GAINESVILLE, Fla.--(BUSINESS WIRE)--Exactech, Inc. (Nasdaq: EXAC), a developer and producer of bone and joint restoration products for hip, knee, shoulder and spine, announced today revenue of $57.9 million for the third quarter of 2014, a 4% increase over $55.7 million in the third quarter of 2013. Net income was $3.0 million, or $0.21 per diluted share, compared to $3.2 million, or $0.23 per diluted share, in the same quarter a year ago.
Third Quarter Segment Performance
- Extremity implant revenue increased 23% to $18.6 million
- Knee implant revenue decreased 2% to $18.1 million
- Hip implant revenue increased 4% to $10.2 million
- Biologic and Spine revenue decreased 10% to $5.4 million
- Other revenue decreased 9% to $5.6 million
Nine Months Highlights and Segment Performance
For the nine months of 2014, revenue was $185.1 million, an increase of 5% over $175.5 million for the comparable period last year. Net income for the first nine months of 2014 increased 5% to $11.4 million, or $0.81 per diluted share compared to $10.8 million, or $0.79 per diluted share for the first nine months of 2013. Nine month product revenues were as follows:
- Extremity implant revenue increased 22% to $57.3 million
- Knee implant revenue decreased 1% to $59.8 million
- Hip implant revenue increased 4% to $32.2 million
- Biologic and spine revenue decreased 6% to $17.7 million
- Other products revenue decreased 2% to $18.2 million
Exactech CEO and President David Petty said, “Total sales were up 4% to $57.9 million in the third quarter and up 5% to $185.1 million for the first nine months. Continuing double-digit strength in our shoulder segment resulted in our extremities implant revenue emerging as our largest revenue segment in the quarter with an increase of 23% to $18.6 million. This surpassed revenue in our knee segment, which decreased 2% to $18.1 million year over year in the quarter. Sluggish knee sales in Europe and the U.S. contributed to the knee revenue performance. Our hip segment continued to perform well with a 4% gain to $10.2 million, and we experienced weakness in our other segments. Net income slipped 6% to $3.0 million reflecting a $923,000 negative foreign exchange swing as compared to the third quarter of last year.
“U.S. sales for the quarter were up 2% to $40.0 million compared with $39.1 million in the third quarter a year ago. International sales increased 8% to $17.9 million. U.S. sales represented 69% of total sales and international sales were 31% of the total. For the first nine months of 2014, U.S. sales rose 5% to $123.8 million compared with $117.9 million in 2013, representing 67% of total sales. International sales increased 6% to $61.2 million and remained at 33% of total sales,” Petty said.
Chief Financial Officer Jody Phillips said, “Gross margins remained at 71% for each of the third quarters for 2014 and 2013. Total operating expenses for the third quarter increased 2% to $35.4 million and as a percentage of sales decreased to 61% from 62% resulting in an operating profit increase of 14% to $5.5 million. Our balance sheet remained strong with a further decrease in long-term debt reflecting healthy cash flow."
Looking forward, Exactech updated its 2014 revenue guidance to $247-$249 million and its diluted EPS target to $1.14–$1.16. For the fourth quarter ending December 31, 2014, the company said it anticipates revenues of $62-$64 million and diluted EPS of $0.33-$0.35 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 will hold a conference call with CEO David Petty and key members of the management team on Wednesday, October 22nd, 2014 at 10:00 a.m. Eastern Time. The call will cover Exactech’s third quarter 2014 results. Petty will open the conference call and a question-and-answer session will follow.
To participate in the call, dial 1-888-329-8877 any time after 9:50 a.m. Eastern on Wednesday, October 22nd. International and local callers should dial 1-719-457-2085. 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=111204. 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|
|September 30,||December 31,|
|Cash and cash equivalents||$||9,086||$||6,011|
|Trade receivables, net of allowances of $821 and $993||46,342||59,109|
|Prepaid expenses and other assets, net||3,711||2,865|
|Income taxes receivable||550||1,331|
|Deferred tax assets||1,521||1,653|
|Total current assets||135,381||142,559|
|PROPERTY AND EQUIPMENT:|
|Machinery and equipment||34,321||35,439|
|Furniture and fixtures||4,547||4,200|
|Projects in process||1,133||852|
|Total property and equipment||162,406||157,795|
|Net property and equipment||80,056||81,668|
|Deferred financing and deposits, net||1,375||870|
|Product licenses and designs, net||8,664||9,457|
|Patents and trademarks, net||1,777||2,005|
|Customer relationships, net||317||669|
|Total other assets||42,446||37,615|
|LIABILITIES AND SHAREHOLDERS’ EQUITY|
|Income taxes payable||-||39|
|Other current liabilities||250||250|
|Current portion of long-term debt||3,000||3,000|
|Total current liabilities||27,574||30,517|
|Deferred tax liabilities||2,890||4,200|
|Line of credit||-||10,732|
|Long-term debt, net of current portion||21,000||23,250|
|Other long-term liabilities||432||719|
|Total long-term liabilities||24,322||38,901|
|COMMITMENTS AND CONTINGENCIES|
|Additional paid-in capital||74,315||69,175|
|Accumulated other comprehensive loss, net of tax||(6,850||)||(3,902||)|
|Total shareholders’ equity||205,987||192,424|
|TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY||$||257,883||$||261,842|
|EXACTECH, INC. AND SUBSIDIARIES|
|CONDENSED CONSOLIDATED STATEMENTS OF INCOME|
|(in thousands, except per share amounts)|
|Three Month Periods||Nine Month Periods|
|Ended September 30,||Ended September 30,|
|COST OF GOODS SOLD||16,929||16,126||55,128||53,791|
|Sales and marketing||21,304||20,274||67,902||63,281|
|General and administrative||5,380||5,384||16,832||15,801|
|Research and development||4,464||5,068||13,521||13,523|
|Depreciation and amortization||4,289||3,963||12,735||11,992|
|Total operating expenses||35,437||34,689||110,990||104,597|
|INCOME FROM OPERATIONS||5,518||4,835||18,943||17,122|
|OTHER INCOME (EXPENSE):|
|Other income (loss)||3||18||53||69|
|Foreign currency exchange (loss) gain||(652||)||271||(452||)||(312||)|
|Total other income (expenses)||(897||)||10||(1,246||)||(1,090||)|
|INCOME BEFORE INCOME TAXES||4,621||4,845||17,697||16,032|
|PROVISION FOR INCOME TAXES||1,610||1,653||6,328||5,255|
|BASIC EARNINGS PER SHARE||$||0.22||$||0.24||$||0.83||$||0.80|
|DILUTED EARNINGS PER SHARE||$||0.21||$||0.23||$||0.81||$||0.79|
|SHARES - BASIC||13,766||13,494||13,690||13,433|
|SHARES - DILUTED||14,064||13,712||13,989||13,632|