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| 8-K - FORM 8-K - EXACTECH INC | exac2q12form8-kearnings.htm |
EXHIBIT 99.1
Exactech Q2 Revenue Up 7% to $55.2M, Net Income $3.0M, EPS $0.23 on Strong Hips, Shoulder Growth
YTD Revenue Up 8% to $113.8M, Net Income $6.3M, EPS $0.48
Gainesville, Fla. - July 31, 2012 -- Exactech, Inc. (Nasdaq: EXAC), a developer and producer of bone and joint restoration products for hip, knee, shoulder, spine and biologic materials, announced today revenue of $55.2 million for the second quarter of 2012, a 7% increase over $51.7 million in the second quarter of 2011. Net income increased 11% to $3.0 million, or $0.23 per diluted share, compared to $2.7 million, or $0.21 per diluted share, in the same quarter a year ago.
Second Quarter Highlights and Segment Performance
• | Second quarter revenue increased 7% to $55.2 million |
• | Knee implant revenue increased 1% to $21.0 million |
• | Extremity implant revenue increased 24% to $12.0 million |
• | Hip implant revenue increased 22% to $10.3 million |
• | Biologic and Spine revenue decreased 1% to $5.9 million |
• | Other products revenue decreased 14% to $6.0 million |
Six Months Highlights and Segment Performance
For the first six months of 2012 revenue was $113.8 million, an increase of 8% over $105.1 million for the comparable period last year. Net income for the first six months of 2012 increased 11% to $6.3 million, or $0.48 per diluted share compared to $5.7 million, or $0.43 per diluted share for the first six months of 2011. First six month product revenues were as follows:
• | First half revenue increased 8% to $113.8 million |
• | Knee implant revenue increased 1% to $42.5 million |
• | Extremity implant revenue increased 31% to $25.0 million |
• | Hip implant revenue increased 29% to $21.2 million |
• | Biologic and spine revenue decreased 7% to $12.1 million |
• | Other products revenue decreased 10% to $13.1 million |
Management Comment
Exactech Chairman and CEO Bill Petty said, “Exactech continued to outperform our industry in an uncertain climate. Overall domestic and international sales were healthy despite some pockets of weakness. Sales in knees, our largest product segment, were up 1% for both the quarter and the first six months of 2012. Strong double-digit growth in our shoulder products and hip implants provided the bulk of our positive performance. Gains in our operating margin, which we had anticipated, corresponded with reductions in compliance costs. However, a one time tax charge related to the non-deductibility of a portion of our 2010 settlement with the DOJ that was clarified during the current IRS audit caused a $0.02 negative impact on our earnings per share for the quarter.”
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Exactech President David Petty said, “For the quarter, U.S. sales increased 8% to $35.2 million compared with $32.6 million in the second quarter of 2011 based on strong performance of our hip and extremities businesses. For the first six months of 2012, U.S. sales rose 7% to $72.0 million compared with $67.6 million in 2011. International sales grew 5% to $19.9 million reflecting sales strength in Asian and Latin American markets. International sales decreased to 36% of total sales from 37% of total sales for the second quarter of 2011 due to relative weakness in some European markets. For the first six months of the year, international sales increased 12% to $41.8 million from $37.5 million for the same period in 2011. As a percentage of sales, international sales in the first six months of 2012 increased to 37% from 36% in the first six months of the prior year.”
Chief Financial Officer Jody Phillips said, “Gross margins increased to 68.8% for the second quarter of 2012 from 68.0% for the second quarter of 2011. Total operating expenses for the quarter were $32.7 million, an increase of 4% from $31.3 million in the second quarter of 2011. As a percentage of sales, second quarter operating expenses decreased to 59% from 61% for the second quarter of 2011. Sales and marketing expenses increased 4%, but decreased to 36% as a percentage of sales from 37% in the second quarter of 2011. General and administrative expenses decreased 19% in the second quarter to $4.7 million from $5.8 million, primarily due to the reduction in compliance costs. Research and development expenses increased 51% to $4.2 million from $2.7 million in the second quarter of 2011 primarily due to increased design and development activities. This increase reflected a return to our targeted level of R&D spending between 7-8% of sales.”
Looking forward, Exactech updated its 2012 revenue guidance to $218 - $223 million and changed its diluted EPS target to $0.91 - $0.95. For the third quarter ending September 30, 2012, the company anticipates revenues of $49 - $51 million and diluted EPS of $0.17 - $0.19. 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 has scheduled a conference call on Wednesday, August 1, 2012 at 10:00 a.m. Eastern Time. The call will cover the company's second quarter 2012 results. Dr. Petty will open the conference call and a question-and-answer session will follow.
To participate in the call, dial 1-877-941-4774 any time after 9:50 a.m. EDT on August 1. International and local callers should dial 1-480-629-9760. While in conference, if callers should require operator assistance, they can press the star followed by the zero button. This will call an operator to the line.
A live and archived webcast of the call will be available at http://www.hawkassociates.com/profile/exac.cfm or http://public.viavid.com/index.php?id=101127. 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.
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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, compliance costs and the effects of government regulation. Results actually achieved may differ materially from expected results included in these statements.
Investor contacts Julie Marshall or Frank Hawkins
Jody Phillips Hawk Associates
Chief Financial Officer 305-451-1888
352-377-1140 E-mail: exactech@hawkassociates.com
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EXACTECH, INC. AND SUBSIDIARIES | ||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
(in thousands) | ||||||||||
(unaudited) | (audited) | |||||||||
June 30, | December 31, | |||||||||
2012 | 2011 | |||||||||
ASSETS | ||||||||||
CURRENT ASSETS: | ||||||||||
Cash and cash equivalents | $ | 5,542 | $ | 4,663 | ||||||
Accounts receivable, net of allowances of $2,917 and $3,186 | 44,088 | 45,856 | ||||||||
Prepaid expenses and other assets, net | 4,135 | 3,948 | ||||||||
Income taxes receivable | 337 | 171 | ||||||||
Inventories – current | 67,444 | 61,724 | ||||||||
Deferred tax assets – current | 2,681 | 2,869 | ||||||||
Total current assets | 124,227 | 119,231 | ||||||||
PROPERTY AND EQUIPMENT: | ||||||||||
Land | 2,206 | 2,209 | ||||||||
Machinery and equipment | 31,888 | 30,164 | ||||||||
Surgical instruments | 83,556 | 77,105 | ||||||||
Furniture and fixtures | 3,820 | 3,753 | ||||||||
Facilities | 17,910 | 17,930 | ||||||||
Projects in process | 1,949 | 2,141 | ||||||||
Total property and equipment | 141,329 | 133,302 | ||||||||
Accumulated depreciation | (61,988 | ) | (56,061 | ) | ||||||
Net property and equipment | 79,341 | 77,241 | ||||||||
OTHER ASSETS: | ||||||||||
Deferred financing and deposits, net | 953 | 1,016 | ||||||||
Non-current inventories | 7,835 | 7,334 | ||||||||
Product licenses and designs, net | 10,625 | 11,380 | ||||||||
Patents and trademarks, net | 2,122 | 1,589 | ||||||||
Customer relationships, net | 1,308 | 1,545 | ||||||||
Goodwill | 13,171 | 13,276 | ||||||||
Total other assets | 36,014 | 36,140 | ||||||||
TOTAL ASSETS | $ | 239,582 | $ | 232,612 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
CURRENT LIABILITIES: | ||||||||||
Accounts payable | $ | 17,351 | $ | 12,909 | ||||||
Income taxes payable | 2,153 | 4,210 | ||||||||
Accrued expenses and other liabilities | 11,058 | 8,957 | ||||||||
Other current liabilities | 250 | 344 | ||||||||
Current portion of long-term debt | 1,875 | 648 | ||||||||
Total current liabilities | 32,687 | 27,068 | ||||||||
LONG-TERM LIABILITIES: | ||||||||||
Deferred tax liabilities | 3,187 | 3,520 | ||||||||
Line of credit | 13,861 | 42,410 | ||||||||
Long-term debt, net of current portion | 27,750 | 3,507 | ||||||||
Other long-term liabilities | 902 | 780 | ||||||||
Total long-term liabilities | 45,700 | 50,217 | ||||||||
Total liabilities | 78,387 | 77,285 | ||||||||
SHAREHOLDERS’ EQUITY: | ||||||||||
Common stock | 132 | 132 | ||||||||
Additional paid-in capital | 62,011 | 60,565 | ||||||||
Accumulated other comprehensive loss | (6,158 | ) | (4,272 | ) | ||||||
Retained earnings | 105,210 | 98,902 | ||||||||
Total shareholders’ equity | 161,195 | 155,327 | ||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 239,582 | $ | 232,612 | ||||||
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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, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
NET SALES | $ | 55,185 | $ | 51,682 | $ | 113,813 | $ | 105,051 | ||||||||
COST OF GOODS SOLD | 17,200 | 16,538 | 35,296 | 33,258 | ||||||||||||
Gross profit | 37,985 | 35,144 | 78,517 | 71,793 | ||||||||||||
OPERATING EXPENSES: | ||||||||||||||||
Sales and marketing | 19,968 | 19,145 | 41,788 | 39,251 | ||||||||||||
General and administrative | 4,735 | 5,819 | 10,383 | 11,485 | ||||||||||||
Research and development | 4,160 | 2,749 | 8,264 | 6,215 | ||||||||||||
Depreciation and amortization | 3,813 | 3,570 | 7,605 | 6,979 | ||||||||||||
Total operating expenses | 32,676 | 31,283 | 68,040 | 63,930 | ||||||||||||
INCOME FROM OPERATIONS | 5,309 | 3,861 | 10,477 | 7,863 | ||||||||||||
OTHER INCOME (EXPENSE): | ||||||||||||||||
Interest income | 8 | 42 | 8 | 43 | ||||||||||||
Other income (loss) | (32 | ) | (20 | ) | (15 | ) | 3 | |||||||||
Interest expense | (382 | ) | (291 | ) | (834 | ) | (540 | ) | ||||||||
Foreign currency exchange gain (loss) | (39 | ) | 388 | 184 | 893 | |||||||||||
Total other expenses | (445 | ) | 119 | (657 | ) | 399 | ||||||||||
INCOME BEFORE INCOME TAXES | 4,864 | 3,980 | 9,820 | 8,262 | ||||||||||||
PROVISION FOR INCOME TAXES | 1,841 | 1,258 | 3,512 | 2,569 | ||||||||||||
NET INCOME | $ | 3,023 | $ | 2,722 | $ | 6,308 | $ | 5,693 | ||||||||
BASIC EARNINGS PER SHARE | $ | 0.23 | $ | 0.21 | $ | 0.48 | $ | 0.44 | ||||||||
DILUTED EARNINGS PER SHARE | $ | 0.23 | $ | 0.21 | $ | 0.48 | $ | 0.43 | ||||||||
SHARES - BASIC | 13,178 | 13,088 | 13,167 | 13,061 | ||||||||||||
SHARES - DILUTED | 13,268 | 13,235 | 13,264 | 13,225 | ||||||||||||
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EXACTECH INC.
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