Month Periods
Ended June 30, Ended June 30,
  2013     2012   2013     2012
NET SALES $ 60,559 $ 55,185 $ 119,860 $ 113,813
 
COST OF GOODS SOLD   19,075   17,200   37,665   35,296
Gross profit 41,484 37,985 82,195 78,517
 
OPERATING EXPENSES:
Sales and marketing 21,483 19,968 43,007 41,788
General and administrative 5,321 4,735 10,417 10,383
Research and development 4,605 4,160 8,455 8,264
Depreciation and amortization   3,854   3,813   8,029   7,605
Total operating expenses 35,263 32,676 69,908 68,040
       
INCOME FROM OPERATIONS 6,221 5,309 12,287 10,477
 
OTHER INCOME (EXPENSE):
Interest income 2 8 3 8
Other income (loss) 22 (32 ) 51 (15 )
Interest expense (288 ) (382 ) (571 ) (834 )
Foreign currency exchange (loss) gain   (121 )   (39 )   (583 )   184
Total other income (expenses) (385 ) (445 ) (1,100 ) (657 )
       
INCOME BEFORE INCOME TAXES 5,836 4,864 11,187 9,820
 
PROVISION FOR INCOME TAXES 2,108 1,841 3,602 3,512
       
NET INCOME $ 3,728 $ 3,023 $ 7,585 $ 6,308
 
 
BASIC EARNINGS PER SHARE $ 0.28 $ 0.23 $ 0.57 $ 0.48
 
DILUTED EARNINGS PER SHARE $ 0.27 $ 0.23 $ 0.56 $ 0.48
 
 
SHARES - BASIC 13,449 13,178 13,403 13,167
 
SHARES - DILUTED 13,631 13,268 13,587 13,264

Exactech
Investor contacts
Jody Phillips, 352-377-1140
Chief Financial Officer
or
Hawk Associates
Julie Marshall or Frank Hawkins, 305-451-1888
exactech@hawkassociates.com

Source: Exactech, Inc.

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