Exactech, Inc. (Nasdaq:EXAC), a developer and producer of bone
and joint restoration products for hip, knee, shoulder and spine,
announced today revenue of $61.5 million for the second quarter of
2015, a 4% decrease from $63.9 million in the second quarter of
2014. Net income was $3.7 million, or $0.26 per diluted share,
compared to $4.2 million, or $0.30 per diluted share, in the same
quarter a year ago.
Second Quarter Segment Performance
The second quarter of 2015 continued to be impacted by a
weakened Euro and Japanese Yen relative to the U.S. Dollar. The
following are company revenue results, as well as adjusted revenue
comparisons on a constant currency basis:
- Extremity implant revenue increased 8%
to $20.5 million, a 9% constant currency increase
- Knee implant revenue decreased 10% to
$19.0 million, a 4% constant currency decrease
- Hip implant revenue decreased 2% to
$10.9 million, a 1% constant currency increase
- Biologic and Spine revenue decreased 9%
to $5.9 million, a 4% constant currency decrease
- Other revenue decreased 15% to $5.2
million, a 14% constant currency decrease
Six Months Highlights and Segment Performance
For the first six months of 2015, revenue was $122.9 million, a
decrease of 3% over $127.2 million for the comparable period last
year. Net income for the first six months of 2015 decreased 7% to
$7.8 million, or $0.55 per diluted share compared to $8.4 million,
or $0.60 per diluted share for the first six months of 2014. First
six month product revenues were as follows:
- Extremity implant revenue increased 7%
to $41.6 million, a 9% constant currency increase
- Knee implant revenue decreased 10% to
$37.4 million, a 5% constant currency decrease
- Hip implant revenue was relatively
unchanged at $21.9 million, a 4% constant currency increase
- Biologic and Spine revenue decreased
10% to $11.0 million, a 6% constant currency decrease
- Other revenue decreased 13% to $11.0
million, an 11% constant currency decrease
Management Comment
Exactech CEO and President David Petty said, “The first half of
2015 posed difficult challenges. We faced strong currency
headwinds, worked to optimize our inventory flow and supply service
levels and executed some disruptive but necessary changes within
our domestic sales channel. We also invested heavily in our
pipeline of new products, several of which initially will be used
in surgeries during the second half of the year. Partially
because of improvements we have made to our sales force and also
because of the initial availability of new revision systems in our
hip, knee and shoulder product lines, we expect the second half
will be considerably better. This should result in a satisfactory
year’s performance, providing positive momentum as we head into
2016.”
“Worldwide sales for the first half of 2015 decreased 3% to
$122.9 million and were flat on a constant currency basis. U.S.
sales were down 2% to $82.5 million compared with $83.8 million in
the first half a year ago. International sales decreased 7% to
$40.3 million. U.S. sales for the second quarter of 2015 were down
2% to $41.3 million compared with $42.2 million in the second
quarter a year ago. International sales decreased 7% to $20.2
million. On a constant currency basis, international sales
increased 4% and worldwide sales were flat for the second quarter.
U.S. sales represented 67% of total sales and international sales
were 33% of the total,” Petty said.
Chief Financial Officer Jody Phillips said, “Gross margins
decreased largely as expected to 68.6% for the second quarter of
2015 vs 69.4% in the second quarter of 2014 due to pricing and
currency impacts. Total operating expenses for the quarter
decreased 4% to $36.0 million and as a percentage of sales were
59%, the same as the second quarter of 2014. General and
administrative expenses increased 2% in the second quarter at $5.8
million and sales and marketing expenses decreased 6% to $21.5
million primarily due to the currency impact of our direct
operations in Europe. We continued to produce positive cash flows,
which resulted in a $3.3 million improvement in our cash and net
debt position during the second quarter.”
Looking forward, Exactech updated its 2015 revenue guidance to
$246-$250 million and its diluted EPS target to $1.16–$1.20. For
the third quarter ending September 30, 2015, the company said it
anticipates revenues of $58.0-$60.0 million and diluted EPS of
$0.23-$0.25. 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, July
29th at 10:00 a.m. Eastern Time. The call will cover
Exactech’s second quarter 2015 results. Petty will open the
conference call and a question-and-answer session will follow.
To participate in the call, dial 1-888-510-1785 any time
after 9:50 a.m. Eastern on July 29th. International and local
callers should dial 1-719-325-2455. 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=115275.
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, 2015 2014
ASSETS CURRENT ASSETS: Cash and cash equivalents $ 14,852 $
10,051 Trade receivables, net of allowances of $998 and $946 52,751
50,731 Prepaid expenses and other assets, net 3,575 2,436 Income
taxes receivable 966 1,492 Inventories, current 71,964 72,827
Deferred tax assets 1,616 1,620 Total current assets
145,724 139,157 PROPERTY AND EQUIPMENT: Land 2,687 2,742
Machinery and equipment 36,318 35,434 Surgical instruments 106,096
101,142 Furniture and fixtures 4,745 4,556 Facilities 20,087 19,981
Projects in process 862 1,166 Total property and
equipment 170,795 165,021 Accumulated depreciation (91,781 )
(84,915 ) Net property and equipment 79,014 80,106
OTHER ASSETS: Deferred financing and deposits, net 610 676
Non-current inventory 16,400 17,465 Product licenses and designs,
net 12,031 8,641 Patents and trademarks, net 1,561 1,701 Customer
relationships, net 130 203 Goodwill 19,016 13,091
Total other assets 49,748 41,777
TOTAL ASSETS
$ 274,486 $ 261,040
LIABILITIES AND SHAREHOLDERS’
EQUITY CURRENT LIABILITIES: Accounts payable $ 13,271 $ 13,615
Income taxes payable 4 146 Accrued expenses 8,661 9,194 Other
current liabilities 1,747 250 Current portion of long-term debt
3,000 3,000 Total current liabilities 26,683 26,205
LONG-TERM LIABILITIES: Deferred tax liabilities 4,026 2,794
Long-term debt, net of current portion 18,750 20,250 Other
long-term liabilities 5,222 420 Total long-term
liabilities 27,998 23,464 Total liabilities 54,681
49,669 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS’
EQUITY: Common stock 141 139 Additional paid-in capital 79,567
76,126 Accumulated other comprehensive loss, net of tax (11,179 )
(8,397 ) Retained earnings 151,276 143,503 Total
shareholders’ equity 219,805 211,371
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY $ 274,486 $ $261,040
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, 2015 2014 2015
2014 NET SALES $ 61,493 $ 63,919 $ 122,869 $ 127,177
COST OF GOODS SOLD 19,334 19,565 37,976
38,199 Gross profit 42,159 44,354 84,893 88,978 OPERATING
EXPENSES: Sales and marketing 21,464 22,885 43,314 46,598 General
and administrative 5,776 5,667 11,623 11,452 Research and
development 4,602 4,864 9,131 9,057 Depreciation and amortization
4,182 4,124 8,624 8,446 Total operating
expenses 36,024 37,540 72,692 75,553
INCOME FROM OPERATIONS 6,135 6,814 12,201 13,425 OTHER
INCOME (EXPENSE): Interest income 2 5 4 8 Other income (loss) 37 26
65 50 Interest expense (275 ) (260 ) (577 ) (607 ) Foreign currency
exchange (loss) gain (557 ) (113 ) (759 )
200 Total other income (expenses) (793 ) (342 ) (1,267 )
(349 ) INCOME BEFORE INCOME TAXES 5,342
6,472 10,934 13,076 PROVISION FOR INCOME TAXES 1,681 2,312
3,161 4,718 NET INCOME $ 3,661 $ 4,160
$ 7,773 $ 8,358 BASIC EARNINGS PER SHARE $ 0.26 $
0.30 $ 0.56 $ 0.61 DILUTED EARNINGS PER SHARE $ 0.26 $ 0.30
$ 0.55 $ 0.60 SHARES - BASIC 13,947 13,694 13,965
13,646 SHARES - DILUTED 14,167 13,986 14,203 13,946
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version on businesswire.com: http://www.businesswire.com/news/home/20150728006767/en/
Exactech, Inc.Jody Phillips, 352-377-1140Executive Vice
President of Finance & Chief Financial OfficerorHawk
AssociatesJulie Marshall or Frank Hawkins,
305-451-1888EXAC@hawkassociates.com
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