Exactech, Inc. (Nasdaq: EXAC), a developer and producer of bone
and joint restoration products for hip, knee, shoulder and spine,
announced today that revenue for 2014 increased 5% to $248.4
million from $237.1 million in 2013. Diluted earnings per share for
the year was $1.18 based on net income of $16.5 million,
representing a 7% increase compared to net income of $15.4 million
or $1.12 diluted earnings per share during 2013.
2014 Full Year Highlights and Segment Performance
• Revenue for the year increased 5% to $248.4
million
• Extremity implant revenue increased 21% to
$79.0 million
• Knee implant revenue decreased 2% to $78.7
million
• Hip implant revenue increased 6% to $43.5
million
• Biologic & spine revenues decreased 7%
to $23.8 million
• Other revenues decreased 5% to $23.4
million
2014 Fourth Quarter Highlights and Segment
Performance
For the fourth quarter of 2014 revenue was $63.3 million, an
increase of 3% over $61.6 million for the comparable period last
year. Net income for the fourth quarter of 2014 increased 11% to
$5.1 million, or $0.36 per diluted share, compared to $4.6 million,
or $0.33 per diluted share, for the fourth quarter of 2013. Fourth
quarter total and segment revenues were as follows:
• Total revenue for the quarter increased 3%
to $63.3 million
• Extremity implant revenue increased 18% to
$21.7 million
• Knee implant revenue decreased 7% to $18.9
million
• Hip implant revenue increased 12% to $11.3
million
• Biologic & spine revenues decreased 8%
to $6.1 million
• Other revenues decreased 13% to $5.2
million
Management Comment
Exactech CEO and President David Petty said, “Total sales were
up 5% to $248.4 million in 2014. Continuing double-digit strength
in our shoulder segment resulted in our extremities implant revenue
emerging as our largest revenue segment in 2014 with an increase of
21% to $79.0 million.
“The major success of our shoulder business was directly
attributable to excellent results that our surgeon customers
continue to achieve with our Equinoxe® shoulder system. With a
strong pipeline of new products and a well-established competency
in the segment, we believe this will continue to be a robust
business segment in 2015. Our hip business received a strong boost
during the year with introduction of the Alteon® brand, which
features a Tapered Wedge Femoral Stem and Neck Preserving Femoral
Stem. These innovations have also produced very positive feedback
from surgeons, providing us with excellent momentum going into the
new year.
“Currency issues had a particularly specific impact on our knee
revenues, which represent the largest volume product that we sell
outside of the U.S. Knee unit sales increased on a worldwide basis
during the year although revenues slipped, as pricing pressure was
a factor. Based upon new product launches, sales force engagement,
sales organization development and the product development
pipeline, we see a number of positives in our knee business that we
expect to be beneficial in the second half of 2015.
“U.S. sales for the year were up 4% to $165.6 million compared
with $159.6 million in 2013. International sales increased 7% to
$82.8 million. U.S. sales represented 67% of total sales and
international sales were 33% of the total. For the fourth quarter
of 2014 U.S. sales remained constant at $41.7 million as compared
to the fourth quarter of 2013. International sales increased 9% to
$21.6 million for the fourth quarter of 2014, which represented 34%
of total sales,” Petty said.
Chief Financial Officer Jody Phillips said, “Full year gross
margins increased to 70% compared with 69% for 2013 due to
manufacturing cost reductions that offset some pricing pressure.
Total operating expenses for the year increased 6% to $147.9
million and as a percentage of sales increased to 59.5% from 59.1%
resulting in an operating profit increase of 10% to $26.3 million.
Currency losses and income taxes significantly impacted our net
income in the fourth quarter. The currency loss of $677,000 was
partially offset by reinstatement of the Research and Development
tax credit during the quarter.”
Looking forward, Exactech released its initial 2015 revenue
guidance of $252-$260 million and diluted EPS target of
$1.20-$1.28. For the first quarter of 2015, the company anticipates
USGAAP revenues of $62-$65 million and diluted EPS of $0.30-$0.32.
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 18th at 10:00 a.m. Eastern Time. The call will
cover Exactech’s fourth quarter and year end 2014 results. Petty
will open the conference call and a question-and-answer session
will follow.
To participate in the call, dial 1-888-504-7963 any time
after 9:50 a.m. Eastern on February 18th. International and local
callers should dial 1-719-457-2627. 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=112991. 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.
EXACTECH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
(unaudited) (audited) December
31, December 31, 2014 2013
ASSETS CURRENT ASSETS: Cash and cash equivalents $ 10,051 $
6,011 Accounts receivable, net of allowances of $946 and $993
50,731 59,109 Prepaid expenses and other assets, net 2,436 2,865
Income taxes receivable 1,492 1,331 Inventories – current 72,827
71,590 Deferred tax assets – current 1,620
1,653 Total current assets 139,157 142,559 PROPERTY
AND EQUIPMENT: Land 2,742 2,215 Machinery and equipment 35,434
35,439 Surgical instruments 101,142 95,902 Furniture and fixtures
4,556 4,200 Facilities 19,981 19,187 Projects in process
1,166 852 Total property and equipment 165,021
157,795 Accumulated depreciation (84,915 ) (76,127 )
Net property and equipment 80,106 81,668 OTHER ASSETS:
Deferred financing and deposits, net 676 870 Non-current
inventories 17,465 11,100 Product licenses and designs, net 8,641
9,457 Patents and trademarks, net 1,701 2,005 Customer
relationships, net 203 669 Goodwill 13,091
13,514 Total other assets 41,777 37,615
TOTAL ASSETS $ 261,040 $ 261,842
LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES:
Accounts payable $ 13,615 $ 16,254 Income taxes payable 146 39
Accrued expenses and other liabilities 9,194 10,974 Other current
liabilities 250 250 Current portion of long-term debt 3,000
3,000 Total current liabilities 26,205 30,517
LONG-TERM LIABILITIES: Deferred tax liabilities 2,794 4,200
Line of credit - 10,732 Long-term debt, net of current portion
20,250 23,250 Other long-term liabilities 420
719 Total long-term liabilities 23,464
38,901 Total liabilities 49,669 69,418 SHAREHOLDERS’
EQUITY: Common stock 139 136 Additional paid-in capital 76,126
69,175 Accumulated other comprehensive loss (8,397 ) (3,902 )
Retained earnings 143,503 127,015 Total
shareholders’ equity 211,371 192,424
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 261,040
$ 261,842
EXACTECH, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF INCOME (in thousands, except per share
amounts) (Unaudited)
Three Month Period Twelve Month Periods Ended December 31,
Ended December 31, 2014 2013 2014 2013 NET SALES $ 63,312 $ 61,578
$ 248,373 $ 237,088 COST OF GOODS SOLD 19,116
19,228 74,244 73,019 Gross profit 44,196 42,350
174,129 164,069 OPERATING EXPENSES: Sales and marketing
21,894 21,718 89,796 84,999 General and administrative 5,860 5,348
22,692 21,149 Research and development 4,856 4,279 18,377 17,802
Depreciation and amortization 4,255 4,198
16,990 16,190 Total operating expenses 36,865 35,543 147,855
140,140 INCOME FROM OPERATIONS 7,331
6,807 26,274 23,929 OTHER INCOME (EXPENSE): Interest income
3 3 16 8 Other income 25 69 78 138 Interest expense (251 ) (371 )
(1,111 ) (1,223 ) Foreign currency loss (677 ) (132 )
(1,129 ) (444 ) Total other income (expense) (900 )
(431 ) (2,146 ) (1,521 ) INCOME BEFORE
INCOME TAXES 6,431 6,376 24,128 22,408 PROVISION FOR INCOME
TAXES 1,312 1,781 7,640 7,036 NET
INCOME $ 5,119 $ 4,595 $ 16,488 $ 15,372 BASIC
EARNINGS PER SHARE $ 0.37 $ 0.34 $ 1.20 $ 1.14 DILUTED
EARNINGS PER SHARE $ 0.36 $ 0.33 $ 1.18 $ 1.12 SHARES
- BASIC 13,837 13,546 13,732 13,462 SHARES - DILUTED 14,083
13,844 14,016 13,683
Exactech Inc.Investor contactsJody Phillips, 352-377-1140Chief
Financial OfficerorHawk AssociatesJulie Marshall or Frank Hawkins,
305-451-1888E-mail: exactech@hawkassociates.com
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