Hearing Health Revenue Up Over Prior
Year
IntriCon Corporation (NASDAQ: IIN), a designer,
developer, manufacturer and distributor of miniature and
micro-miniature body-worn devices, today announced financial
results for its second quarter ended June 30, 2016.
Highlights:
- Net sales of $17.0 million were
consistent with the prior-year period;
- The company’s value hearing health
initiatives delivered year-over-year growth;
- IntriCon’s equity offering in May 2016
raised net proceeds of $3.7 million, providing additional financial
flexibility; and,
- The company amended its credit
facilities with The PrivateBank in April 2016, obtaining additional
liquidity.
Financial ResultsFor the 2016 second quarter, the company
reported net sales of $17.0 million, compared to $17.1 million in
the prior-year period. IntriCon posted a net loss attributable to
IntriCon shareholders of $1,490,000, or $0.23 per share, versus net
income attributable to IntriCon shareholders of $506,000, or $0.08
per diluted share, for the 2015 second quarter. The results were in
line with IntriCon’s June 30, 2016, pre-release and reflect a
timing shift in orders from its largest medical customer.
“While we are far from pleased with our second-quarter
performance, we continue to make progress building the
infrastructure required to secure high-potential growth
opportunities in value hearing health, and the long-term outlook
for our business remains healthy,” said Mark S. Gorder, president
and chief executive officer of IntriCon. “The $3.7 million in net
proceeds we raised in the quarter through a public stock offering
is an important step in advancing our future plans. And we are
aggressively pursuing alternative distribution models and
partnerships within the value hearing health market to drive
shareholder value.”
Gross profit margins were 22.8 percent compared to 26.8 percent
in the prior-year second quarter. The decrease was primarily due to
a less favorable sales mix and slightly increased overhead.
Operating expenses for the second-quarter were $5.0 million,
compared to $3.9 million in the prior-year second quarter. The
increase was largely due to the inclusion of PC Werth, acquired by
IntriCon UK in November 2015, and higher research and development
investments to support value hearing health initiatives.
Business UpdateHearing health sales increased 7 percent
during the second quarter from the prior-year quarter, primarily as
a result of contributions from PC Werth. During the quarter,
IntriCon experienced gains in value hearing aids, personal sound
amplifier products (PSAP) and assisted listening devices. These
were partially offset by anticipated decreases in conventional
channel sales. For some time, IntriCon has focused on opportunities
in value hearing health versus the conventional channel.
Over the past 12 months several institutions including the U.S.
Food and Drug Administration (FDA), the President’s Council of
Advisors on Science and Technology (PCAST) and most recently, the
National Academies of Sciences, Engineering and Medicines (NASEM),
have recognized that untreated hearing loss in the United States is
a substantial national problem. High device costs and inadequate
innovation in distribution channels are creating significant
barriers to access for most Americans. Each institution,
individually, has released statements indicating their support for
improving hearing health access and affordability for consumers,
thereby improving market penetration.
“As a company, we are aligned with the FDA, PCAST and NASEM
efforts to overcome barriers to device access and spur development
and innovation in cost-effective technology,” said Gorder. “All of
these pivotal events point to a groundswell for fundamental change.
They highlight the need for an outcomes-based hearing healthcare
model in which the best value-added devices and software technology
are combined with varying levels of practitioner intervention, to
provide the most efficient, lowest cost solution, to consumers
across the country.”
The company’s recent initiative to improve affordability in the
U.S. market was providing the independent audiologist the best
value-added devices at the best price, by establishing earVenture,
a joint venture with the Academy of Doctors of Audiology (ADA).
While earVenture has not yet generated significant revenue, it is
an important strategic element in IntriCon’s approach. Over 450 ADA
members have registered to join the earVenture program. earVenture
is focused on sales and marketing efforts to convert those members
into consistent customers, as well as solicit
non-registered ADA members to join.
In the United Kingdom, IntriCon’s integration plan for PC Werth
is proceeding on schedule. Over the last several months
IntriCon has delivered initial devices to targeted National
Health Service (NHS) clinics, with positive feedback. The company
is directing sales and marketing efforts at additional clinics
during the second half of the year.
“The ADA and NHS leadership have embraced our offering, which is
a groundbreaking first step in advancing our value-based model,”
said Gorder. “In order to drive meaningful growth in both of these
markets, we must focus our efforts on marketing to and educating
the practitioner.”
Lastly, the company is also aggressively exploring initiatives
to expand its offering into alternative distribution channels that
require less practitioner intervention. These models have
demonstrated the ability to scale more quickly than efforts into
traditional channels.
Sales in IntriCon’s medical business decreased 4 percent in the
2016 second quarter, primarily driven by IntriCon’s largest
customer, Medtronic. Sales to Medtronic were lower as they manage
the transition of their pending FDA product approval and launch for
the MiniMed 630G system. Long-term, IntriCon believes it’s well
positioned for growth with Medtronic. In addition to the MiniMed
630G system, IntriCon is also designed into the MiniMed 670G system
which was recently submitted to the FDA for Premarket Approval.
Second-quarter 2016 professional audio communication sales
declined 5 percent from the prior-year period. IntriCon anticipates
second half 2016 revenue in this business to be flat with the
prior-year comparable period. The company is working on several
opportunities that management believes will provide modest revenue
growth in 2017.
While lower revenue levels are expected to be temporary,
IntriCon has taken measured actions to reduce operating expenses.
These reductions, which will not impact the company’s ability to
execute strategic initiatives, should result in approximately
$600,000 in annual savings. The majority of the savings will begin
to be realized in the 2016 fourth quarter.
Looking AheadConcluded Gorder, “While I am disappointed
we experienced a timing issue that had an adverse impact on our
second-quarter results, I am excited about the direction we are
headed. I believe our value proposition is a compelling one. Our
position with Medtronic has never been stronger, our technology
pipeline – including advancements of wireless connective and
self-fitting hearing aid software – is robust, and the need for
disruptive hearing health channels is high. We are committed to
accelerating targeted investments that best position the company
for long-term success in the value hearing health and medical
biotelemetry markets. Based on information currently available, we
anticipate third-quarter net sales to be consistent with 2016
second-quarter levels, with a notably smaller net loss.
Additionally, we anticipate fourth-quarter net sales at levels that
will achieve profitability.
Conference Call TodayAs previously announced, the company
will hold an investment community conference call today, Tuesday,
August 2, 2016, beginning at 4 p.m. CT. Mark Gorder, president and
chief executive officer, and Scott Longval, chief financial
officer, will review second-quarter performance and discuss the
company’s strategies. To join the conference call, dial:
1-888-632-3382 and provide the conference ID number 6339461 to the
operator. To access the replay, please visit
https://jsp.premiereglobal.com/webrsvp and enter confirmation code
6339461.
About IntriCon CorporationHeadquartered in Arden Hills,
Minn., IntriCon Corporation designs, develops and manufactures
miniature and micro-miniature body-worn devices. These advanced
products help medical, healthcare and professional communications
companies meet the rising demand for smaller, more intelligent and
better connected devices. IntriCon has facilities in the United
States, Asia, the United Kingdom and Europe. The company’s common
stock trades under the symbol “IIN” on the NASDAQ Global Market.
For more information about IntriCon, visit www.intricon.com.
Forward-Looking StatementsStatements made in this release
and in IntriCon’s other public filings and releases that are not
historical facts or that include forward-looking terminology are
“forward-looking statements” within the meaning of the Securities
Exchange Act of 1934, as amended. These forward-looking statements
may be affected by known and unknown risks, uncertainties and other
factors that are beyond IntriCon’s control, and may cause
IntriCon’s actual results, performance or achievements to differ
materially from the results, performance and achievements expressed
or implied in the forward-looking statements. These risks,
uncertainties and other factors are detailed from time to time in
the company’s filings with the Securities and Exchange Commission,
including the Annual Report on Form 10-K for the year ended
December 31, 2015. The company disclaims any intent or obligation
to publicly update or revise any forward-looking statements,
regardless of whether new information becomes available, future
developments occur or otherwise.
INTRICON CORPORATION Consolidated Condensed
Statements of Operations (In Thousands, Except Per Share
Amounts)
Three Months Ended Six Months Ended June 30, June 30, June
30, June 30, 2016 2015 2016 2015
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Sales, net $ 16,976 $ 17,120 $ 35,234 $ 33,722 Cost of sales
13,106 12,535 26,250
24,809 Gross profit 3,870 4,585 8,984 8,913 - -
Operating expenses: Sales and marketing 1,200 898 2,396 1,885
General and administrative 2,108 1,733 4,399 3,442 Research and
development 1,558 1,294 2,974 2,520 Restructuring charges
132 - 132 - Total
operating expenses 4,998 3,925
9,901 7,847 Operating income (loss) (1,128 )
660 (917 ) 1,066 Interest expense (126 ) (89 ) (252 ) (192 )
Other income (expense) (221 ) 12 (291 )
148 Income (loss) before income taxes (1,475 ) 583
(1,460 ) 1,022 Income tax expense 52 77
86 232 Net income (loss) (1,527
) 506 (1,546 ) 790 Less: Loss allocated to non-controlling interest
(37 ) - (71 ) - Net
income (loss) attributable to IntriCon shareholders $ (1,490 ) $
506 $ (1,475 ) $ 790 Net income (loss) per
share attributable to IntriCon shareholders: Basic $ (0.23 ) $ 0.09
$ (0.24 ) $ 0.14 Diluted (0.23 ) 0.08 (0.24 ) 0.13 Average
shares outstanding: Basic 6,370 5,856 6,078 5,848 Diluted 6,370
6,242 6,078 6,229
INTRICON CORPORATION
Consolidated Condensed Balance Sheets (In Thousands,
Except Per Share Amounts)
June
30,
December 31,
2016
2015
Current assets: Cash $ 450 $ 369 Restricted cash 633 610 Accounts
receivable, less allowance for doubtful accounts of $133 at June
30, 2016 and $135 at December 31, 2015 8,473 8,578 Inventories
14,598 14,472 Other current assets 883 860
Total current assets 25,037 24,889 Machinery and
equipment 39,852 38,653 Less: Accumulated depreciation
32,829 31,911 Net machinery and equipment
7,023 6,742 Goodwill 9,551 9,551 Investment in partnerships
133 224 Other assets, net 1,050 480
Total assets $ 42,794 $ 41,886 Current
liabilities: Current maturities of long-term debt $ 1,992 $ 1,908
Accounts payable 7,363 7,785 Accrued salaries, wages and
commissions 2,291 2,559 Deferred gain - 55 Other accrued
liabilities 784 1,279 Total current
liabilities 12,430 13,586 Long-term debt, less current
maturities 7,589 7,929 Other postretirement benefit obligations 519
542 Accrued pension liabilities 803 812 Other long-term liabilities
160 120 Total liabilities 21,501 22,989
Commitments and contingencies Shareholders’ equity: Common stock,
$1.00 par value per share; 20,000 shares authorized; 6,796 and
5,981 shares issued and outstanding at June 30, 2016 and December
31, 2015, respectively 6,796 5,981 Additional paid-in capital
21,004 17,721 Accumulated deficit (5,521 ) (4,046 ) Accumulated
other comprehensive loss (877 ) (721 ) Total
shareholders' equity 21,402 18,935 Non-controlling interest
(109 ) (38 ) Total equity 21,293 18,897
Total liabilities and equity $ 42,794 $ 41,886
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160802006764/en/
At IntriCon:Scott Longval, CFO,
651-604-9526slongval@intricon.comorAt PadillaCRT:Matt
Sullivan, 612-455-1709matt.sullivan@padillacrt.com
Intricon (NASDAQ:IIN)
Historical Stock Chart
From Aug 2024 to Sep 2024
Intricon (NASDAQ:IIN)
Historical Stock Chart
From Sep 2023 to Sep 2024