Strong Double Digit Extremities Revenue Growth
Continues Above Expectations
Exactech, Inc. (Nasdaq: EXAC), a developer and producer of bone
and joint restoration products for hip, knee, shoulder, spine and
biologic materials, announced today revenue of $63.3 million for
the first quarter of 2014, a 7% increase over $59.3 million in the
first quarter of 2013. Net income was $4.2 million, or $0.30 per
diluted share, compared to $3.9 million, or $0.29 per diluted
share, in the same quarter a year ago.
First Quarter Segment Performance
- Knee implant revenue was constant at
$20.6 million
- Extremity implant revenue increased 25%
to $19.7 million
- Hip implant revenue increased 3% to
$10.8 million
- Biologic and Spine revenue decreased 4%
to $5.8 million
- Other revenue decreased 3% to $6.4
million
Management Comment
Exactech CEO and President David Petty said, “Driven by
continuing strong double digit growth in extremities revenue, we
recorded our strongest quarter ever. Worldwide sales rose 7% to
$63.3 million. U.S. sales were up 7% to $41.6 million compared with
$39.0 million in the first quarter a year ago. International sales
increased 6% to $21.7 million. U.S. sales represented 66% of total
sales and international sales were 34% of the total. On a constant
currency basis, international sales increased 7% and worldwide
sales grew 7% for the quarter. As our extremity revenues continued
to exceed our expectations, we also were pleased with the
international performance of our hip segment."
Chief Financial Officer Jody Phillips said, “Gross margins
increased to 71% from 69% for the first quarter a year ago
primarily due to continued focus on manufacturing cost reductions
as well as the pricing impact of stronger European currencies.
Total operating expenses for the quarter increased 10% to $38.0
million and as a percentage of sales increased to 60% from 58% for
the first quarter of 2013. General and administrative expenses
increased 14% in the first quarter to $5.8 million from $5.1
million and Sales and marketing expenses increased 10% to $23.7
million. An extensive review of our global compliance programs
contributed to increases in both G&A and S&M expenses.
Research and development expenses increased 9% to $4.2 million
during the first quarter reflecting ongoing significant investment
in our new product pipeline. We are encouraged we were able to
deliver operating margin and net income expansion considering these
investments."
Looking forward, Exactech updated its 2014 revenue guidance to
$247-$254 million and its diluted EPS target to $1.19 – $1.24. For
the second quarter ending June 30, 2014, the company said it
anticipates revenues of $62 - $64 million and diluted EPS of
$0.29-$0.31. 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 Tuesday, April 22. The call will cover the
company’s first quarter results. Chairman Bill Petty will open the
conference call with the introduction of CEO David Petty. After
opening statements a question-and-answer session will follow.
To participate in the call, dial 1-877-941-4774 any time after
9:50 a.m. Eastern on Tuesday, April 22nd. International and local
callers should dial 1-480-629-9760. 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=108647. 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) March 31,
December 31, 2014 2013
ASSETS CURRENT ASSETS: Cash and cash equivalents $ 11,279 $
6,011 Trade receivables, net of allowances of $918 and $993 47,520
59,109 Prepaid expenses and other assets, net 4,028 2,865 Income
taxes receivable 216 1,331 Inventories, current 72,205 71,590
Deferred tax assets 1,694 1,653 Total current assets
136,942 142,559 PROPERTY AND EQUIPMENT: Land 2,215 2,215
Machinery and equipment 35,560 35,439 Surgical instruments 98,959
95,902 Furniture and fixtures 4,551 4,200 Facilities 19,193 19,187
Projects in process 753 852 Total property and
equipment 161,231 157,795 Accumulated depreciation (80,146 )
(76,127 ) Net property and equipment 81,085 81,668
OTHER ASSETS: Deferred financing and deposits, net 969 870
Non-current inventory 11,624 11,100 Product licenses and designs,
net 9,134 9,457 Patents and trademarks, net 1,928 2,005 Customer
relationships, net 555 669 Goodwill 13,514 13,514
Total other assets 37,724 37,615
TOTAL ASSETS
$ 255,751 $ 261,842
LIABILITIES AND SHAREHOLDERS’
EQUITY CURRENT LIABILITIES: Accounts payable $ 16,384 $ 16,254
Income taxes payable 1,037 39 Accrued expenses 9,946 10,974 Other
current liabilities 250 250 Current portion of long-term debt
3,000 3,000 Total current liabilities 30,617 30,517
LONG-TERM LIABILITIES: Deferred tax liabilities 3,839 4,200
Line of credit - 10,732 Long-term debt, net of current portion
22,500 23,250 Other long-term liabilities 601 719
Total long-term liabilities 26,940 38,901 Total
liabilities 57,557 69,418 COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY: Common stock 136 136 Additional
paid-in capital 70,979 69,175 Accumulated other comprehensive loss,
net of tax (4,134 ) (3,902 ) Retained earnings 131,213
127,015 Total shareholders’ equity 198,194
192,424
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $
255,751 $ 261,842
EXACTECH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in
thousands, except per share amounts) (Unaudited)
Three Month Periods Ended March 31, 2014 2013 NET SALES $
63,258 $ 59,301 COST OF GOODS SOLD 18,634
18,590 Gross profit 44,624 40,711 OPERATING EXPENSES: Sales
and marketing 23,713 21,524 General and administrative 5,785 5,096
Research and development 4,193 3,850 Depreciation and amortization
4,322 4,175 Total operating expenses 38,013 34,645
INCOME FROM OPERATIONS 6,611 6,066
OTHER INCOME (EXPENSE): Interest income 3 1 Other income 24
29 Interest expense (347 ) (283 ) Foreign currency exchange gain
(loss) 313 (462 ) Total other expenses (7 ) (715 )
INCOME BEFORE INCOME TAXES 6,604 5,351
PROVISION FOR INCOME TAXES 2,406 1,494 NET
INCOME $ 4,198 $ 3,857 BASIC EARNINGS PER SHARE $ 0.31 $
0.29 DILUTED EARNINGS PER SHARE $ 0.30 $ 0.29 SHARES
- BASIC 13,596 13,355 SHARES - DILUTED 13,907 13,523
Exactech, Inc.Investor contactsJody Phillips, 352-377-1140Chief
Financial OfficerorHawk AssociatesJulie Marshall or Frank Hawkins,
305-451-1888exactech@hawkassociates.com
Exactech, Inc. (delisted) (NASDAQ:EXAC)
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