Exactech, Inc. (Nasdaq:EXAC), a developer and producer of bone
and joint restoration products for hip, knee, shoulder and spine,
announced today revenue of $56.2 million for the third quarter of
2015, a 3% decrease from $57.9 million in the third quarter of
2014. On a constant currency basis for the quarter, revenue was
flat. Net income was down 4% to $2.9 million, or $0.20 per diluted
share, compared to $3.0 million, or $0.21 per diluted share, in the
same quarter a year ago.
Third Quarter Segment Performance
The third 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 7%
to $20.0 million, a 9% constant currency increase
- Knee implant revenue decreased 16% to
$15.3 million, a 13% constant currency decrease
- Hip implant revenue decreased 2% to
$9.9 million, a 4% constant currency increase
- Biologic and Spine revenue increased 5%
to $5.7 million, an 8% constant currency increase
- Other revenue decreased 4% to $5.4
million, a 3% constant currency decrease
Nine Months Highlights and Segment Performance
For the first nine months of 2015, revenue was $179.1 million, a
decrease of 3% over $185.1 million for the comparable period last
year. On a constant currency basis, revenue for the first nine
months of 2015 was flat. Net income for the first nine months of
2015 decreased 6% to $10.7 million, or $0.75 per diluted share
compared to $11.4 million, or $0.81 per diluted share for the first
nine months of 2014. First nine month product revenues were as
follows:
- Extremity implant revenue increased 7%
to $61.5 million, a 9% constant currency increase
- Knee implant revenue decreased 12% to
$52.7 million, a 7% constant currency decrease
- Hip implant revenue decreased 1% to
$31.8 million, a 4% constant currency increase
- Biologic and Spine revenue decreased 6%
to $16.7 million, a 2% constant currency decrease
- Other revenue decreased 10% to $16.4
million, a 9% constant currency decrease
Management Comment
Exactech CEO and President David Petty said, “Another solid
performance in our largest segment, Extremities, and third quarter
improvement in our Biologic and Spine segment and gains in overall
U.S. sales were not enough to offset strong international currency
headwinds and soft results in European and Latin American markets.
Worldwide sales for the first nine months of 2015 decreased 3% to
$179.1 million but were flat on a constant currency basis. U.S.
sales were relatively flat at $123.3 million compared with $123.8
million in the first nine months a year ago. International sales
decreased 9% in the first nine months to $55.8 million and were up
1% on a constant currency basis. For the third quarter of 2015,
U.S. sales were up 2% to $40.7 million compared with $40.0 million
in the third quarter a year ago. International sales decreased 13%
to $15.5 million. On a constant currency basis, international sales
were down 4% and worldwide sales were flat for the third quarter.
U.S. sales represented 72% of total sales and international sales
were 28% of the total,” Petty said.
Chief Financial Officer Jody Phillips said, “Gross margins
decreased to 70.5% for the third quarter of 2015 vs. 70.7% in the
third quarter of 2014 due to pricing and currency impacts. Total
operating expenses for the quarter decreased 1% to $35.1 million
and as a percentage of sales were 62%, compared to $35.4 million
and 61% for the same quarter of 2014. General and administrative
expenses decreased 4% in the third quarter to $5.2 million and
sales and marketing expenses decreased 3% to $20.6 million
primarily due to currency impacts. We experienced an 18% increase
in R&D spending to $5.3 million related to development and
launch costs associated with our new revision products. We
continued to produce positive cash flows, which resulted in a $2.9
million improvement in our cash and net debt position during the
third quarter.”
Looking forward, Exactech confirmed its updated 2015 revenue
guidance to $239-$241 million and updated its diluted EPS target to
$1.02–$1.04. The resulting revenue guidance for the fourth quarter
of 2015 is for revenues of $60-$62 million and a diluted EPS target
of $0.27-$0.29. The foregoing statements regarding targets for the
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 28th at 10:00 a.m. Eastern Time. The call will
cover Exactech’s third quarter 2015 results. Petty will open the
conference call and a question-and-answer session will follow.
To participate in the call, dial 1-888-417-8533 any time
after 9:50 a.m. Eastern on October 28th. International and local
callers should dial 1-719-457-2645. 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=116694.
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 $ 17,051 $ 10,051 Trade
receivables, net of allowances of $807 and $946 50,283 50,731
Prepaid expenses and other assets, net 3,692 2,436 Income taxes
receivable 829 1,492 Inventories, current 72,348 72,827 Deferred
tax assets 1,647 1,620 Total current assets 145,850
139,157 PROPERTY AND EQUIPMENT: Land 2,692 2,742 Machinery
and equipment 36,877 35,434 Surgical instruments 109,939 101,142
Furniture and fixtures 4,720 4,556 Facilities 20,247 19,981
Projects in process 711 1,166 Total property and
equipment 175,186 165,021 Accumulated depreciation (95,579 )
(84,915 ) Net property and equipment 79,607 80,106
OTHER ASSETS: Deferred financing and deposits, net 582 676
Non-current inventory 18,733 17,465 Product licenses and designs,
net 11,693 8,641 Patents and trademarks, net 1,492 1,701 Customer
relationships, net 111 203 Goodwill 19,098 13,091
Total other assets 51,709 41,777
TOTAL ASSETS
$ 277,166 $ 261,040
LIABILITIES AND SHAREHOLDERS’
EQUITY CURRENT LIABILITIES: Accounts payable $ 12,642 $ 13,615
Income taxes payable 167 146 Accrued expenses 9,113 9,194 Other
current liabilities 1,381 250 Current portion of long-term debt
3,000 3,000 Total current liabilities 26,303 26,205
LONG-TERM LIABILITIES: Deferred tax liabilities 3,756 2,794
Long-term debt, net of current portion 18,000 20,250 Other
long-term liabilities 5,582 420 Total long-term
liabilities 27,338 23,464 Total liabilities 53,641
49,669 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS’
EQUITY: Common stock 141 139 Additional paid-in capital 80,347
76,126 Accumulated other comprehensive loss, net of tax (11,117 )
(8,397 ) Retained earnings 154,154 143,503 Total
shareholders’ equity 223,525 211,371
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY $ 277,166 $ $261,040
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, 2015 2014
2015 2014 NET SALES $ 56,237 $ 57,884 $ 179,106 $ 185,061
COST OF GOODS SOLD 16,597 16,929 54,573
55,128 Gross profit 39,640 40,955 124,533 129,933
OPERATING EXPENSES: Sales and marketing 20,587 21,304 63,901 67,902
General and administrative 5,180 5,380 16,803 16,832 Research and
development 5,258 4,464 14,389 13,521 Depreciation and amortization
4,073 4,289 12,697 12,735 Total
operating expenses 35,098 35,437 107,790 110,990
INCOME FROM OPERATIONS 4,542 5,518 16,743 18,943
OTHER INCOME (EXPENSE): Interest income 3 5 7 13 Other
income (loss) 26 3 91 53 Interest expense (283 ) (253 ) (860 ) (860
) Foreign currency exchange loss (103 ) (652 )
(862 ) (452 ) Total other income (expenses) (357 ) (897 )
(1,624 ) (1,246 ) INCOME BEFORE INCOME
TAXES 4,185 4,621 15,119 17,697 PROVISION FOR INCOME TAXES
1,307 1,610 4,468 6,328 NET INCOME $
2,878 $ 3,011 $ 10,651 $ 11,369 BASIC EARNINGS PER
SHARE $ 0.20 $ 0.22 $ 0.76 $ 0.83 DILUTED EARNINGS PER SHARE
$ 0.20 $ 0.21 $ 0.75 $ 0.81 SHARES - BASIC 14,058
13,766 13,996 13,690 SHARES - DILUTED 14,201 14,064 14,201
13,989
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version on businesswire.com: http://www.businesswire.com/news/home/20151027006837/en/
Exactech, Inc.Investor Contacts: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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