Q2 Net Income $4.8 Million; Diluted EPS
$0.33
Exactech, Inc. (Nasdaq:EXAC), a developer and producer of bone
and joint restoration products and biologic solutions for
extremities, knee and hip, announced today that revenue for the
second quarter of 2017 increased 2% to $67.3 million from $66.1
million in the second quarter of 2016, and 3% on a constant
currency basis. Domestic revenue increased 2% to $45.7 million, and
international revenue increased 1% to $21.6 million in the second
quarter of 2017. Diluted earnings per share for the second quarter
was $0.33 based on net income of $4.8 million, compared to second
quarter 2016 net income of $4.4 million and diluted earnings per
share of $0.31.
Second Quarter Segment Performance
- Extremities revenue increased 19% to
$29.5 million from $24.8 million, a 19% constant currency
increase
- Knee revenue was flat at $19.6 million,
a 1% constant currency increase
- Hip revenue decreased 8% to $11.5
million from $12.5 million, a 7% constant currency decrease
- Other revenue decreased 27% to $6.7
million from $9.2 million, a 26% constant currency decrease. The
Other segment includes an aggregation of the former Biologics and
Spine segment
Six Months Highlights and Segment Performance
For the first six months of 2017, revenue was $136.8 million, an
increase of 4% over $131.4 million for the comparable period last
year. On a constant currency basis, revenue for the first half of
2017 was up 5%. Net income for the first six months of 2017
increased 7% to $9.4 million, or $0.65 per diluted share compared
to $8.8 million, or $0.62 per diluted share, for the first six
months of 2016. First six month product revenue was as follows:
- Extremities revenue increased 20% to
$59.4 million, a 20% constant currency increase
- Knee revenue increased 1% to $39.7
million, a 1% constant currency increase
- Hip revenue decreased 1% to $23.6
million, flat on a constant currency basis
- Other revenue decreased 24% to $14.1
million, a 23% constant currency decrease
Management Comment
Exactech CEO and President David Petty said, “For the first half
of 2017, we reported a 4% increase in our revenue; however,
excluding the impact of the divested spine products from the prior
year we reported 7% growth in revenue during the first half of the
year. Our hip revenue was negatively impacted by distribution
transitions underway in certain markets outside the U.S. We
continue to be pleased with the performance of our Extremities
segment, which benefited modestly in the quarter from the pilot
launch of the Vantage® ankle and also the Equinoxe® Preserve
humeral stem. In terms of our product pipeline, additional pilot
launches of the ExactechGPS® shoulder application, Alteon® H.A. hip
stem and the Truliant® knee system are also going well.
“During the third and fourth quarters we will be building
inventory for these systems and hope to move into a limited launch
late this year. Our channel development strategy remains important
and will be enhanced as we more fully launch the Truliant knee
system,” Petty said.
Chief Financial Officer Jody Phillips said, “Gross margins
decreased to 68.7% from 69.3% for the second quarter a year ago, as
average selling price decreases offset the increases in higher
margin extremity sales. Total operating expenses for the quarter
remained relatively flat at $39.3 million due to the divestiture of
the spine segment being offset by an increase in product launch and
development expenses. As a result, we produced a net income
increase of 10% to $4.8 million and $0.33 diluted EPS for the
second quarter which was in the range of our expectations.”
Looking forward, Exactech narrowed 2017 revenue guidance to
$267-$271 million and diluted EPS target to $1.25-$1.29, including
the impact of the first quarter $0.02 diluted earnings per share
costs related to the spine business transition. On an adjusted
basis, the diluted EPS target is $1.27-$1.31. For the third quarter
of 2017, the company anticipates revenues of $60.5-$62.5 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, Friday, July 28th at 10:00 a.m.
Eastern Time. The call will cover Exactech’s second quarter 2017
results. Mr. Petty will open the conference call and a
question-and-answer session will follow.
To participate in the call, dial 888-417-2254 any time after
9:50 a.m. Eastern Time on July 28. International and local callers
should dial 719-325-4790. 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=125497.
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,
2017 2016 ASSETS CURRENT ASSETS: Cash
and cash equivalents $ 8,917 $ 13,052 Trade receivables, net of
allowances of $1,707 and $1,473 57,733 53,051 Prepaid expenses and
other assets, net 3,606 3,075 Income taxes receivable 1,848 2,140
Inventories, current 67,358 65,264 Assets held for sale
2,695 6,477 Total current assets 142,157 143,059
PROPERTY AND EQUIPMENT: Land 4,530 4,474 Machinery and equipment
43,033 42,034 Surgical instruments 144,018 132,134 Furniture and
fixtures 4,713 4,700 Facilities 21,690 21,726 Projects in process
6,818 2,473 Total property and equipment 224,802
207,541 Accumulated depreciation (108,160 ) (100,234
) Net property and equipment 116,642 107,307 OTHER ASSETS:
Deferred financing, deposits and other 4,326 968 Equity investment
1,952 2,047 Deferred tax asset — 887 Non-current inventory 11,823
15,723 Product licenses and designs, net 8,933 9,102 Patents and
trademarks, net 717 821 Customer relationships, net 467 476
Goodwill 14,758 13,819 Total other assets
42,976 43,843
TOTAL ASSETS $ 301,775 $ 294,209
LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES:
Accounts payable $ 16,602 $ 17,566 Income taxes payable 1,772 780
Accrued expenses 13,017 11,832 Liabilities held for sale 325 —
Other current liabilities 2,884 2,927 Total current
liabilities 34,600 33,105 LONG-TERM LIABILITIES: Deferred
tax liabilities 3,243 1,773 Long-term debt, net of current portion
14,000 20,000 Other long-term liabilities 3,152 5,089
Total long-term liabilities 20,395 26,862 Total
liabilities 54,995 59,967 COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY: Common stock 145 144 Additional
paid-in capital 90,228 87,319 Treasury Stock (3,042 ) (3,042 )
Accumulated other comprehensive loss, net of tax (8,398 ) (8,611 )
Retained earnings 167,847 158,432 Total shareholders’
equity 246,780 234,242
TOTAL LIABILITIES
AND SHAREHOLDERS’ EQUITY $ 301,775 $ 294,209
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, 2017 2016 2017
2016 NET SALES $ 67,327 $ 66,124 $ 136,809 $ 131,422
COST OF GOODS SOLD 21,054 20,268 41,695 40,636 Gross profit 46,273
45,856 95,114 90,786 OPERATING EXPENSES: Sales and marketing
23,569 23,835 48,622 47,154 General and administrative 5,621 5,640
12,157 11,554 Research and development 5,380 5,329 11,604 10,399
Depreciation and amortization 4,732 4,410 9,391 8,734 Total
operating expenses 39,302 39,214 81,774 77,841
INCOME FROM OPERATIONS 6,971 6,642 13,340 12,945
OTHER INCOME (EXPENSE): Interest income 52 2 55 6 Other income
(loss) 185 32 328 72 Interest expense (238 ) (268 ) (464 ) (530 )
Foreign currency exchange gain 168 98 730 592 Total other income
(expenses) 167 (136 ) 649 140 INCOME
BEFORE INCOME TAXES 7,138 6,506 13,989 13,085 PROVISION FOR
INCOME TAXES 2,255 2,120 4,479 4,297
INCOME BEFORE EQUITY IN LOSS OF INVESTEE 4,883 4,386 9,510 8,788
EQUITY IN LOSS OF INVESTEE, NET OF TAX (52 ) — (95 ) —
NET INCOME $ 4,831 $ 4,386 $ 9,415 $
8,788 BASIC EARNINGS PER SHARE $ 0.34 $ 0.31 $ 0.66 $
0.62 DILUTED EARNINGS PER SHARE $ 0.33 $ 0.31 $ 0.65 $ 0.62
SHARES - BASIC 14,321 14,112 14,297 14,084
SHARES - DILUTED 14,574 14,298 14,513 14,243
Non-GAAP Disclosure and Reconciliation
We present certain non-GAAP results as a supplement to our
financial results based on GAAP, as we believe it is useful to
exclude certain items in order to focus on what we regard to be a
more reliable indicator of the underlying operating performance of
our business. Because we operate internationally, we present the
percentage change in sales by reporting segment on a constant
currency basis, which is a non-GAAP financial measure. We calculate
this change on a constant currency basis by translating current
period sales at the comparable average historical exchange rates
for the same period in the prior year. We believe that presenting
the percentage change in sales on a constant currency basis assists
in the understanding of actual sales fluctuations by excluding the
impact of foreign currency fluctuations.
Additionally, we report on a non-GAAP basis adjusted sales,
gross margin, operating expenses, income, and diluted earnings per
share excluding charges related to the spine assets we sold January
2017. We believe the exclusion of spine sales and costs provides
the reader with more comparable financials to better analyze the
reported periods. The following items have been adjusted:
- Sales, cost of goods sold, and
operating expenses from our spine products
- Transition charges related to the sale
of our spine assets
- Personnel and severance costs related
to the transition
Six Months June 30, 2017 Six Months June
30, 2016 Change % Reported US
Spine Adjusted Reported US Spine
Adjusted Reported Adjusted Domestic
sales $ 93,355 $ 282 $ 93,073 $ 89,185 $ 3,758 85,427
International sales 43,454 — 43,454 42,237 — 42,237 Total sales
136,809 282 136,527 131,422 3,758 127,664 4.1% 6.9% Gross
profit 95,114 187 94,927 90,786 1,700 89,086 4.8 6.6
Operating expense 81,774 715 81,059 77,841 1,886 75,955 5.1 6.7
Other income 649 — 649 140 — 140 363.6 363.6 Income before
income tax and equity in loss of investee 13,989 (528 ) 14,517
13,085 (186 ) 13,271 6.9 9.4 Income tax 4,479 (140 ) 4,619
4,297 (67 ) 4,364 4.2 5.9 Equity in loss of investee (95 ) — (95
)
—
— — Net income (loss) $ 9,415 $ (388 ) $ 9,803 $ 8,788 $ (119 ) $
8,907 7.1 10.1 Diluted EPS $ 0.65 $ (0.03 ) $ 0.68 $ 0.62 $
(0.01 ) $ 0.63
We also provide adjusted forward looking guidance on diluted
earnings per share for the full year for 2017. We believe this
adjusted guidance will assist in comparative measures. The
following reconciles the guidance ranges to expected guidance on a
GAAP basis:
Twelve Months Ended December 31, 2017
Expected diluted EPS range on GAAP basis $1.25 - $1.29
Adjustment: Spine asset divestiture 0.02 Adjusted total
diluted EPS range $1.27-$1.31
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170727006401/en/
Exactech, Inc.Investor contactsJody Phillips,
352-377-1140Executive Vice President of Finance &Chief
Financial OfficerorHawk AssociatesJulie Marshall or Frank Hawkins,
305-451-1888EXAC@hawkassociates.comorExactech, Inc.Media
contactPriscilla Bennett, 352-377-1140Vice President, Corporate
& Marketing Communication
Exactech, Inc. (delisted) (NASDAQ:EXAC)
Historical Stock Chart
From Aug 2024 to Sep 2024
Exactech, Inc. (delisted) (NASDAQ:EXAC)
Historical Stock Chart
From Sep 2023 to Sep 2024