Q4 Revenue $62.7M, Net Income $4.1M, EPS
$0.29
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.
EXACTECH, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (in thousands)
(unaudited) (audited) December 31,
December 31, 2015 2014
ASSETS CURRENT ASSETS: 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 PROPERTY AND EQUIPMENT: 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 OTHER ASSETS: 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
LIABILITIES AND
SHAREHOLDERS’ EQUITY CURRENT LIABILITIES: 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 LONG-TERM LIABILITIES: 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 COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY: 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
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $
277,242 $ $261,040
EXACTECH, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF INCOME (in thousands, except per share
amounts) (Unaudited) 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 OPERATING EXPENSES: 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
OTHER INCOME (EXPENSE): 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
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version on businesswire.com: http://www.businesswire.com/news/home/20160216006639/en/
Exactech, Inc.Investor contactsJody Phillips,
352-377-1140Executive Vice President of Finance & Chief
Financial OfficerorMedia contactPriscilla Bennett, 352-377-1140Vice
President, Corporate & Marketing CommunicationorHawk
AssociatesJulie Marshall or Frank Hawkins, 305-451-1888E-mail:
EXAC@hawkassociates.com
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