Nine Months Revenue Up 5% to $185.1 Million;
Net Income Up 5% to $11.4 Million or $0.81 EPDS
Exactech, Inc. (Nasdaq: EXAC), a developer and producer of bone
and joint restoration products for hip, knee, shoulder and spine,
announced today revenue of $57.9 million for the third quarter of
2014, a 4% increase over $55.7 million in the third quarter of
2013. Net income was $3.0 million, or $0.21 per diluted share,
compared to $3.2 million, or $0.23 per diluted share, in the same
quarter a year ago.
Third Quarter Segment Performance
- Extremity implant revenue increased 23%
to $18.6 million
- Knee implant revenue decreased 2% to
$18.1 million
- Hip implant revenue increased 4% to
$10.2 million
- Biologic and Spine revenue decreased
10% to $5.4 million
- Other revenue decreased 9% to $5.6
million
Nine Months Highlights and Segment Performance
For the nine months of 2014, revenue was $185.1 million, an
increase of 5% over $175.5 million for the comparable period last
year. Net income for the first nine months of 2014 increased 5% to
$11.4 million, or $0.81 per diluted share compared to $10.8
million, or $0.79 per diluted share for the first nine months of
2013. Nine month product revenues were as follows:
- Extremity implant revenue increased 22%
to $57.3 million
- Knee implant revenue decreased 1% to
$59.8 million
- Hip implant revenue increased 4% to
$32.2 million
- Biologic and spine revenue decreased 6%
to $17.7 million
- Other products revenue decreased 2% to
$18.2 million
Management Comment
Exactech CEO and President David Petty said, “Total sales were
up 4% to $57.9 million in the third quarter and up 5% to $185.1
million for the first nine months. Continuing double-digit strength
in our shoulder segment resulted in our extremities implant revenue
emerging as our largest revenue segment in the quarter with an
increase of 23% to $18.6 million. This surpassed revenue in our
knee segment, which decreased 2% to $18.1 million year over year in
the quarter. Sluggish knee sales in Europe and the U.S. contributed
to the knee revenue performance. Our hip segment continued to
perform well with a 4% gain to $10.2 million, and we experienced
weakness in our other segments. Net income slipped 6% to $3.0
million reflecting a $923,000 negative foreign exchange swing as
compared to the third quarter of last year.
“U.S. sales for the quarter were up 2% to $40.0 million compared
with $39.1 million in the third quarter a year ago. International
sales increased 8% to $17.9 million. U.S. sales represented 69% of
total sales and international sales were 31% of the total. For the
first nine months of 2014, U.S. sales rose 5% to $123.8 million
compared with $117.9 million in 2013, representing 67% of total
sales. International sales increased 6% to $61.2 million and
remained at 33% of total sales,” Petty said.
Chief Financial Officer Jody Phillips said, “Gross margins
remained at 71% for each of the third quarters for 2014 and 2013.
Total operating expenses for the third quarter increased 2% to
$35.4 million and as a percentage of sales decreased to 61% from
62% resulting in an operating profit increase of 14% to $5.5
million. Our balance sheet remained strong with a further decrease
in long-term debt reflecting healthy cash flow."
Looking forward, Exactech updated its 2014 revenue guidance to
$247-$249 million and its diluted EPS target to $1.14–$1.16. For
the fourth quarter ending December 31, 2014, the company said it
anticipates revenues of $62-$64 million and diluted EPS of
$0.33-$0.35 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 Wednesday,
October 22nd, 2014 at 10:00 a.m. Eastern
Time. The call will cover Exactech’s third quarter 2014
results. Petty will open the conference call and a
question-and-answer session will follow.
To participate in the call, dial 1-888-329-8877 any time
after 9:50 a.m. Eastern on Wednesday, October 22nd. International
and local callers should dial 1-719-457-2085. A live and
archived webcast of the call will be available at
http://www.hawkassociates.com/profile/exac.cfm or
http://public.viavid.com/index.php?id=111204. 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) September 30,
December 31, 2014 2013
ASSETS CURRENT ASSETS: Cash and cash equivalents $ 9,086 $
6,011 Trade receivables, net of allowances of $821 and $993 46,342
59,109 Prepaid expenses and other assets, net 3,711 2,865 Income
taxes receivable 550 1,331 Inventories, current 74,171 71,590
Deferred tax assets 1,521 1,653 Total current assets
135,381 142,559 PROPERTY AND EQUIPMENT: Land 2,208 2,215
Machinery and equipment 34,321 35,439 Surgical instruments 100,946
95,902 Furniture and fixtures 4,547 4,200 Facilities 19,251 19,187
Projects in process 1,133 852 Total property and
equipment 162,406 157,795 Accumulated depreciation (82,350 )
(76,127 ) Net property and equipment 80,056 81,668
OTHER ASSETS: Deferred financing and deposits, net 1,375 870
Non-current inventory 17,089 11,100 Product licenses and designs,
net 8,664 9,457 Patents and trademarks, net 1,777 2,005 Customer
relationships, net 317 669 Goodwill 13,224 13,514
Total other assets 42,446 37,615
TOTAL ASSETS
$ 257,883 $ 261,842
LIABILITIES AND SHAREHOLDERS’
EQUITY CURRENT LIABILITIES: Accounts payable $ 15,631 $ 16,254
Income taxes payable - 39 Accrued expenses 8,693 10,974 Other
current liabilities 250 250 Current portion of long-term debt
3,000 3,000 Total current liabilities 27,574 30,517
LONG-TERM LIABILITIES: Deferred tax liabilities 2,890 4,200
Line of credit - 10,732 Long-term debt, net of current portion
21,000 23,250 Other long-term liabilities 432 719
Total long-term liabilities 24,322 38,901 Total
liabilities 51,896 69,418 COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY: Common stock 138 136 Additional
paid-in capital 74,315 69,175 Accumulated other comprehensive loss,
net of tax (6,850 ) (3,902 ) Retained earnings 138,384
127,015 Total shareholders’ equity 205,987
192,424
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $
257,883 $ 261,842
EXACTECH, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts) (Unaudited)
Three Month Periods Nine Month Periods
Ended September 30, Ended September 30, 2014 2013 2014
2013 NET SALES $ 57,884 $ 55,650 $ 185,061 $ 175,510
COST OF GOODS SOLD 16,929 16,126 55,128
53,791 Gross profit 40,955 39,524 129,933 121,719 OPERATING
EXPENSES: Sales and marketing 21,304 20,274 67,902 63,281 General
and administrative 5,380 5,384 16,832 15,801 Research and
development 4,464 5,068 13,521 13,523 Depreciation and amortization
4,289 3,963 12,735 11,992 Total
operating expenses 35,437 34,689 110,990 104,597
INCOME FROM OPERATIONS 5,518 4,835 18,943 17,122
OTHER INCOME (EXPENSE): Interest income 5 2 13 5 Other
income (loss) 3 18 53 69 Interest expense (253 ) (281 ) (860 ) (852
) Foreign currency exchange (loss) gain (652 ) 271
(452 ) (312 ) Total other income (expenses) (897 ) 10
(1,246 ) (1,090 ) INCOME BEFORE INCOME
TAXES 4,621 4,845 17,697 16,032 PROVISION FOR INCOME TAXES
1,610 1,653 6,328 5,255 NET INCOME $
3,011 $ 3,192 $ 11,369 $ 10,777 BASIC EARNINGS PER
SHARE $ 0.22 $ 0.24 $ 0.83 $ 0.80 DILUTED EARNINGS PER SHARE
$ 0.21 $ 0.23 $ 0.81 $ 0.79 SHARES - BASIC 13,766
13,494 13,690 13,433 SHARES - DILUTED 14,064 13,712 13,989
13,632
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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