ARDEN HILLS, Minn.--(BUSINESS WIRE)--IntriCon Corporation (NASDAQ: IIN), a designer, developer, manufacturer and distributor of miniature and micro-miniature body-worn devices, today announced financial results for its fourth quarter ended December 31, 2014.
Fourth-Quarter Highlights:
- Net sales of $16.5 million rose 10 percent over the prior-year period;
- Gross margins of 27.1 percent increased from 25.5 percent;
- IntriCon achieved EPS of $0.06, up significantly from an EPS loss of $(0.25) in the prior-year period;
- The company’s value hearing health business posted strong results, with revenues rising 31 percent;
- The company reduced bank debt by $2.0 million from 2013 year end;
- IntriCon secured CE (Conformité Européenne) Mark approval allowing it to directly pursue significant value hearing health opportunities throughout Europe; and
- The company entered into a distribution agreement with the United Kingdom’s PC Werth Ltd which allows IntriCon to be a main supplier to the National Health Service (NHS) Supply Chain’s National Framework.
Financial Results
For the 2014 fourth quarter, the company
reported net sales of $16.5 million, up from $15.0 million in the
prior-year period. IntriCon posted net income of $360,000, or $0.06 per
diluted share, compared to a net loss of $(1.4) million, or $(0.25) per
diluted share, for the 2013 fourth quarter. Included in the 2014
fourth-quarter results was a one-time $165,000, or $0.03 per diluted
share, foreign tax expense charge. Included in 2013 fourth-quarter
results was a net loss from discontinued operations of $(1.6) million,
or $(0.27) per diluted share.
“We are pleased to report continued strength, with double-digit, top- and bottom-line growth for the fourth consecutive quarter,” said Mark S. Gorder, president and chief executive officer of IntriCon. “Our fourth-quarter results capped off the strongest year for IntriCon from a net sales, gross margin and profitability perspective, since the Selas restructuring nearly a decade ago. Our strategy of developing partnerships with key value hearing health and medical customers, and concentrating on our highest potential opportunities in value hearing health and the medical biotelemetry market is taking hold, as evidenced by our recent announcement of the PC Werth contract.”
Gross profit margins grew to 27.1 percent from 25.5 percent in the prior-year fourth quarter. The gains stemmed primarily from volume increases and cost reductions achieved from the company’s previously disclosed global restructuring plan.
Full-Year Results
For the 2014 full year, IntriCon reported
higher net sales of $68.3 million and net income of $2.2 million, or
$0.37 per diluted share. This compares to 2013 annual net sales of $53.0
million and a net loss of $(6.2) million, or $(1.08) per diluted share.
Net income from continuing operations for the 2014 twelve-months was
$2.5 million, or $0.42 per diluted share, with a discontinued operations
net loss of $(270,000), or $(0.04) per diluted share. The 2013 annual
results included a loss from continuing operations of $(2.3) million, or
$(0.40) per diluted share, and a discontinued operations net loss of
$(3.9) million, or $(0.68) per diluted share.
Gross profit margins increased to 27.1 percent from 23.0 percent for the full year 2013. Again, the improvement was primarily due to volume increases and cost reductions.
Business Update
Hearing health sales grew during the fourth
quarter, rising 31 percent from the prior-year quarter, primarily due to
initial gains on targeted value hearing health initiatives, including
value hearing aids, personal sound amplifier products (PSAP) and
assistive listening devices.
Said Gorder, “We continue to make significant strides in the hearing health market as demonstrated by the PC Werth partnership. As we’ve previously noted, within the conventional hearing health channel, industry growth and penetration rate continues to be stagnated by high device costs, distribution inefficiencies and retail consolidation. These factors, along with the rapidly growing aging population, have created a need for an outcomes-based hearing health model. To capitalize on this opportunity, we are concentrating our efforts on significant prospective partnerships and customers, and are aggressively pursuing the value hearing aid and PSAP channels.”
PC Werth, through its partnership with IntriCon, has been appointed one of the main suppliers to the NHS Supply Chain's National Framework. The NHS is the largest purchaser of hearing aids in the world, supplying an estimated 1.2 million hearing aids annually. Under the agreement, PC Werth will distribute IntriCon hearing aid products under the Kamplex brand name. PC Werth will provide the required marketing, selling, training and service support. IntriCon is currently working on product approval with the NHS Audiology Supplies Group and anticipates having product approved and available for sale in the first half of 2015.
Sales in IntriCon’s medical business declined 9 percent in the 2014 fourth quarter compared to the year-ago period, primarily driven by an anticipated reduction in sales to IntriCon’s largest customer, Medtronic. To support Medtronic’s MiniMed 530G insulin pump launch in late 2013, IntriCon built and sold significant inventory from the fourth quarter of 2013 through the first half of 2014. While the company has satisfied the initial launch volume requirements, IntriCon anticipates sequential Medtronic revenue growth in the 2015 first quarter and throughout 2015.
Fourth-quarter 2014 professional audio communication sales rose 41 percent from the prior-year period. During the quarter, the company completed the final delivery on a significant contract with the Singapore government to provide technically advanced headsets worn in military applications. IntriCon will continue to leverage its core technologies in professional audio communication to support existing customers, as well as seek related hearing health and medical product opportunities.
Looking Ahead
Concluded Gorder, “2014 was a very successful
year. We posted the strongest revenue and earnings in a decade,
completed our restructuring of the business and importantly, made great
strides in establishing our infrastructure to drive growth in our value
hearing health business. As we carry this positive momentum into 2015,
we anticipate higher sales for the full year, with our first-quarter
revenue consistent with our 2014 fourth quarter. Strategically, as we
look to the future, we will maintain our focus on aggressively expanding
our value hearing health reach and pursuing opportunities in value
hearing health and medical biotelemetry.”
Conference Call Today
As previously announced, the company
will hold an investment community conference call today, Tuesday,
February 17, 2015, beginning at 4 p.m. CT. Mark Gorder, president and
chief executive officer, and Scott Longval, chief financial officer,
will review fourth-quarter performance and discuss the company’s
strategies. To join the conference call, dial: 1-888-438-5448 and
provide the conference ID number 5633695 to the operator.
A replay of the conference call will be available three hours after the call ends through 7 p.m. CT on Tuesday, March 3, 2015. To access the replay, dial 1-888-203-1112 and enter passcode: 5633695.
About IntriCon Corporation
Headquartered 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 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 Statements
Statements 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, 2013. 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 | Twelve Months Ended | |||||||||||||||||||
| December 31, | December 31, | December 31, | December 31, | |||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||||||
|
(Unaudited) |
(Unaudited) |
(Unaudited) |
(Unaudited) |
|||||||||||||||||
| Sales, net | $ | 16,481 | $ | 15,026 | $ | 68,303 | $ | 52,961 | ||||||||||||
| Cost of sales | 12,018 | 11,189 | 49,819 | 40,792 | ||||||||||||||||
| Gross profit | 4,463 | 3,837 | 18,484 | 12,169 | ||||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Sales and marketing | 884 | 884 | 3,699 | 3,308 | ||||||||||||||||
| General and administrative | 1,575 | 1,350 | 6,462 | 5,789 | ||||||||||||||||
| Research and development | 1,302 | 1,184 | 4,832 | 4,181 | ||||||||||||||||
| Restructuring charges | - | 30 | 83 | 229 | ||||||||||||||||
| Total operating expenses | 3,761 | 3,448 | 15,076 | 13,507 | ||||||||||||||||
| Operating income (loss) | 702 | 389 | 3,408 | (1,338 | ) | |||||||||||||||
| Interest expense | (99 | ) | (132 | ) | (461 | ) | (600 | ) | ||||||||||||
| Equity in loss of partnerships | (71 | ) | (78 | ) | (228 | ) | (262 | ) | ||||||||||||
| Other income (expense) | 105 | 14 | 227 | 127 | ||||||||||||||||
| Income (loss) from continuing operations before income taxes and discontinued operations | 637 | 193 | 2,946 | (2,073 | ) | |||||||||||||||
| Income tax expense | 277 | 58 | 428 | 217 | ||||||||||||||||
| Income (loss) before discontinued operations | 360 | 135 | 2,518 | (2,290 | ) | |||||||||||||||
| Loss on sale of discontinued operations | - | - | (120 | ) | - | |||||||||||||||
| Loss from discontinued operations, net of income taxes | - | (1,558 | ) | (150 | ) | (3,872 | ) | |||||||||||||
| Net income (loss) | $ | 360 | $ | (1,423 | ) | $ | 2,248 | $ | (6,162 | ) | ||||||||||
| Basic income (loss) per share: | ||||||||||||||||||||
| Continuing operations | $ | 0.06 | $ | 0.02 | $ | 0.43 | $ | (0.40 | ) | |||||||||||
| Discontinued operations | - | (0.27 | ) | (0.05 | ) | (0.68 | ) | |||||||||||||
| Net income (loss) per share: | $ | 0.06 | $ | (0.25 | ) | $ | 0.39 | $ | (1.08 | ) | ||||||||||
| Diluted income (loss) per share: | ||||||||||||||||||||
| Continuing operations | $ | 0.06 | $ | 0.02 | $ | 0.42 | $ | (0.40 | ) | |||||||||||
| Discontinued operations | - | (0.27 | ) | (0.04 | ) | (0.68 | ) | |||||||||||||
| Net income (loss) per share: | $ | 0.06 | $ | (0.25 | ) | $ | 0.37 | $ | (1.08 | ) | ||||||||||
| Average shares outstanding: | ||||||||||||||||||||
| Basic | 5,831 | 5,710 | 5,791 | 5,699 | ||||||||||||||||
| Diluted | 6,122 | 5,710 | 6,038 | 5,699 | ||||||||||||||||
| INTRICON CORPORATION | ||||||||||
| Consolidated Condensed Balance Sheets | ||||||||||
| (In Thousands, Except Per Share Amounts) | ||||||||||
| December 31, | December 31, | |||||||||
|
2014 |
2013 |
|||||||||
| Current assets: | ||||||||||
| Cash | $ | 328 | $ | 217 | ||||||
| Restricted cash | 640 | 568 | ||||||||
| Accounts receivable, less allowance for doubtful accounts of $120 at December 31, 2014 and $124 at December 31, 2013 | 7,673 | 5,433 | ||||||||
| Inventories | 9,983 | 9,400 | ||||||||
| Other current assets | 1,013 | 1,337 | ||||||||
| Current assets of discontinued operations | - | 382 | ||||||||
| Total current assets | 19,637 | 17,337 | ||||||||
| Machinery and equipment | 35,104 | 33,971 | ||||||||
| Less: Accumulated depreciation | 30,859 | 29,232 | ||||||||
| Net machinery and equipment | 4,245 | 4,739 | ||||||||
| Goodwill | 9,194 | 9,194 | ||||||||
| Investment in partnerships | 387 | 569 | ||||||||
| Other assets, net | 498 | 749 | ||||||||
| Other assets of discontinued operations | - | 132 | ||||||||
| Total assets | $ | 33,961 | $ | 32,720 | ||||||
| Current liabilities: | ||||||||||
| Checks written in excess of cash | $ | 516 | $ | 279 | ||||||
| Current maturities of long-term debt | 1,886 | 2,210 | ||||||||
| Accounts payable | 5,438 | 5,037 | ||||||||
| Accrued salaries, wages and commissions | 2,519 | 1,676 | ||||||||
| Deferred gain | 110 | 110 | ||||||||
| Other accrued liabilities | 1,364 | 1,893 | ||||||||
| Current liabilities of discontinued operations | - | 154 | ||||||||
| Total current liabilities | 11,833 | 11,359 | ||||||||
| Long-term debt, less current maturities | 4,627 | 6,271 | ||||||||
| Other postretirement benefit obligations | 485 | 531 | ||||||||
| Accrued pension liabilities | 741 | 839 | ||||||||
| Deferred gain | 55 | 165 | ||||||||
| Other long-term liabilities | 113 | 247 | ||||||||
| Total liabilities | 17,854 | 19,412 | ||||||||
| Commitments and contingencies | ||||||||||
| Shareholders’ equity: | ||||||||||
| Common stock, $1.00 par value per share; 20,000 shares authorized; 5,844 and 5,727 shares issued and outstanding at December 31, 2014 and December 31, 2013, respectively | 5,844 | 5,727 | ||||||||
| Additional paid-in capital | 16,939 | 16,434 | ||||||||
| Accumulated deficit | (6,274 | ) | (8,522 | ) | ||||||
| Accumulated other comprehensive loss | (402 | ) | (331 | ) | ||||||
| Total shareholders' equity | 16,107 | 13,308 | ||||||||
| Total liabilities and shareholders’ equity | $ | 33,961 | $ | 32,720 | ||||||