Exactech, Inc. (Nasdaq: EXAC), a developer and producer of bone
and joint restoration products for hip, knee, shoulder, spine and
biologic materials, today announced revenue of $66.1 million for
the second quarter of 2016, an 8% increase from $61.5 million in
the second quarter of 2015. On a constant currency basis, revenue
was up 7%. Net income increased 20% to $4.4 million, or $0.31 per
diluted share, compared to $3.7 million, or $0.26 per diluted
share, in the same quarter a year ago.
Second Quarter Segment Performance
The following are company revenue results, as well as adjusted
revenue comparisons on a constant currency basis:
- Extremity implant revenue increased 18%
to $24.2 million, an 18% constant currency increase
- Knee implant revenue increased 1% to
$19.2 million, flat on constant currency
- Hip implant revenue increased 13% to
$12.4 million, a 12% constant currency increase
- Biologic and Spine revenue decreased 7%
to $5.4 million, an 8% constant currency decrease
- Other revenue decreased 6% to $4.9
million, an 8% constant currency decrease
Six Months Highlights and Segment Performance
For the first six months of 2016, revenue was $131.4 million, an
increase of 7% over $122.9 million for the comparable period last
year. On a constant currency basis, revenue for the first half of
2016 was also up 7%. Net income for the first six months of 2016
increased 13% to $8.8 million, or $0.62 per diluted share compared
to $7.8 million, or $0.55 per diluted share, for the first six
months of 2015. First six month product revenues were as
follows:
- Extremity implant revenue increased 16%
to $48.4 million, a 17% constant currency increase
- Knee implant revenue increased 3% to
$38.6 million, a 3% constant currency increase
- Hip implant revenue increased 8% to
$23.7 million, an 8% constant currency increase
- Biologic and Spine revenue decreased 2%
to $10.8 million, a 1% constant currency decrease
- Other revenue decreased 10% to $9.9
million, a 10% constant currency decrease
Management Comment
Exactech CEO and President David Petty said, “We are pleased
with our first half performance, which was led by our shoulder and
hip implant revenues as demand continued to be strong. Revenues
from shoulder implants, our largest operating segment, were up 16%
in the first six months and up 18% in the second quarter, which we
believe indicate good momentum going forward. Similarly, hip sales
were up 8% for the first six months with a strong 13% gain in the
second quarter, continuing to reflect the success of our revision
hip stem release. Knee revenue was up 3% for the first six months
and rose 1% in the quarter. Our strengthened sales team is
performing well, and we are continuing to attract new customers. We
are continuing to invest aggressively in R&D focused on both
new products and innovative production capabilities.
“Worldwide sales increased 7% to $131.4 million for the first
half of 2016. U.S. sales were up 8% to $89.2 million compared with
$82.5 million in the first six months a year ago. International
sales increased 5% to $42.2 million. U.S. sales for the second
quarter of 2016 were up 8% to $44.6 million compared with $41.3
million in the second quarter a year ago. International sales
increased 7% to $21.5 million from $20.2 million in the second
quarter of 2015. U.S. sales represented 67% of total, sales and
international sales represented 33% of total sales during the
second quarter.
"Our sales channel development, particularly in the U.S., in
combination with contributions from new product launches, is
creating revenue growth momentum for Exactech. We continue to build
inventory for the revision hip, knee and shoulder systems that are
being launched this year. Those products contributed modestly to
growth in the first six months. We hope to accelerate that in the
second half. We returned to industry leading growth with our
Equinoxe shoulder product line and look forward to doing first
cases with the Vantage total ankle in the second half of the year.
Hip growth momentum is strong as we have gained traction with the
Alteon tapered wedge hip stem and Integrip porous metal acetabular
component,” Petty said.
Chief Financial Officer Jody Phillips said, “Gross margins
increased to 69.3% from 68.6% for the second quarter a year ago,
primarily due to the strength in our U.S. Extremity revenues, which
carry higher margins. Total operating expenses for the quarter
increased 9% to $39.2 million; however, as a percentage of sales,
remained at 59% for the second quarter of 2016. Sales and marketing
expenses increased 11% to $23.8 million, most notably due to
ongoing investments in the U.S. sales organization. General and
administrative expenses decreased 2% in the second quarter to $5.6
million and research and development expenses increased 16% to $5.3
million during the second quarter.”
Looking forward, Exactech increased its 2016 revenue guidance to
$253-$258 million and its diluted EPS target to $1.15–$1.19. For
the third quarter ending September 30, 2016, the company
anticipates revenues of $58-$60 million and diluted EPS of
$0.21-$0.23. 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 Tuesday,
August 2nd at 10:00 a.m. Eastern Time. The call will cover
Exactech’s second quarter 2016 results. Mr. Petty will open the
conference call and a question-and-answer session will follow.
To participate in the call, dial 1-888-430-8709 any time
after 9:50 a.m. Eastern on August 2nd. International and local
callers should dial 1-719-325-2361. 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=120383. 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.
Non-GAAP financial measures – 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.
EXACTECH, INC. AND SUBSIDIARIES CONSOLIDATED
BALANCE SHEETS (in thousands)
(unaudited) (audited) June 30,
December 31, 2016 2015
ASSETS CURRENT ASSETS: Cash and cash equivalents $ 10,052 $
12,713 Trade receivables, net of allowances of $1,239 and $1,011
54,143 52,442 Prepaid expenses and other assets, net 4,155 2,552
Income taxes receivable 312 486 Inventories, current 74,913
71,429 Total current assets 143,575 139,622 PROPERTY
AND EQUIPMENT: Land 4,505 4,494 Machinery and equipment 38,595
37,008 Surgical instruments 131,489 123,533 Furniture and fixtures
4,722 4,655 Facilities 21,322 20,348 Projects in process
1,835 1,218 Total property and equipment 202,468 191,256
Accumulated depreciation (98,142 ) (96,713 ) Net
property and equipment 104,326 94,543 OTHER ASSETS: Deferred
financing and deposits, net 891 858 Deferred tax assets 777 --
Non-current inventory 11,459 8,995 Product licenses and designs,
net 10,614 11,121 Patents and trademarks, net 1,293 1,426 Customer
relationships, net 589 92 Goodwill 22,265 18,850
Total other assets 47,888 41,342
TOTAL ASSETS
$ 295,789 $ 275,507
LIABILITIES AND SHAREHOLDERS’
EQUITY CURRENT LIABILITIES: Accounts payable $ 15,888 $ 13,932
Income taxes payable 950 603 Accrued expenses 11,096 9,498 Other
current liabilities 2,768 792 Total current
liabilities 30,702 24,825 LONG-TERM LIABILITIES: Deferred
tax liabilities 423 443 Long-term debt, net of current portion
20,000 16,000 Other long-term liabilities 5,787 5,850
Total long-term liabilities 26,210 22,293 Total
liabilities 56,912 47,118 COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY: Common stock 143 142 Additional
paid-in capital 85,156 81,963 Treasury Stock (3,042 ) --
Accumulated other comprehensive loss, net of tax (10,438 ) (11,986
) Retained earnings 167,058 158,270 Total
shareholders’ equity 238,877 228,389
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY $ 295,789 $ 275,507
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, 2016 2015
2016 2015 NET SALES $ 66,124 $ 61,493 $ 131,422 $ 122,869
COST OF GOODS SOLD 20,268 19,334 40,636
37,976 Gross profit 45,856 42,159 90,786 84,893 OPERATING
EXPENSES: Sales and marketing 23,835 21,464 47,154 43,314 General
and administrative 5,640 5,776 11,554 11,623 Research and
development 5,329 4,602 10,399 9,131 Depreciation and amortization
4,410 4,182 8,734 8,624 Total operating
expenses 39,214 36,024 77,841 72,692
INCOME FROM OPERATIONS 6,642 6,135 12,945 12,201 OTHER
INCOME (EXPENSE): Interest income 2 2 6 4 Other income (loss) 32 37
72 65 Interest expense (268 ) (275 ) (530 ) (577 ) Foreign currency
exchange (loss) gain 98 (557 ) 592 (759
) Total other income (expenses) (136 ) (793 ) 140 (1,267 )
INCOME BEFORE INCOME TAXES 6,506 5,342 13,085
10,934 PROVISION FOR INCOME TAXES 2,120 1,681 4,297 3,161
NET INCOME $ 4,386 $ 3,661 $ 8,788 $
7,773 BASIC EARNINGS PER SHARE $ 0.31 $ 0.26 $ 0.62 $
0.56 DILUTED EARNINGS PER SHARE $ 0.31 $ 0.26 $ 0.62 $ 0.55
SHARES - BASIC 14,112 13,947 14,084 13,965
SHARES - DILUTED 14,298 14,167 14,243 14,203
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version on businesswire.com: http://www.businesswire.com/news/home/20160801006161/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.comorMedia contact:Priscilla
Bennett, 352-377-1140Vice President, Corporate & Marketing
Communication
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