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| 8-K - 8-K - EXACTECH INC | exac3q15form8-kearnings.htm |
EXHIBIT 99.1
Exactech Q3 2015 Revenue $56.2 Million. Net Income $2.9 Million. Diluted EPS $0.20.
Gainesville, Fla. - October 27, 2015 -- Exactech, Inc. (Nasdaq: EXAC), a developer and producer of bone and joint restoration products for hip, knee, shoulder and spine, announced today revenue of $56.2 million for the third quarter of 2015, a 3% decrease from $57.9 million in the third quarter of 2014. On a constant currency basis for the quarter, revenue was flat. Net income was down 4% to $2.9 million, or $0.20 per diluted share, compared to $3.0 million, or $0.21 per diluted share, in the same quarter a year ago.
Third Quarter Segment Performance
The third quarter of 2015 continued to be impacted by a weakened Euro and Japanese Yen relative to the U.S. Dollar. The following are company revenue results, as well as adjusted revenue comparisons on a constant currency basis:
• | Extremity implant revenue increased 7% to $20.0 million, a 9% constant currency increase |
• | Knee implant revenue decreased 16% to $15.3 million, a 13% constant currency decrease |
• | Hip implant revenue decreased 2% to $9.9 million, a 4% constant currency increase |
• | Biologic and Spine revenue increased 5% to $5.7 million, an 8% constant currency increase |
• | Other revenue decreased 4% to $5.4 million, a 3% constant currency decrease |
Nine Months Highlights and Segment Performance
For the first nine months of 2015, revenue was $179.1 million, a decrease of 3% over $185.1 million for the comparable period last year. On a constant currency basis, revenue for the first nine months of 2015 was flat. Net income for the first nine months of 2015 decreased 6% to $10.7 million, or $0.75 per diluted share compared to $11.4 million, or $0.81 per diluted share for the first nine months of 2014. First nine month product revenues were as follows:
• | Extremity implant revenue increased 7% to $61.5 million, a 9% constant currency increase |
• | Knee implant revenue decreased 12% to $52.7 million, a 7% constant currency decrease |
• | Hip implant revenue decreased 1% to $31.8 million, a 4% constant currency increase |
• | Biologic and Spine revenue decreased 6% to $16.7 million, a 2% constant currency decrease |
• | Other revenue decreased 10% to $16.4 million, a 9% constant currency decrease |
Management Comment
Exactech CEO and President David Petty said, “Another solid performance in our largest segment, Extremities, and third quarter improvement in our Biologic and Spine segment and gains in overall U.S. sales were not enough to offset strong international currency headwinds and soft results in European and Latin American markets. Worldwide sales for the first nine months of 2015 decreased 3% to $179.1 million but were flat on a constant currency basis. U.S. sales were relatively flat at $123.3 million compared with $123.8 million in the first nine months a year ago. International sales decreased 9% in the first nine months
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to $55.8 million and were up 1% on a constant currency basis. For the third quarter of 2015, U.S. sales were up 2% to $40.7 million compared with $40.0 million in the third quarter a year ago. International sales decreased 13% to $15.5 million. On a constant currency basis, international sales were down 4% and worldwide sales were flat for the third quarter. U.S. sales represented 72% of total sales and international sales were 28% of the total,” Petty said.
Chief Financial Officer Jody Phillips said, “Gross margins decreased to 70.5% for the third quarter of 2015 vs. 70.7% in the third quarter of 2014 due to pricing and currency impacts. Total operating expenses for the quarter decreased 1% to $35.1 million and as a percentage of sales were 62%, compared to $35.4 million and 61% for the same quarter of 2014. General and administrative expenses decreased 4% in the third quarter to $5.2 million and sales and marketing expenses decreased 3% to $20.6 million primarily due to currency impacts. We experienced an 18% increase in R&D spending to $5.3 million related to development and launch costs associated with our new revision products. We continued to produce positive cash flows, which resulted in a $2.9 million improvement in our cash and net debt position during the third quarter.”
Looking forward, Exactech confirmed its updated 2015 revenue guidance to $239-$241 million and updated its diluted EPS target to $1.02-$1.04. The resulting revenue guidance for the fourth quarter of 2015 is for revenues of $60-$62 million and a diluted EPS target of $0.27-$0.29. The foregoing statements regarding targets for the 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 Wednesday, October 28th at 10:00 a.m. Eastern Time. The call will cover Exactech’s third quarter 2015 results. Petty will open the conference call and a question-and-answer session will follow.
To participate in the call, dial 1-888-417-8533 any time after 9:50 a.m. Eastern on October 28th. International and local callers should dial 1-719-457-2645. 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=116694.
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
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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.
Investor contacts Julie Marshall or Frank Hawkins
Jody Phillips Hawk Associates
Executive Vice President of Finance & 305-451-1888
Chief Financial Officer E-mail: EXAC@hawkassociates.com
352-377-1140
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EXACTECH, INC. AND SUBSIDIARIES | ||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
(in thousands) | ||||||||||
(unaudited) | (audited) | |||||||||
September 30, | December 31, | |||||||||
2015 | 2014 | |||||||||
ASSETS | ||||||||||
CURRENT ASSETS: | ||||||||||
Cash and cash equivalents | $ | 17,051 | $ | 10,051 | ||||||
Accounts receivable, net of allowances of $807 and $946 | 50,283 | 50,731 | ||||||||
Prepaid expenses and other assets, net | 3,692 | 2,436 | ||||||||
Income taxes receivable | 829 | 1,492 | ||||||||
Inventories – current | 72,348 | 72,827 | ||||||||
Deferred tax assets – current | 1,647 | 1,620 | ||||||||
Total current assets | 145,850 | 139,157 | ||||||||
PROPERTY AND EQUIPMENT: | ||||||||||
Land | 2,692 | 2,742 | ||||||||
Machinery and equipment | 36,877 | 35,434 | ||||||||
Surgical instruments | 109,939 | 101,142 | ||||||||
Furniture and fixtures | 4,720 | 4,556 | ||||||||
Facilities | 20,247 | 19,981 | ||||||||
Projects in process | 711 | 1,166 | ||||||||
Total property and equipment | 175,186 | 165,021 | ||||||||
Accumulated depreciation | (95,579 | ) | (84,915 | ) | ||||||
Net property and equipment | 79,607 | 80,106 | ||||||||
OTHER ASSETS: | ||||||||||
Deferred financing and deposits, net | 582 | 676 | ||||||||
Non-current inventories | 18,733 | 17,465 | ||||||||
Product licenses and designs, net | 11,693 | 8,641 | ||||||||
Patents and trademarks, net | 1,492 | 1,701 | ||||||||
Customer relationships, net | 111 | 203 | ||||||||
Goodwill | 19,098 | 13,091 | ||||||||
Total other assets | 51,709 | 41,777 | ||||||||
TOTAL ASSETS | $ | 277,166 | $ | 261,040 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
CURRENT LIABILITIES: | ||||||||||
Accounts payable | $ | 12,642 | $ | 13,615 | ||||||
Income taxes payable | 167 | 146 | ||||||||
Accrued expenses and other liabilities | 9,113 | 9,194 | ||||||||
Other current liabilities | 1,381 | 250 | ||||||||
Current portion of long-term debt | 3,000 | 3,000 | ||||||||
Total current liabilities | 26,303 | 26,205 | ||||||||
LONG-TERM LIABILITIES: | ||||||||||
Deferred tax liabilities | 3,756 | 2,794 | ||||||||
Long-term debt, net of current portion | 18,000 | 20,250 | ||||||||
Other long-term liabilities | 5,582 | 420 | ||||||||
Total long-term liabilities | 27,338 | 23,464 | ||||||||
Total liabilities | 53,641 | 49,669 | ||||||||
SHAREHOLDERS’ EQUITY: | ||||||||||
Common stock | 141 | 139 | ||||||||
Additional paid-in capital | 80,347 | 76,126 | ||||||||
Accumulated other comprehensive loss | (11,117 | ) | (8,397 | ) | ||||||
Retained earnings | 154,154 | 143,503 | ||||||||
Total shareholders’ equity | 223,525 | 211,371 | ||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 277,166 | $ | 261,040 | ||||||
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EXACTECH, INC. AND SUBSIDIARIES | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Month Periods | Nine Month Periods | |||||||||||||||
Ended September 30, | Ended September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
NET SALES | $ | 56,237 | $ | 57,884 | $ | 179,106 | $ | 185,061 | ||||||||
COST OF GOODS SOLD | 16,597 | 16,929 | 54,573 | 55,128 | ||||||||||||
Gross profit | 39,640 | 40,955 | 124,533 | 129,933 | ||||||||||||
OPERATING EXPENSES: | ||||||||||||||||
Sales and marketing | 20,587 | 21,304 | 63,901 | 67,902 | ||||||||||||
General and administrative | 5,180 | 5,380 | 16,803 | 16,832 | ||||||||||||
Research and development | 5,258 | 4,464 | 14,389 | 13,521 | ||||||||||||
Depreciation and amortization | 4,073 | 4,289 | 12,697 | 12,735 | ||||||||||||
Total operating expenses | 35,098 | 35,437 | 107,790 | 110,990 | ||||||||||||
INCOME FROM OPERATIONS | 4,542 | 5,518 | 16,743 | 18,943 | ||||||||||||
OTHER INCOME (EXPENSE): | ||||||||||||||||
Interest income | 3 | 5 | 7 | 13 | ||||||||||||
Other income | 26 | 3 | 91 | 53 | ||||||||||||
Interest expense | (283 | ) | (253 | ) | (860 | ) | (860 | ) | ||||||||
Foreign currency exchange gain (loss) | (103 | ) | (652 | ) | (862 | ) | (452 | ) | ||||||||
Total other income (expense) | (357 | ) | (897 | ) | (1,624 | ) | (1,246 | ) | ||||||||
INCOME BEFORE INCOME TAXES | 4,185 | 4,621 | 15,119 | 17,697 | ||||||||||||
PROVISION FOR INCOME TAXES | 1,307 | 1,610 | 4,468 | 6,328 | ||||||||||||
NET INCOME | $ | 2,878 | $ | 3,011 | $ | 10,651 | $ | 11,369 | ||||||||
BASIC EARNINGS PER SHARE | $ | 0.20 | $ | 0.22 | $ | 0.76 | $ | 0.83 | ||||||||
DILUTED EARNINGS PER SHARE | $ | 0.20 | $ | 0.21 | $ | 0.75 | $ | 0.81 | ||||||||
SHARES - BASIC | 14,058 | 13,766 | 13,996 | 13,690 | ||||||||||||
SHARES - DILUTED | 14,201 | 14,064 | 14,201 | 13,989 | ||||||||||||
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