IntriCon Corporation (NASDAQ: IIN), a designer,
developer, manufacturer and distributor of body-worn medical
devices, today announced financial results for its third quarter
ended September 30, 2010.
For the third quarter, the company reported net sales of $14.7
million, an increase of 14 percent from net sales of $12.9 million
for the prior-year period. Net income in the 2010 third quarter was
$243,000, or $0.04 per diluted share, versus a net loss of
$736,000, or $(0.14) per diluted share, for the prior-year period.
Included in the 2009 third-quarter results were Datrix-related
acquisition costs and bank financing charges totaling $532,000, or
$0.10 per diluted share.
“We continue to deliver measureable year-over-year revenue and
earnings progress,” said Mark S. Gorder, president and chief
executive officer of IntriCon. “At the same time, we are investing
significantly in our business, including several key research and
development initiatives. While this impacts certain sequential and
year-over-year comparisons, we firmly believe it strengthens our
platform for future IntriCon growth.”
Business PerformanceFor the third quarter, IntriCon
experienced double-digit growth in all three core markets. As a
percentage of total revenue, the medical business contributed 44
percent, with hearing health and professional audio communications
contributing 33 percent and 23 percent, respectively.
Said Gorder, “Year over year, our business mix was stable.
Medical continued to post strong revenues, rising 11 percent from
the previous year. Gains were again due to continued sales of
wireless glucose monitors and new sales from our proprietary
cardiac diagnostic monitoring devices, or CDMs.”
Hearing health sales rose 20 percent from the 2009 third
quarter. Driving this increase was a rebound in the hearing health
market. IntriCon believes more significant future growth will stem
from the introduction and acceptance of new products in early
2011.
Professional audio communications rose 15 percent from the prior
year. The gain was from higher sales of headset devices to existing
customers and communication devices to government agencies. These
customers continue to demand smaller and more durable products that
perform well in noisy or hazardous environments.
Gross profits in the 2010 third quarter were 25.9 percent, up
significantly from 20.3 percent in the year-ago period. Higher
sales volumes, increased proprietary technology in products—which
generates higher margins—and the impact of previously discussed
profit enhancement programs, including production transfers to
lower-cost manufacturing facilities and the ongoing rollout of lean
manufacturing programs, drove improvements.
Nine-month ResultsFor the 2010 nine-month period,
IntriCon reported net sales of $44.2 million and net income of
$530,000, or $0.10 per diluted share. This was up from 2009 net
sales of $37.5 million and a net loss of $2.3 million, or $(0.43)
per diluted share. Included in the 2009 nine-month results were
Datrix-related acquisition costs and bank financing charges of
$546,000, or $0.10 per diluted share.
For the 2010 nine months, IntriCon’s medical business
represented 44 percent of total revenue, with hearing health and
professional audio communications contributing 34 percent and 22
percent, respectively. This compares to 2009 nine-month levels of
44 percent, 36 percent and 20 percent for medical, hearing health
and professional audio communications, respectively.
Gross profits for the 2010 nine months were 26.1 percent, up
from 19.9 percent a year earlier. Gains were driven by the same
factors detailed above in the third-quarter description.
Key MilestonesEarlier this year, IntriCon unveiled its
hybrid Overtus™ DSP amplifier. Overtus is designed to: optimize
open in-the-canal (ITC) fittings; utilize an advanced adaptive
feedback canceller; and incorporate an acoustic switch that
eliminates the need for a bulky mechanical switch, allowing for
further miniaturization. This amplifier utilizes two patent-pending
technologies that allow customers to produce their open in-the-ear
devices. Overtus will enter production in the near future and sales
are expected to have a modest impact on fourth-quarter results.
Said Gorder, “As the amplifier component of hearing aids,
Overtus brings significant technology advantages over existing
devices. We’ve taken that technology and developed our own complete
hearing device, the all-new, patent-pending APT™ Open ITC.
“The APT, introduced at the European Hearing Aid Acousticians
event earlier this month, is powered by Overtus and includes our
Reliant CLEAR™ adaptive feedback canceller and the AcousTAP ™
acoustic push button. In addition, the APT utilizes the patent
pending Concha Lock System technology that allows for the
suspension of an open in-the-ear device in the ear canal. These
features create stable and effective amplification, occlusion-free
comfort and easy integration into existing fitting systems. Our OEM
customers now have the option of using Overtus in their own
devices, or purchasing our complete APT device.”
In the medical arena, IntriCon continues to make progress with
its new Centauri CDM device. Centauri is a next-generation wireless
outpatient monitoring device that uses a proven automatic
arrhythmia detection algorithm. The company anticipates submitting
Centauri for FDA approval in the upcoming weeks.
IntriCon is in the process of finalizing development of its
PhysioLink™ wireless technology, which will be incorporated into
products in the medical, hearing health and professional audio
communication markets. PhysioLink enables audio and data streaming
to ear-worn and body-worn applications over distances of up to five
meters.
IntriCon’s situational listening device (SLD) product line
leverages PhysioLink. SLDs help hearing-impaired people in noisy
environments, allowing them to listen to television, music and
direct broadcast by wireless connection. SLDs supplement
conventional hearing aids that don’t handle noisy situations well.
The company anticipates production of its SLD platform in early
2011.
Gorder indicated that while IntriCon is seeing customers
continue to reengage in all markets on new programs, persisting
economic sluggishness has caused many patients to delay
discretionary medical procedures, and hospitals and doctors to cut
back on purchases of legacy med-tech products. During the course of
the year several large medical customers experienced temporary
fluctuations in demand. As some customers have ordered above their
immediate needs, the company anticipates certain medical orders to
slow in the fourth quarter—however it believes these deferrals to
be temporary.
Concluded Gorder, “Across the board, we are focusing our
resources and capital on our strengths: making body-worn devices
smaller and better. We’re doing so by accelerating the development
of proprietary core technologies. This is demonstrated by our
increasing number of new products based on patent pending
technologies, such as the Overtus and APT. We believe our continued
prudent investments in new initiatives will fuel long-term growth.
This strategy centers on the idea of enhancing the mobility and
effectiveness of miniature, body-worn devices—and creating entirely
new technology-driven products.”
Conference Call TodayAs previously announced, the company
will hold an investment community conference call today, Thursday,
Oct. 28, 2010, beginning at 4:00 p.m. CT. Mark Gorder, president
and chief executive officer, and Scott Longval, chief financial
officer, will review third-quarter performance and discuss the
company’s strategies. To join the conference call, dial:
1-877-941-6011 (international 1-480-248-5081) and provide the
conference identification number 4375930 to the operator.
A replay of the conference call will be available one hour after
the call ends through 11:59 p.m. CT on Thursday, Nov. 4, 2010. To
access the replay, dial 1-800-406-7325 (international
1-303-590-3030) and enter access code: 4375930.
About IntriCon CorporationHeadquartered in Arden Hills,
Minn., IntriCon Corporation designs, develops and manufactures
miniature and micro-miniature body-worn medical products. The
company is focused on three key markets: medical, hearing health,
and professional audio communications. IntriCon has facilities in
the United States, Asia 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 such
as “may”, “will”, “believe”, “anticipate,” “expect”, “should”,
“optimistic” or “continue” or the negative thereof or other
variations thereon are “forward-looking statements” within the
meaning of the Securities Exchange Act of 1934, as amended. These
forward-looking statements include, without limitation, statements
concerning prospects in the miniature body-worn device arena, new
products, strategic alliances, future growth and expansion, market
fundamentals, future financial condition and performance, prospects
and the positioning of IntriCon to compete in chosen markets and
the Company’s planned investments in research and development.
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 factors
include, without limitation, risks related to the current economic
crisis, the risk that IntriCon may not be able to achieve its
long-term strategy, weakening demand for products of the company
due to general economic conditions, risks related to the company’s
strategic alliances and joint venture, possible non-performance of
developing the Centauri, Scenic, Overtus, wireless glucose monitor
and situational listening device products and other technological
products, the volume and timing of orders received by the company,
changes in the mix of products sold, competitive pricing pressures,
the cost and availability of electronic components and commodities
for the company’s products, ability to create and market products
in a timely manner, competition by competitors with more resources
than the company, foreign currency risks arising from the company’s
foreign operations, ability to satisfy and maintain compliance with
the covenants under the company’s loan facility, the costs and
risks associated with research and development investments and
other risks 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, 2009. 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 data) Three Months Ended Nine Months
Ended September 30, September 30, September 30,
September 30, 2010 2009 2010 2009
(Unaudited)
(Unaudited) (Unaudited)
(Unaudited) Sales, net $ 14,727 $ 12,868 $
44,215 $ 37,523 Cost of sales
10,912
10,258 32,693
30,044 Gross profit 3,815 2,610 11,522
7,479 Operating expenses: Selling expense 751 694 2,373
2,023 General and administrative expense 1,398 1,180 4,335 3,959
Research and development expense
1,231
799 3,455
2,466 Total operating expenses
3,380 2,673
10,163 8,448
Operating income (loss) 435 (63 ) 1,359 (969 ) Interest
expense (158 ) (378 ) (500 ) (621 ) Equity in income (loss) of
partnerships 54 (19 ) 42 (220 ) Other income, net
(57 ) (243
) 29
(161 ) Income (loss) from continuing
operations before income taxes and discontinued operations 274 (703
) 930 (1,971 ) Income tax expense (benefit)
31 8
106 (30 )
Income (loss) before discontinued operations 243 (711 ) 824 (1,941
) Loss from discontinued operations, net of income taxes --
(25 ) (329 ) (382 ) Gain on sale of discontinued operations, net of
income taxes
-- --
35 --
Net income (loss)
$ 243
$ (736 ) $
530 $ (2,323
) Basic income (loss) per share:
Continuing operations $ 0.04 $ (0.13 ) $ 0.15 $ (0.36 )
Discontinued operations
0.00
(0.01 ) (0.05
) (0.07 ) Net income
(loss)
$ 0.04 $
(0.14 ) $ 0.10
$ (0.43 )
Diluted income (loss) per share: Continuing operations $ 0.04 $
(0.13 ) $ 0.15 $ (0.36 ) Discontinued operations
0.00 (0.01 )
(0.05 ) (0.07
) Net income (loss)
$ 0.04
$ (0.14 )
$ 0.10 $
(0.43 ) Average shares outstanding: Basic
5,485 5,412 5,477 5,370 Diluted 5,614 5,412 5,540 5,370
IntriCon Corporation Consolidated
Condensed Balance Sheets (in thousands) September 30, 2010
December 31, (Unaudited) 2009 Current assets: Cash $ 792 $ 385
Restricted cash 325 406 Accounts receivable, less allowance for
doubtful accounts of $219 at September 30, 2010 and $226 at
December 31, 2009 8,070 7,084 Inventories 9,000 8,221 Other current
assets 698 879 Current assets of discontinued operations
-- 1,140 Total
current assets 18,885 18,115 Machinery and equipment 36,607
35,516 Less: Accumulated depreciation
30,227
28,725 Net machinery and
equipment 6,380 6,791 Goodwill 9,709 9,717 Investment in
partnerships 1,286 1,237 Other assets of discontinued operations --
142 Other assets, net
1,277
1,361 Total assets
$
37,537 $ 37,363
Current liabilities: Checks written in excess of cash
$ 83 $ 102 Current maturities of long-term debt 1,772 1,709
Accounts payable 3,900 3,637 Deferred gain 110 110 Partnership
payable 260 260 Liabilities of discontinued operations -- 926 Other
accrued liabilities
3,519
2,867 Total current liabilities 9,644 9,611
Long-term debt, less current maturities 7,104 7,730 Other
postretirement benefit obligations 696 756 Long-term partnership
payable 500 500 Deferred income taxes 150 129 Accrued pension
liabilities 484 543 Deferred gain
523
605 Total liabilities 19,101 19,874
Commitments and contingencies (note 14) Shareholders’
equity: Common shares, $1.00 par value per share; 20,000 shares
authorized; 6,006 and 5,986 shares issued; 5,490 and 5,470 shares
outstanding at September 30, 2010 and December 31, 2009,
respectively. 6,006 5,986 Additional paid-in capital 15,406 14,987
Retained deficit (1,475 ) (2,005 ) Accumulated other comprehensive
loss (236 ) (214 ) Less: 516 common shares held in treasury, at
cost
(1,265 )
(1,265 ) Total shareholders' equity
18,436 17,489
Total liabilities and shareholders’ equity
$
37,537 $ 37,363
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