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 contactsJody Phillips, 352-377-1140Chief
Financial OfficerorHawk AssociatesJulie Marshall or Frank Hawkins,
305-451-1888E-mail: exactech@hawkassociates.com
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