Hearing Health Revenues Rise
IntriCon Corporation (NASDAQ: IIN), a designer,
developer, manufacturer and distributor of miniature and
micro-miniature body-worn devices, today announced financial
results for its third quarter ended September 30, 2016.
Highlights:
- IntriCon’s value hearing health
initiatives delivered year-over-year growth;
- The company made meaningful progress
pursuing alternative distribution models and partnerships within
the value hearing health market acquiring partial ownership of
Hearing Help Express, with the option to acquire the remaining
ownership; and,
- Sales to IntriCon’s largest medical
customer are poised to rebound in the fourth quarter.
Financial ResultsFor the 2016 third quarter, the company
reported net sales of $16.0 million, compared to $17.3 million in
the prior-year period. IntriCon posted a net loss attributable to
shareholders of ($1,304,000), or ($0.19) per share, versus net
income attributable to shareholders of $628,000, or $0.10 per
diluted share, for the 2015 third quarter.
“Third-quarter results reflect the continued timing shift in
orders from our largest medical customer,” said Mark S. Gorder,
president and chief executive officer of IntriCon. “Despite this
challenge, we were able to deliver year-over-year gains in hearing
health and professional audio. And we anticipate medical revenues
will begin to rebound in our fourth quarter.”
Gross profit margins were 22.9 percent compared to 26.7 percent
in the prior-year third quarter. The decrease was primarily due to
a less favorable sales mix and slightly lower revenue.
Operating expenses for the third-quarter were $4.7 million,
compared to $3.9 million in the prior-year third quarter. The
increase was largely due to the inclusion of PC Werth, acquired by
IntriCon UK in November 2015. Sequentially, IntriCon decreased
operating expenses $343,000, in response to temporarily lower
revenue levels.
Business UpdateHearing health sales increased 7 percent
from the prior-year third quarter, primarily stemming from
contributions by PC Werth, acquired by IntriCon UK to build a
hearing health platform in England. During the quarter, IntriCon
experienced gains in value hearing aids, personal sound amplifier
products (PSAP) and assisted listening devices. The company remains
intently focused on opportunities in value hearing health versus
the declining conventional channel.
“Within hearing health, there’s a groundswell building for
fundamental change among regulators and consumers,” said Gorder.
“As a company, we are steadfast in our commitment to overcome
barriers to device access and spur development and innovation. This
is why—despite lower revenue levels—we maintained our level of
investment in mission critical ultra-low-power wireless and DSP
technologies during the quarter. These technologies are required to
support our emerging alternative channels and our goal of
delivering superior outcomes-based, affordable hearing healthcare,
by combining state-of-the-art devices and software technology at a
much lower cost directly to consumers.”
The company is focused on driving growth and creating
efficiencies in its current value-based hearing healthcare
initiatives. Domestically, IntriCon continues its work with
earVenture, a joint venture with the Academy of Doctors of
Audiology (ADA). Over 450 ADA members have registered to join the
earVenture program. earVenture is implementing sales and marketing
efforts to convert those members into consistent customers, as well
as soliciting non-registered ADA members to join.
In the United Kingdom, IntriCon has delivered initial
devices to targeted National Health Service (NHS) clinics, with
positive feedback. In addition, IntriCon currently working with the
NHS for approval of a third device, the K940D, which will enhance
IntriCon sales capabilities. The K940D, which is a traditional
behind-the-ear device, is very appealing to the NHS because of its
broad fitting range and advanced features. Approval of the K940D is
anticipated in early 2017.
“With the ADA and NHS, our efforts have centered on educating
the practitioner—an effort we believe will drive growth,” said
Gorder. “Moreover, we made meaningful progress during the quarter
pursuing alternative distribution models and partnerships within
the value hearing health market. And as we announced today, we
acquired partial ownership of Hearing Help Express, a
direct-to-consumer hearing aid provider.”
Sales in IntriCon’s medical business decreased 17 percent in the
2016 third quarter, primarily driven by IntriCon’s largest
customer, Medtronic. The lower sales to Medtronic were expected as
they manage the transition of their recently FDA-approved MiniMed
630G system. IntriCon expects Medtronic sales to begin ramping up
in the fourth quarter as they launch the MiniMed 630G system.
Long term, the company 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 also recently
approved by the FDA, and is scheduled to be launched in the spring
of 2017. “The MiniMed 670G is the world’s first hybrid closed
loop insulin delivery system,” said Gorder, “and we are
excited to be designed into and supporting such a revolutionary
diabetes management system.”
Third-quarter 2016 professional audio communication sales rose
by 13 percent from the prior-year period. IntriCon anticipates
fourth quarter of 2016 revenue in this business to be flat with the
prior-year comparable period.
As disclosed in the second quarter, given temporarily lower
revenue levels, IntriCon has taken measured actions to reduce
operating expenses. These reductions, while not impacting the
company’s ability to execute strategic initiatives, should result
in approximately $600,000 in annual savings—the majority of which
will begin to be realized in the 2016 fourth quarter.
Looking AheadConcluded Gorder, “Although our
third-quarter performance reflects a customer product transition
outside of our control, this is not where we want it to be—or where
we know we can be. We remain confident in the long-term prospects
of our medical business and look forward to the expected
fourth-quarter ramp of Medtronic’s sales. Equally important, we
remain encouraged by our technology pipeline and the growing
appetite for an alternative hearing health channel. Based on
information currently available, we anticipate fourth-quarter net
sales to increase approximately $1 million from the 2016 third
quarter and near break-even from a profitability prospective, with
notably stronger results in the first quarter of 2017.”
Conference Call TodayAs previously announced, the company
will hold an investment community conference call today, Monday,
November 14, 2016, beginning at 4 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:
1-888-715-1401 and provide the conference ID number 5036157 to the
operator. To access the replay, dial 1-888-203-1112 and enter
passcode 5036157.
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 Nine Months Ended September 30, September
30, September 30, September 30, 2016 2015 2016 2015
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
- Sales, net $ 16,012 $ 17,341 $ 51,246 $ 51,063 Cost of sales
12,347 12,706 38,597
37,515 Gross profit 3,665 4,635 12,649 13,548
Operating expenses: Sales and marketing 1,082 854 3,478 2,739
General and administrative 2,250 1,708 6,649 5,150 Research and
development 1,323 1,344 4,297 3,864 Restructuring charges -
- 132 - Total
operating expenses 4,655 3,906
14,556 11,753 Operating income (loss) (990 )
729 (1,907 ) 1,795 Interest expense (135 ) (95 ) (387 ) (287
) Other income (expense) (181 ) (131 ) (472 )
17 Income (loss) before income taxes (1,306 )
503 (2,766 ) 1,525 Income tax expense (benefit) 33
(125 ) 119 107 Net income
(loss) (1,339 ) 628 (2,885 ) 1,418 Less: Loss allocated to
non-controlling interest (35 ) - (106 )
- Net income (loss) attributable to IntriCon
shareholders $ (1,304 ) $ 628 $ (2,779 ) $ 1,418
Net income (loss) per share attributable to IntriCon
shareholders: Basic $ (0.19 ) $ 0.11 $ (0.44 ) $ 0.24 Diluted (0.19
) 0.10 (0.44 ) 0.23 Average shares outstanding: Basic 6,796
5,943 6,287 5,873 Diluted 6,796 6,271 6,287 6,214
INTRICON CORPORATION
Consolidated Condensed Balance Sheets (In Thousands,
Except Per Share Amounts) September
30, December 31,
2016
2015
(Unaudited) Current assets: Cash $ 604 $ 369 Restricted cash
633 610 Accounts receivable, less allowance for doubtful accounts
of $67 at September 30, 2016 and $135 at December 31, 2015 6,324
8,578 Inventories 13,329 14,472 Other current assets 638
860 Total current assets 21,528 24,889
Machinery and equipment 39,959 38,653 Less: Accumulated
depreciation 33,103 31,911 Net
machinery and equipment 6,856 6,742 Goodwill 9,551 9,551
Investment in partnerships 212 224 Other assets, net 1,161
480 Total assets $ 39,308 $ 41,886
Current liabilities: Current maturities of long-term
debt $ 2,002 $ 1,908 Accounts payable 5,966 7,785 Accrued salaries,
wages and commissions 2,207 2,559 Deferred gain - 55 Other accrued
liabilities 725 1,279 Total current
liabilities 10,900 13,586 Long-term debt, less current
maturities 6,862 7,929 Other postretirement benefit obligations 508
542 Accrued pension liabilities 790 812 Other long-term liabilities
127 120 Total liabilities 19,187 22,989
Shareholders’ equity: Common stock, $1.00 par value per
share; 20,000 shares authorized; 6,801 and 5,981 shares issued and
outstanding at September 30, 2016 and December 31, 2015,
respectively 6,801 5,981 Additional paid-in capital 21,168 17,721
Accumulated deficit (6,825 ) (4,046 ) Accumulated other
comprehensive loss (879 ) (721 ) Total shareholders'
equity 20,265 18,935 Non-controlling interest (144 )
(38 ) Total equity 20,121 18,897 Total
liabilities and equity $ 39,308 $ 41,886
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161114006248/en/
At IntriCon:Scott Longval,
651-604-9526CFOslongval@intricon.comorAt PadillaCRT:Matt
Sullivan, 612-455-1709matt.sullivan@padillacrt.com
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