Exactech, Inc. (Nasdaq:EXAC), a developer and producer of bone
and joint restoration products for hip, knee, shoulder, spine and
biologic materials, announced today revenue of $61.4 million for
the first quarter of 2015, a 3% decrease from $63.3 million in the
first quarter of 2014. On a constant currency basis, revenue was
flat. Net income was $4.1 million, or $0.29 per diluted share,
compared to $4.2 million, or $0.30 per diluted share, in the same
quarter a year ago.
First Quarter Segment Performance
The first quarter of 2015 was significantly 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 7%
to $21.1 million, a 9% constant currency increase
- Knee implant revenue decreased 10% to
$18.4 million, a 6% constant currency decrease
- Hip implant revenue increased 1% to
$11.0 million, a 7% constant currency increase
- Biologic and Spine revenue decreased
12% to $5.1 million, an 8% constant currency decrease
- Other revenue decreased 10% to $5.8
million, an 8% constant currency decrease
Management Comment
Exactech CEO and President David Petty said, “Worldwide sales
decreased 3% to $61.4 million. U.S. sales were down 1% to $41.2
million compared with $41.6 million in the first quarter a year
ago. International sales decreased 7% to $20.1 million. U.S. sales
represented 67% of total sales and international sales were 33% of
the total. On a constant currency basis, international sales
increased 3% and worldwide sales were flat for the quarter. At
current rates we are expecting foreign currency challenges in the
second quarter. Sales were softer than planned in part resulting
from sales organization transition and improvement activities that
we expect will begin delivering positive results in the second half
of this year. Major product development projects for revision hip,
knee and shoulder systems remain on track and we plan to be doing
surgeries with all three revision systems in the second half of
this year as well.”
Chief Financial Officer Jody Phillips said, “Gross margins
decreased to 70% from 71% for the first quarter a year ago due to
the anticipated impact of pricing. Total operating expenses for the
quarter decreased 4% to $36.7 million and as a percentage of sales
were 60%, the same as the first quarter of 2014. General and
administrative expenses increased 1% in the first quarter at $5.8
million and sales and marketing expenses decreased 8% to $21.9
million. Research and development expenses increased 8% to $4.5
million during the first quarter reflecting ongoing significant
investment in our new product pipeline and the integration of the
Blue Ortho acquisition. Our forward looking guidance has been
adjusted for the first quarter’s results as well as the anticipated
full year impact of current currency exchange rates.
Looking forward, Exactech updated its 2015 revenue guidance to
$248-$254 million and its diluted EPS target to $1.18 – $1.24. For
the second quarter ending June 30, 2015, the company said it
anticipates revenues of $61-$63 and diluted EPS of $0.26-$0.28. 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 at 10:00 a.m.
Eastern Time on Wednesday, April 29. The call will cover the
company’s first quarter results. After opening statements a
question-and-answer session will follow.
To participate in the call, dial 1-888-481-2877 any time after
9:50 a.m. Eastern on Wednesday, April 29th. International and local
callers should dial 1-719-325-2420. 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=114141. 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) March 31,
December 31, 2015 2014
ASSETS CURRENT ASSETS: Cash and cash equivalents $ 12,266 $
10,051 Trade receivables, net of allowances of $1,005 and $946
51,928 50,731 Prepaid expenses and other assets, net 3,906 2,436
Income taxes receivable 582 1,492 Inventories, current 71,321
72,827 Deferred tax assets 1,648 1,620 Total current
assets 141,651 139,157 PROPERTY AND EQUIPMENT: Land 2,677
2,742 Machinery and equipment 35,976 35,434 Surgical instruments
102,304 101,142 Furniture and fixtures 4,732 4,556 Facilities
20,042 19,981 Projects in process 856 1,166 Total
property and equipment 166,587 165,021 Accumulated depreciation
(87,853 ) (84,915 ) Net property and equipment 78,734
80,106 OTHER ASSETS: Deferred financing and deposits, net
650 676 Non-current inventory 17,553 17,465 Product licenses and
designs, net 14,963 8,641 Patents and trademarks, net 1,627 1,701
Customer relationships, net 149 203 Goodwill 15,190
13,091 Total other assets 50,132 41,777
TOTAL
ASSETS $ 270,517 $ 261,040
LIABILITIES AND
SHAREHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $
14,464 $ 13,615 Income taxes payable 809 146 Accrued expenses 9,084
9,194 Other current liabilities 1,692 250 Current portion of
long-term debt 3,000 3,000 Total current liabilities
29,049 26,205 LONG-TERM LIABILITIES: Deferred tax
liabilities 2,048 2,794 Long-term debt, net of current portion
19,500 20,250 Other long-term liabilities 6,197 420
Total long-term liabilities 27,745 23,464 Total
liabilities 56,794 49,669 COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY: Common stock 140 139 Additional
paid-in capital 77,657 76,126 Accumulated other comprehensive loss,
net of tax (11,689 ) (8,397 ) Retained earnings 147,615
143,503 Total shareholders’ equity 213,723
211,371
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $
270,517 $ $261,040
EXACTECH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME
(in thousands, except per share
amounts)
(Unaudited) Three Month Periods Ended March
31, 2015 2014 NET SALES $ 61,376 $ 63,258 COST OF GOODS SOLD
18,642 18,634 Gross profit 42,734 44,624
OPERATING EXPENSES: Sales and marketing 21,850 23,713 General and
administrative 5,847 5,785 Research and development 4,529 4,193
Depreciation and amortization 4,442 4,322 Total
operating expenses 36,668 38,013 INCOME
FROM OPERATIONS 6,066 6,611 OTHER INCOME (EXPENSE): Interest
income 2 3 Other income 28 24 Interest expense (302 ) (347 )
Foreign currency exchange (loss) gain (202 ) 313
Total other expenses (474 ) (7 ) INCOME
BEFORE INCOME TAXES 5,592 6,604 PROVISION FOR INCOME TAXES
1,480 2,406 NET INCOME $ 4,112 $ 4,198 BASIC
EARNINGS PER SHARE $ 0.30 $ 0.31 DILUTED EARNINGS PER SHARE
$ 0.29 $ 0.30 SHARES - BASIC 13,916 13,596 SHARES -
DILUTED 14,174 13,907
Exactech, Inc.Jody Phillips, 352-377-1140Executive Vice
President of Finance & Chief Financial OfficerorHawk
AssociatesJulie Marshall or Frank Hawkins,
305-451-1888exac@hawkassociates.com
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