Exactech 2015 Revenue $241.8 Million, Net Income $14.8 Million, EPS $1.04

Q4 Revenue $62.7M, Net Income $4.1M, EPS $0.29

GAINESVILLE, Fla.--()--Exactech, Inc. (Nasdaq: EXAC), a developer and producer of bone and joint restoration products for extremities, knee, hip, spine and biologics, announced today that revenue for 2015 decreased 3% to $241.8 million from $248.4 million in 2014 and 2015 revenue increased 1% on a constant currency basis. Diluted earnings per share for the year was $1.04 based on net income of $14.8 million, representing a 10% decrease compared to net income of $16.5 million or $1.18 diluted earnings per share during 2014.

2015 Full Year Highlights and Segment Performance

• Extremity implant revenue increased 7% to $84.4 million, a 8% constant currency increase

• Knee implant revenue decreased 10% to $70.9 million, a 6% constant currency decrease

• Hip implant revenue decreased 2% to $42.7 million, a 3% constant currency increase

• Biologic & spine revenues decreased 5% to $22.6 million, a 1% constant currency decrease

• Other revenues decreased 9% to $21.3 million, a 7% constant currency decrease

2015 Fourth Quarter Highlights and Segment Performance

For the fourth quarter of 2015 revenue was $62.7 million, a decrease of 1% from $63.3 million for the comparable period last year and an increase of 1% on a constant currency basis. Domestic sales increased 7% compared to fourth quarter of 2014. Net income for the fourth quarter of 2015 decreased 19% to $4.1 million, or $0.29 per diluted share, compared to $5.1 million, or $0.36 per diluted share, for the fourth quarter of 2014. Fourth quarter total and segment revenues were as follows:

• Extremity implant revenue increased 5% to $22.9 million, a 6% constant currency increase

• Knee implant revenue decreased 4% to $18.2 million, a 1% constant currency decrease

• Hip implant revenue decreased 4% to $10.8 million, a 1% constant currency decrease

• Biologic & spine revenues decreased 3% to $5.9 million, flat on constant currency basis

• Other revenues decreased 6% to $4.9 million, a 3% constant currency decrease

Management Comment

Exactech CEO and President David Petty said, “2015 was a year of investing both in new product launches and sales channel improvements. We had a modest uplift from the pilot launch of revision hip, knee and shoulder products the last four months of the year despite increased pricing pressures. We expect to ramp those product launches up to full launch mode over the next six to nine months with the help of improvements we have made in the last 12 months in our domestic sales channel. We saw important growth in our domestic sales in the fourth quarter thanks in part to new sales people and the revision system pilot launches. This was offset by a difficult year in our overseas operations as we faced significant challenges primarily due a strong dollar compared with international currencies. We experienced downturns in several emerging markets experiencing economic difficulties. Outside the U.S., we have taken steps to strengthen our sales and marketing network including the first quarter 2016 acquisition of our Australian distributor, giving us nine directly owned companies outside of the U.S.

“2015 U.S. sales were up 2% to $168.1 million compared with $165.6 million a year ago. International sales decreased 11% in 2015 to $73.7 million and were down 1% on a constant currency basis. For the fourth quarter of 2015, U.S. sales were up 7% to $44.9 million compared with $41.7 million in the fourth quarter a year ago and International sales decreased 17% to $17.9 million and decreased 10% on a constant currency basis.

“We expect our strong product pipeline and an improved sales force to produce revenue improvement in 2016 and growth on the bottom line. Contributions are expected from the second half release of our Logic CC revision knee, which will further strengthen our knee product line. Also in the 2016 pipeline are our advanced bearing ceramic shoulder, our new total ankle product and revision hip stem. Based on current currency rates, we do not expect currency issues to be a strong headwind in 2016. Regardless of the challenges of currency and economic pressures outside the U.S., our core businesses are solid. We have proven products that produce great patient outcomes, an improved domestic sales operation, an aggressive R&D effort and a company filled with highly competent people at all levels. This gives us confidence in our future,” Petty said.

Chief Financial Officer Jody Phillips said, “While we experienced a challenging year on the sales and profitability front, we made significant improvement in our balance sheet by reducing our debt net of cash by approximately $10 million during 2015. Full year gross margins decreased to 69.6% compared with 70.1% for 2014, primarily due to the foreign currency impact. Total operating expenses for the year decreased 1% to $145.9 million and as a percentage of sales increased to 60.3% from 59.5%, resulting in an operating profit decrease of 15% to $22.3 million. The $8.1 million constant currency negative impact on sales due to the dollar strengthening during 2015 was difficult for us to offset at the bottom line but with the return to above market growth rates in US sales during the fourth quarter we feel that we have momentum heading into 2016. ”

Looking forward, Exactech released its initial 2016 revenue guidance of $248-$256 million and diluted EPS target of $1.12-$1.18. For the first quarter of 2016, the company anticipates revenues of $62-$65 million and diluted EPS of $0.28-$0.30. 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 will hold a conference call with CEO David Petty and key members of the management team on Wednesday, February 17th at 10:00 a.m. Eastern Time. The call will cover Exactech’s fourth quarter and year-end 2015 results. Mr. Petty will open the conference call and a question-and-answer session will follow.

To participate in the call, dial 1-888-312-3048 any time after 9:50 a.m. Eastern on February 17th. International and local callers should dial 1-719-325-2452. 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=118287. 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 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.





(in thousands)
  (unaudited) (audited)
December 31, December 31,
  2015   2014
Cash and cash equivalents $ 12,713 $ 10,051
Trade receivables, net of allowances of $1,011 and $946 52,442 50,731
Prepaid expenses and other assets, net 2,552 2,436
Income taxes receivable 486 1,492
Inventories, current 71,429 72,827
Deferred tax assets   1,735   1,620
Total current assets 141,357 139,157
Land 4,494 2,742
Machinery and equipment 37,008 35,434
Surgical instruments 109,152 101,142
Furniture and fixtures 4,655 4,556
Facilities 20,348 19,981
Projects in process   1,218   1,166
Total property and equipment 176,875 165,021
Accumulated depreciation   (96,713 )   (84,915 )
Net property and equipment 80,162 80,106
Deferred financing and deposits, net 858 676
Non-current inventory 23,376 17,465
Product licenses and designs, net 11,121 8,641
Patents and trademarks, net 1,426 1,701
Customer relationships, net 92 203
Goodwill   18,850   13,091
Total other assets   55,723   41,777
TOTAL ASSETS $ 277,242 $ 261,040
Accounts payable $ 13,932 $ 13,615
Income taxes payable 603 146
Accrued expenses 9,498 9,194
Other current liabilities 1,956 250
Current portion of long-term debt     3,000
Total current liabilities 25,989 26,205
Deferred tax liabilities 2,178 2,794
Long-term debt, net of current portion 16,000 20,250
Other long-term liabilities   4,686   420
Total long-term liabilities   22,864   23,464
Total liabilities 48,853 49,669
Common stock 142 139
Additional paid-in capital 81,963 76,126
Accumulated other comprehensive loss, net of tax (11,986 ) (8,397 )
Retained earnings   158,270   143,503
Total shareholders’ equity   228,389   211,371

(in thousands, except per share amounts)
Three Month Periods Twelve Month Periods
Ended December 31, Ended December 31,
2015 2014 2015 2014
NET SALES $ 62,732 $ 63,312 $ 241,838 $ 248,373
COST OF GOODS SOLD 19,066 19,116 73,639 74,244
Gross profit 43,666 44,196 168,199 174,129
Sales and marketing 23,194 21,894 87,095 89,796
General and administrative 5,680 5,860 22,483 22,692
Research and development 4,995 4,856 19,384 18,377
Depreciation and amortization 4,243 4,255 16,940 16,990
Total operating expenses 38,112 36,865 145,902 147,855
INCOME FROM OPERATIONS 5,554 7,331 22,297 26,274
Interest income 2 3 9 16
Other income (loss) 377 25 468 78
Interest expense (453 ) (251 ) (1,313 ) (1,111 )
Foreign currency exchange loss (269 ) (677 ) (1,131 ) (1,129 )
Total other income (expenses) (343 ) (900 ) (1,967 ) (2,146 )
INCOME BEFORE INCOME TAXES 5,211 6,431 20,330 24,128
PROVISION FOR INCOME TAXES 1,063 1,312 5,563 7,640
NET INCOME $ 4,148 $ 5,119 $ 14,767 $ 16,488
BASIC EARNINGS PER SHARE $ 0.29 $ 0.37 $ 1.05 $ 1.20
DILUTED EARNINGS PER SHARE $ 0.29 $ 0.36 $ 1.04 $ 1.18
SHARES - BASIC 14,100 13,837 14,022 13,732
SHARES - DILUTED 14,179 14,083 14,202 14,016


Exactech, Inc.
Investor contacts
Jody Phillips, 352-377-1140
Executive Vice President of Finance & Chief Financial Officer
Media contact
Priscilla Bennett, 352-377-1140
Vice President, Corporate & Marketing Communication
Hawk Associates
Julie Marshall or Frank Hawkins, 305-451-1888
E-mail: EXAC@hawkassociates.com


Exactech, Inc.
Investor contacts
Jody Phillips, 352-377-1140
Executive Vice President of Finance & Chief Financial Officer
Media contact
Priscilla Bennett, 352-377-1140
Vice President, Corporate & Marketing Communication
Hawk Associates
Julie Marshall or Frank Hawkins, 305-451-1888
E-mail: EXAC@hawkassociates.com