GAINESVILLE, Fla.--(BUSINESS WIRE)--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 $63.3 million for the first quarter of 2014, a 7% increase over $59.3 million in the first quarter of 2013. Net income was $4.2 million, or $0.30 per diluted share, compared to $3.9 million, or $0.29 per diluted share, in the same quarter a year ago.
First Quarter Segment Performance
- Knee implant revenue was constant at $20.6 million
- Extremity implant revenue increased 25% to $19.7 million
- Hip implant revenue increased 3% to $10.8 million
- Biologic and Spine revenue decreased 4% to $5.8 million
- Other revenue decreased 3% to $6.4 million
Exactech CEO and President David Petty said, “Driven by continuing strong double digit growth in extremities revenue, we recorded our strongest quarter ever. Worldwide sales rose 7% to $63.3 million. U.S. sales were up 7% to $41.6 million compared with $39.0 million in the first quarter a year ago. International sales increased 6% to $21.7 million. U.S. sales represented 66% of total sales and international sales were 34% of the total. On a constant currency basis, international sales increased 7% and worldwide sales grew 7% for the quarter. As our extremity revenues continued to exceed our expectations, we also were pleased with the international performance of our hip segment."
Chief Financial Officer Jody Phillips said, “Gross margins increased to 71% from 69% for the first quarter a year ago primarily due to continued focus on manufacturing cost reductions as well as the pricing impact of stronger European currencies. Total operating expenses for the quarter increased 10% to $38.0 million and as a percentage of sales increased to 60% from 58% for the first quarter of 2013. General and administrative expenses increased 14% in the first quarter to $5.8 million from $5.1 million and Sales and marketing expenses increased 10% to $23.7 million. An extensive review of our global compliance programs contributed to increases in both G&A and S&M expenses. Research and development expenses increased 9% to $4.2 million during the first quarter reflecting ongoing significant investment in our new product pipeline. We are encouraged we were able to deliver operating margin and net income expansion considering these investments."
Looking forward, Exactech updated its 2014 revenue guidance to $247-$254 million and its diluted EPS target to $1.19 – $1.24. For the second quarter ending June 30, 2014, the company said it anticipates revenues of $62 - $64 million and diluted EPS of $0.29-$0.31. 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.
The company has scheduled a conference call at 10:00 a.m. Eastern Time on Tuesday, April 22. The call will cover the company’s first quarter results. Chairman Bill Petty will open the conference call with the introduction of CEO David Petty. After opening statements a question-and-answer session will follow.
To participate in the call, dial 1-877-941-4774 any time after 9:50 a.m. Eastern on Tuesday, April 22nd. International and local callers should dial 1-480-629-9760. 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=108647. This call will be archived for approximately 90 days.
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.
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.
|EXACTECH, INC. AND SUBSIDIARIES|
|CONSOLIDATED BALANCE SHEETS|
|March 31,||December 31,|
|Cash and cash equivalents||$||11,279||$||6,011|
|Trade receivables, net of allowances of $918 and $993||47,520||59,109|
|Prepaid expenses and other assets, net||4,028||2,865|
|Income taxes receivable||216||1,331|
|Deferred tax assets||1,694||1,653|
|Total current assets||136,942||142,559|
|PROPERTY AND EQUIPMENT:|
|Machinery and equipment||35,560||35,439|
|Furniture and fixtures||4,551||4,200|
|Projects in process||753||852|
|Total property and equipment||161,231||157,795|
|Net property and equipment||81,085||81,668|
|Deferred financing and deposits, net||969||870|
|Product licenses and designs, net||9,134||9,457|
|Patents and trademarks, net||1,928||2,005|
|Customer relationships, net||555||669|
|Total other assets||37,724||37,615|
|LIABILITIES AND SHAREHOLDERS’ EQUITY|
|Income taxes payable||1,037||39|
|Other current liabilities||250||250|
|Current portion of long-term debt||3,000||3,000|
|Total current liabilities||30,617||30,517|
|Deferred tax liabilities||3,839||4,200|
|Line of credit||-||10,732|
|Long-term debt, net of current portion||22,500||23,250|
|Other long-term liabilities||601||719|
|Total long-term liabilities||26,940||38,901|
|COMMITMENTS AND CONTINGENCIES|
|Additional paid-in capital||70,979||69,175|
|Accumulated other comprehensive loss, net of tax||(4,134||)||(3,902||)|
|Total shareholders’ equity||198,194||192,424|
|TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY||$||255,751||$||261,842|
EXACTECH, INC. AND SUBSIDIARIES
|CONDENSED CONSOLIDATED STATEMENTS OF INCOME|
|(in thousands, except per share amounts)|
|Three Month Periods|
|Ended March 31,|
|COST OF GOODS SOLD||18,634||18,590|
|Sales and marketing||23,713||21,524|
|General and administrative||5,785||5,096|
|Research and development||4,193||3,850|
|Depreciation and amortization||4,322||4,175|
|Total operating expenses||38,013||34,645|
|INCOME FROM OPERATIONS||6,611||6,066|
|OTHER INCOME (EXPENSE):|
|Foreign currency exchange gain (loss)||313||(462||)|
|Total other expenses||(7||)||(715||)|
|INCOME BEFORE INCOME TAXES||6,604||5,351|
|PROVISION FOR INCOME TAXES||2,406||1,494|
|BASIC EARNINGS PER SHARE||$||0.31||$||0.29|
|DILUTED EARNINGS PER SHARE||$||0.30||$||0.29|
|SHARES - BASIC||13,596||13,355|
|SHARES - DILUTED||13,907||13,523|