IntriCon Corporation (NASDAQ: IIN), a designer,
developer, manufacturer and distributor of miniature and
micro-miniature body-worn devices, today announced financial
results for its first quarter ended March 31, 2013.
For the 2013 first quarter, the company reported net sales of
$14.6 million, versus $16.5 million in the prior-year period.
IntriCon had a net loss of $(471,000), or $(0.08) per diluted
share, compared to net income of $243,000, or $0.04 per diluted
share, for the 2012 first quarter.
“Consistent with historical revenue cycles, we reported a more
moderate 2013 first quarter,” said Mark S. Gorder, president and
chief executive officer of IntriCon. “Driven by increased activity
from our largest customer, Medtronic, our medical business posted
its strongest revenue quarter ever. However, this growth was offset
by continued sluggishness in the conventional hearing health
market, the planned softness in our program with hi
HealthInnovations, and a professional audio slowdown due to U.S.
Government sequestration.”
As a percentage of 2013 first-quarter sales, healthcare-related
revenue (hearing health and medical combined) totaled 84.5 percent
(35.8 percent hearing health and 48.7 percent medical), with
professional audio communications at 15.5 percent. This compares to
2012 healthcare-related revenue of 82.8 percent (45.9 percent
hearing health and 36.9 percent medical), with professional audio
communications at 17.2 percent.
Gross profit margins decreased to 23.8 percent from 25.2 percent
in the prior-year first quarter. The decrease was primarily due to
lower sales volume, partially offset by a favorable product mix
within the medical market.
According to Gorder, the company continued to transfer select,
labor-intensive programs in its medical and hearing health
businesses to its Singapore and Indonesia facilities during the
first quarter. To drive margin improvement and remain competitive
from a cost standpoint, IntriCon will continue these shifts
throughout 2013.
Business Update
Sales in IntriCon’s medical business rose 17.0 percent in the
first quarter. The growth, as previously stated, was primarily due
to increased activity from Medtronic in preparation for a new
product line launch. The company expects medical sales going
forward to moderate in the second quarter as Medtronic works
through the inventory build, and then to strengthen in the second
half of the year.
Within cardiac, IntriCon has secured initial orders for its
wireless cardiac diagnostic monitor Sirona™ for delivery in the
third quarter. Additionally, the company is expanding its CDM sales
and marketing infrastructure, to further advance its cardiac
program and elevate its devices with market-demanded features.
Within hearing health, IntriCon continues to experience softness
in the conventional market which is consistent with overall
industry trends. The slow growth in the conventional hearing aid
channel is primarily due to the high device costs and
inconveniences in the distribution channel. The company believes
these factors have created an opportunity for alternative care
models such as the insurance channel and the personal sound
amplifier product (PSAP) market.
Said Gorder, “hi HealthInnovations continues to make progress
building the infrastructure to provide high-quality, affordable
hearing health care to a broad range of customers. And while we do
not anticipate that hi HealthInnovations will ramp until the second
half of the year, we remain very optimistic about the progress that
has been made and the long term prospects of this market-changing
program.
“We also recently unveiled Audion4™, our new four-channel
hearing aid amplifier, at AudiologyNOW!. The latest amplifier in
our Audion family, Audion4 broadens our amplifier product
offering—giving manufacturers even more options to be competitive
in today's emerging value sector of the hearing health market.”
IntriCon's Audion4 is a feature-rich amplifier designed to fit a
wide array of applications. In addition to multiple compression
channels, the amplifier has a complete set of proven adaptive
features which greatly improve the user experience.
On the professional audio front, first-quarter sales moderated
to more historical levels as expected. The decline was due to U.S.
Government sequestration related to IntriCon’s security business
and the conclusion of the company’s Singapore Government contract.
Over the next few quarters IntriCon anticipates securing additional
contracts with both governments.
Looking Ahead
Concluded Gorder, “In early 2013 we met some headwinds and we
face near-term challenges. We are closely monitoring these
challenges and will continue to adjust our cost structure
accordingly. Longer term, we’re confident in our ability drive
shareholder value. Our technology portfolio, global manufacturing
infrastructure and key customer relationships have positioned us
well to aggressively drive growth in the value hearing health and
medical biotelemetry markets.”
Conference Call Today
As previously announced, the company will hold an investment
community conference call today, Monday, April 22, 2013, beginning
at 4:00 p.m. CT. Mark Gorder, president and chief executive
officer, and Scott Longval, chief financial officer, will review
first-quarter performance and discuss the company’s strategies. To
join the conference call, dial: 1-877-941-9205 (international
1-480-629-9818) and provide the conference identification number
4613638 to the operator.
A replay of the conference call will be available one hour after
the call ends through 11:59 p.m. CT on Monday, April 29, 2013. To
access the replay, dial 1-800-406-7325 (international
1-303-590-3030) and enter access code: 4613638.
About IntriCon Corporation
Headquartered in Arden Hills, Minn., IntriCon Corporation
designs, develops and manufactures miniature and micro-miniature
body-worn devices. These advanced products help medical, healthcare
and professional communications companies meet the rising demand
for smaller, more intelligent and better connected devices.
IntriCon has facilities in the United States, Asia and Europe. The
company’s common stock trades under the symbol “IIN” on the NASDAQ
Global Market. For more information about IntriCon, visit
www.intricon.com.
Forward-Looking Statements
Statements made in this release and in IntriCon’s other public
filings and releases that are not historical facts or that include
forward-looking terminology are “forward-looking statements” within
the meaning of the Securities Exchange Act of 1934, as amended.
These forward-looking statements may be affected by known and
unknown risks, uncertainties and other factors that are beyond
IntriCon’s control, and may cause IntriCon’s actual results,
performance or achievements to differ materially from the results,
performance and achievements expressed or implied in the
forward-looking statements. These risks, uncertainties and other
factors are detailed from time to time in the company’s filings
with the Securities and Exchange Commission, including the Annual
Report on Form 10-K for the year ended December 31, 2012. The
company disclaims any intent or obligation to publicly update or
revise any forward-looking statements, regardless of whether new
information becomes available, future developments occur or
otherwise.
IntriCon Corporation Consolidated Condensed
Statements of Operations (in thousands, except per share
data) March 31, March 31, 2013 2012
(Unaudited)
(Unaudited)
Sales, net $ 14,633 $ 16,524 Cost of sales 11,149
12,367 Gross profit 3,484 4,157
Operating expenses: Sales and marketing 892 875 General and
administrative 1,659 1,626 Research and development 1,301
1,137 Total operating expenses 3,852
3,638 Operating income (loss) (368 ) 519
Interest expense (153 ) (179 ) Equity in income (loss) of
partnerships (58 ) (24 ) Other income (expense) 98
(39 ) Income (loss) before income taxes (481 ) 277
Income tax expense (benefit) (10 ) 34 Net
income (loss) $ (471 ) $ 243 Net income (loss) per
share: Basic $ (0.08 ) $ 0.04 Diluted $ (0.08 ) $ 0.04
Average shares outstanding: Basic 5,687 5,654 Diluted 5,687 5,933
IntriCon Corporation Consolidated Condensed
Balance Sheets (in thousands, except per share data)
March 31, December 31, 2013
2012
(Unaudited)
Current assets: Cash $ 172 $ 226 Restricted cash 550 563 Accounts
receivable, less allowance for doubtful accounts of $166 at March
31, 2013 and $154 at December 31, 2012 7,108 7,171 Inventories
11,635 11,117 Other current assets 1,977 1,483
Total current assets 21,442 20,560 Machinery and
equipment 40,650 40,796 Less: Accumulated depreciation
34,343 34,012 Net machinery and equipment
6,307 6,784 Goodwill 9,709 9,709 Investment in partnerships
715 773 Other assets, net 1,250 1,306
Total assets $ 39,423 $ 39,132 Current liabilities:
Checks written in excess of cash $ 849 $ 637 Current maturities of
long-term debt 2,509 2,945 Accounts payable 4,171 4,045 Accrued
salaries, wages and commissions 2,007 1,786 Deferred gain 110 110
Income taxes payable 2 96 Other accrued liabilities 2,915
2,048 Total current liabilities 12,563 11,667
Long-term debt, less current maturities 7,015 7,222 Other
postretirement benefit obligations 582 590 Accrued pension
liabilities 495 510 Deferred gain 248 275 Other long-term
liabilities 106 146 Total liabilities
21,009 20,410 Commitments and contingencies Shareholders’ equity:
Common stock, $1.00 par value per share; 20,000 shares authorized;
5,693 and 5,687 shares issued and outstanding at March 31, 2013 and
December 31, 2012, respectively 5,693 5,687 Additional paid-in
capital 15,950 15,797 Accumulated deficit (2,831 ) (2,360 )
Accumulated other comprehensive loss (398 ) (402 )
Total shareholders' equity 18,414 18,722
Total liabilities and shareholders’ equity $ 39,423 $
39,132
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