Exactech Inc.

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Press Release $EXAC Exactech Inc.

0 COMMENTs 28 Jul
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Exactech Q2 Revenue Up 6% to $63.9 Million. Net Income up 12% to $4.2 Million. Diluted EPS $0.30 vs. $0.27.

GAINESVILLE, Fla.--(BUSINESS WIRE)-- Exactech, Inc. (Nasdaq: EXAC), a developer and producer of bone and joint restoration products for hip, knee, shoulder and spine, announced today revenue of $63.9 million for the second quarter of 2014, a 6% increase over $60.6 million in the second quarter of 2013. Net income was $4.2 million, or $0.30 per diluted share, compared to $3.7 million, or $0.27 per diluted share, in the same quarter a year ago.

Second Quarter Segment Performance

  • Knee implant revenue was constant at $21.0 million
  • Extremity implant revenue increased 17% to $19.0 million
  • Hip implant revenue increased 6% to $11.2 million
  • Biologic and Spine revenue decreased 5% to $6.5 million
  • Other revenue increased 6% to $6.2 million

Six Months Highlights and Segment Performance

For the first six months of 2014, revenue was $127.2 million, an increase of 6% over $119.9 million for the comparable period last year. Net income for the first six months of 2014 increased 10% to $8.4 million, or $0.60 per diluted share compared to $7.6 million, or $0.56 per diluted share for the first six months of 2013. First six month product revenues were as follows:

  • Knee implant revenue was constant at $41.6 million
  • Extremity implant revenue increased 21% to $38.7 million
  • Hip implant revenue increased 5% to $22.0 million
  • Biologic and spine revenue decreased 4% to $12.3 million
  • Other products revenue increased 1% to $12.6 million

Management Comment

Exactech CEO and President David Petty said, “Our first half results were generally strong. Exactech overall is growing well with net income up 12% in the quarter and 10% in the first half. System wide revenue is up 6%. This reflects our ability to differentiate ourselves and to compete effectively in a turbulent environment. This also underscores our ongoing success in providing a positive experience for our surgeon customers and hospitals.

“Our U.S. knee sales showed growth in units that was offset by price reductions in the quarter that kept revenue flat. Shoulder sales continued to be a major driver with a gain of 17% as we again gained market share in a rapidly growing market. We were pleased with hip sales that were up 6% for the quarter and as a result we feel extremely good about the second half of 2014 for our hip business with the second half launch of the Alteon Tapered Wedge stem system. Growth in our spine business continues to be offset by lower biologic revenues resulting in a 5% decrease in revenue in that segment.

“U.S. sales were up 6% to $42.2 million compared with $39.9 million in the second quarter a year ago. International sales increased 5% to $21.7 million. U.S. sales represented 66% of total sales and international sales were 34% of the total. For the first six months of 2014, U.S. sales rose 6% to $83.8 million compared with $78.8 million in 2013, representing 66% of total sales and International sales increased 6% to $43.4 million and remained at 34% of total sales,” Petty said.

Chief Financial Officer Jody Phillips said, “Gross margins increased to 69.4% from 68.5% for the second quarter a year ago. Total operating expenses for the second quarter increased 6% to $37.5 million and as a percentage of sales increased to 59% from 58%. With an operating profit increase of 10% to $6.8 million we are delivering the operating margin leverage that we have been targeting. Our balance sheet reflected the strong progress we are making in creating positive cash flow, which has enabled us to reduce debt down to very manageable levels and provides us with additional strength going forward.”

Looking forward, Exactech updated its 2014 revenue guidance to $249-$253 million and its diluted EPS target to $1.19–$1.23. For the third quarter ending September 30, 2014, the company said it anticipates revenues of $57.5-$59.5 million and diluted EPS of $0.24-$0.26. 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 will hold a conference call with CEO David Petty and key members of the management team on Tuesday, July 29th at 10:00 a.m. Eastern Time. The call will cover Exactech’s second quarter 2014 results. Petty will open the conference call and a question-and-answer session will follow.

To participate in the call, dial 1-888-503-8169 any time after 9:50 a.m. Eastern on Tuesday, July 29th. International and local callers should dial 1-719-325-2464. 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=109952. 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,
  2014   2013
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 11,041 $ 6,011
Trade receivables, net of allowances of $726 and $993 49,420 59,109
Prepaid expenses and other assets, net 4,161 2,865
Income taxes receivable 777 1,331
Inventories, current 73,921 71,590
Deferred tax assets   1,723   1,653
Total current assets 141,043 142,559
 
PROPERTY AND EQUIPMENT:
Land 2,214 2,215
Machinery and equipment 33,859 35,439
Surgical instruments 102,014 95,902
Furniture and fixtures 4,359 4,200
Facilities 19,241 19,187
Projects in process   1,222   852
Total property and equipment 162,909 157,795
Accumulated depreciation   (81,856 )   (76,127 )
Net property and equipment 81,053 81,668
 
OTHER ASSETS:
Deferred financing and deposits, net 892 870
Non-current inventory 14,479 11,100
Product licenses and designs, net 8,978 9,457
Patents and trademarks, net 1,853 2,005
Customer relationships, net 438 669
Goodwill   13,461   13,514
Total other assets   40,101   37,615
TOTAL ASSETS $ 262,197 $ 261,842
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable $ 17,378 $ 16,254
Income taxes payable - 39
Accrued expenses 11,206 10,974
Other current liabilities 250 250
Current portion of long-term debt   3,000   3,000
Total current liabilities 31,834 30,517
 
LONG-TERM LIABILITIES:
Deferred tax liabilities 3,942 4,200
Line of credit - 10,732
Long-term debt, net of current portion 21,750 23,250
Other long-term liabilities   598   719
Total long-term liabilities   26,290   38,901
Total liabilities 58,124 69,418
 
COMMITMENTS AND CONTINGENCIES
 
SHAREHOLDERS’ EQUITY:
Common stock 137 136
Additional paid-in capital 72,948 69,175
Accumulated other comprehensive loss, net of tax (4,385 ) (3,902 )
Retained earnings   135,373   127,015
Total shareholders’ equity   204,073   192,424
 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 262,197 $ 261,842

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,
2014 2013 2014 2013
NET SALES $ 63,919 $ 60,559 $ 127,177 $ 119,860
 
COST OF GOODS SOLD   19,565   19,075   38,199   37,665
Gross profit 44,354 41,484 88,978 82,195
 
OPERATING EXPENSES:
Sales and marketing 22,885 21,483 46,598 43,007
General and administrative 5,667 5,321 11,452 10,417
Research and development 4,864 4,605 9,057 8,455
Depreciation and amortization   4,124   3,854   8,446   8,029
Total operating expenses 37,540 35,263 75,553 69,908
       
INCOME FROM OPERATIONS 6,814 6,221 13,425 12,287
 
OTHER INCOME (EXPENSE):
Interest income 5 2 8 3
Other income (loss) 26 22 50 51
Interest expense (260 ) (288 ) (607 ) (571 )
Foreign currency exchange (loss) gain   (113 )   (121 )   200   (583 )
Total other income (expenses) (342 ) (385 ) (349 ) (1,100 )
       
INCOME BEFORE INCOME TAXES 6,472 5,836 13,076 11,187
 
PROVISION FOR INCOME TAXES 2,312 2,108 4,718 3,602
       
NET INCOME $ 4,160 $ 3,728 $ 8,358 $ 7,585
 
 
BASIC EARNINGS PER SHARE $ 0.30 $ 0.28 $ 0.61 $ 0.57
 
DILUTED EARNINGS PER SHARE $ 0.30 $ 0.27 $ 0.60 $ 0.56
 
 
SHARES - BASIC 13,694 13,449 13,646 13,403
 
SHARES - DILUTED 13,986 13,631 13,946 13,587

Exactech Inc.

Investor contacts

Jody Phillips, 352-377-1140

Chief Financial Officer

or

Hawk Associates

Julie Marshall or Frank Hawkins, 305-451-1888

E-mail: exactech@hawkassociates.com

Source: Exactech Inc.

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