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 $61.5 million for the second quarter of 2015, a 4% decrease from $63.9 million in the second quarter of 2014. Net income was $3.7 million, or $0.26 per diluted share, compared to $4.2 million, or $0.30 per diluted share, in the same quarter a year ago.
Second Quarter Segment Performance
The second 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 8% to $20.5 million, a 9% constant currency increase
- Knee implant revenue decreased 10% to $19.0 million, a 4% constant currency decrease
- Hip implant revenue decreased 2% to $10.9 million, a 1% constant currency increase
- Biologic and Spine revenue decreased 9% to $5.9 million, a 4% constant currency decrease
- Other revenue decreased 15% to $5.2 million, a 14% constant currency decrease
Six Months Highlights and Segment Performance
For the first six months of 2015, revenue was $122.9 million, a decrease of 3% over $127.2 million for the comparable period last year. Net income for the first six months of 2015 decreased 7% to $7.8 million, or $0.55 per diluted share compared to $8.4 million, or $0.60 per diluted share for the first six months of 2014. First six month product revenues were as follows:
- Extremity implant revenue increased 7% to $41.6 million, a 9% constant currency increase
- Knee implant revenue decreased 10% to $37.4 million, a 5% constant currency decrease
- Hip implant revenue was relatively unchanged at $21.9 million, a 4% constant currency increase
- Biologic and Spine revenue decreased 10% to $11.0 million, a 6% constant currency decrease
- Other revenue decreased 13% to $11.0 million, an 11% constant currency decrease
Exactech CEO and President David Petty said, “The first half of 2015 posed difficult challenges. We faced strong currency headwinds, worked to optimize our inventory flow and supply service levels and executed some disruptive but necessary changes within our domestic sales channel. We also invested heavily in our pipeline of new products, several of which initially will be used in surgeries during the second half of the year. Partially because of improvements we have made to our sales force and also because of the initial availability of new revision systems in our hip, knee and shoulder product lines, we expect the second half will be considerably better. This should result in a satisfactory year’s performance, providing positive momentum as we head into 2016.”
“Worldwide sales for the first half of 2015 decreased 3% to $122.9 million and were flat on a constant currency basis. U.S. sales were down 2% to $82.5 million compared with $83.8 million in the first half a year ago. International sales decreased 7% to $40.3 million. U.S. sales for the second quarter of 2015 were down 2% to $41.3 million compared with $42.2 million in the second quarter a year ago. International sales decreased 7% to $20.2 million. On a constant currency basis, international sales increased 4% and worldwide sales were flat for the second quarter. U.S. sales represented 67% of total sales and international sales were 33% of the total,” Petty said.
Chief Financial Officer Jody Phillips said, “Gross margins decreased largely as expected to 68.6% for the second quarter of 2015 vs 69.4% in the second quarter of 2014 due to pricing and currency impacts. Total operating expenses for the quarter decreased 4% to $36.0 million and as a percentage of sales were 59%, the same as the second quarter of 2014. General and administrative expenses increased 2% in the second quarter at $5.8 million and sales and marketing expenses decreased 6% to $21.5 million primarily due to the currency impact of our direct operations in Europe. We continued to produce positive cash flows, which resulted in a $3.3 million improvement in our cash and net debt position during the second quarter.”
Looking forward, Exactech updated its 2015 revenue guidance to $246-$250 million and its diluted EPS target to $1.16–$1.20. For the third quarter ending September 30, 2015, the company said it anticipates revenues of $58.0-$60.0 million and diluted EPS of $0.23-$0.25. 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, July 29th at 10:00 a.m. Eastern Time. The call will cover Exactech’s second quarter 2015 results. Petty will open the conference call and a question-and-answer session will follow.
To participate in the call, dial 1-888-510-1785 any time after 9:50 a.m. Eastern on July 29th. International and local callers should dial 1-719-325-2455. A live webcast of the call will be available at http://www.hawkassociates.com/profile/exac.cfm orhttp://public.viavid.com/index.php?id=115275.
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 athttp://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.
EXACTECH, INC. AND SUBSIDIARIES
|CONSOLIDATED BALANCE SHEETS|
|June 30,||December 31,|
|Cash and cash equivalents||$||14,852||$||10,051|
|Trade receivables, net of allowances of $998 and $946||52,751||50,731|
|Prepaid expenses and other assets, net||3,575||2,436|
|Income taxes receivable||966||1,492|
|Deferred tax assets||1,616||1,620|
|Total current assets||145,724||139,157|
|PROPERTY AND EQUIPMENT:|
|Machinery and equipment||36,318||35,434|
|Furniture and fixtures||4,745||4,556|
|Projects in process||862||1,166|
|Total property and equipment||170,795||165,021|
|Net property and equipment||79,014||80,106|
|Deferred financing and deposits, net||610||676|
|Product licenses and designs, net||12,031||8,641|
|Patents and trademarks, net||1,561||1,701|
|Customer relationships, net||130||203|
|Total other assets||49,748||41,777|
|LIABILITIES AND SHAREHOLDERS’ EQUITY|
|Income taxes payable||4||146|
|Other current liabilities||1,747||250|
|Current portion of long-term debt||3,000||3,000|
|Total current liabilities||26,683||26,205|
|Deferred tax liabilities||4,026||2,794|
|Long-term debt, net of current portion||18,750||20,250|
|Other long-term liabilities||5,222||420|
|Total long-term liabilities||27,998||23,464|
|COMMITMENTS AND CONTINGENCIES|
|Additional paid-in capital||79,567||76,126|
|Accumulated other comprehensive loss, net of tax||(11,179||)||(8,397||)|
|Total shareholders’ equity||219,805||211,371|
|TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY||$||274,486||$||$261,040|
|EXACTECH, INC. AND SUBSIDIARIES|
|CONDENSED CONSOLIDATED STATEMENTS OF INCOME|
|(in thousands, except per share amounts)|
|Three Month Periods||Six Month Periods|
|Ended June 30,||Ended June 30,|
|COST OF GOODS SOLD||19,334||19,565||37,976||38,199|
|Sales and marketing||21,464||22,885||43,314||46,598|
|General and administrative||5,776||5,667||11,623||11,452|
|Research and development||4,602||4,864||9,131||9,057|
|Depreciation and amortization||4,182||4,124||8,624||8,446|
|Total operating expenses||36,024||37,540||72,692||75,553|
|INCOME FROM OPERATIONS||6,135||6,814||12,201||13,425|
|OTHER INCOME (EXPENSE):|
|Other income (loss)||37||26||65||50|
|Foreign currency exchange (loss) gain||(557||)||(113||)||(759||)||200|
|Total other income (expenses)||(793||)||(342||)||(1,267||)||(349||)|
|INCOME BEFORE INCOME TAXES||5,342||6,472||10,934||13,076|
|PROVISION FOR INCOME TAXES||1,681||2,312||3,161||4,718|
|BASIC EARNINGS PER SHARE||$||0.26||$||0.30||$||0.56||$||0.61|
|DILUTED EARNINGS PER SHARE||$||0.26||$||0.30||$||0.55||$||0.60|
|SHARES - BASIC||13,947||13,694||13,965||13,646|
|SHARES - DILUTED||14,167||13,986||14,203||13,946|