Hearing Health and Medical Revenue Up Over
Prior Year
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, 2016.
Highlights:
- Net sales of $18.3 million increased 10
percent over the prior-year period;
- The company’s value hearing health
initiatives delivered both year-over-year and sequential
growth;
- Gross margins of 28.0 percent improved
from 26.1 percent in the first quarter of 2015; and,
- The company amended its credit
facilities with The PrivateBank, creating a lending structure with
broader financial flexibility.
First-Quarter Financial Results
For the 2016 first quarter, the company reported net sales of
$18.3 million, up from $16.6 million in the prior-year period.
Gross profit margins grew to 28.0 percent from 26.1 percent in the
2015 first quarter. The gains stemmed primarily from higher overall
sales volume. IntriCon posted net income attributable to IntriCon
shareholders of $15,000, or $0.00 per diluted share, compared to
$284,000, or $0.05 per diluted share, for the 2015 first
quarter.
“We are pleased to report year-over-year growth from a net sales
and gross margin standpoint. We consciously increased our
investment in the first quarter to accelerate expansion in value
hearing health, which resulted in a slight decline in net income
attributable to IntriCon shareholders,” said Mark S. Gorder,
president and chief executive officer. “Our recent value hearing
health efforts are beginning to gain traction and we delivered
first-quarter net sales gains both year over year and sequentially.
We intend to continue focusing our resources on building the
infrastructure required to secure high-potential growth
opportunities in the value hearing health market.”
Business Update
First-quarter hearing health sales grew 16 percent over the
prior-year period. During the quarter, IntriCon experienced gains
in value hearing aids, personal sound amplifier products (PSAP) and
assisted listening devices. These were partially offset by
anticipated decreases in conventional channel sales.
As previously noted, the conventional channel has experienced a
trend of continuing market consolidation. As a result, six large
manufacturers now control approximately 98 percent of the global
market. However, market penetration has stagnated as end-consumer
prices have risen dramatically. This has spurred the development of
value hearing aids, PSAPs and assisted listening devices.
Moreover, on April 21, 2016, the U.S. Food and Drug
Administration (FDA) hosted a public workshop to gather stakeholder
and public input on draft guidance related to the agency's
premarket requirements for hearing aids and PSAPs. The FDA’s intent
is to consider ways in which regulation can support further device
penetration into the hearing market.
“As a company, we are aligned with the FDA's efforts to overcome
barriers to device access and spur development and innovation in
cost-effective technology,” said Gorder. “We believe these factors
create the need for the outcomes-based hearing health delivery
model we’ve advocated. Our value hearing health strategy focuses on
this need as we continue to build the infrastructure to secure
other notable partners who can help drive the company's
outcomes-based, hearing health delivery model.”
The company’s integration plan for PC Werth is proceeding on
schedule. During the quarter, IntriCon delivered initial devices to
the National Health Service and is eagerly awaiting customer
feedback. In mid-April, earVenture, the company’s joint venture
with the Academy of Doctors of Audiology (ADA), presented at
AudiologyNOW!, the annual convention of the American Academy
of Audiology. This is part of IntriCon’s comprehensive marketing
and sales plan to convert the 400-plus ADA members who have
registered to join the earVenture program, into consistent
customers, as well as solicit non-registered ADA members to
join.
On the medical front, sales in IntriCon’s medical business
increased 12 percent in the 2016 first quarter compared to the
prior-year first quarter, primarily driven by the company’s largest
customer, Medtronic. The gains stemmed from MiniLink REAL-Time
Transmitter and related accessories sales, which are incorporated
in Medtronic's MiniMed 530G insulin pump and continuous glucose
monitoring system. IntriCon anticipates Medtronic revenue gains
throughout 2016.
First quarter 2016 professional audio communication sales were
down 16 percent from the prior-year period. IntriCon will continue
to leverage its core technologies in professional audio
communication to support existing customers, as well as seek
related hearing health and medical product opportunities.
On April 15, 2016, IntriCon amended its credit facilities with
The PrivateBank. The amendment includes, among other things: an
increase in IntriCon’s term loan to $6.0 million from $4.0 million;
an increase in the revolving credit facility capacity to $9.0
million from $8.0 million; an increase in the inventory cap on the
borrowing base from $3.5 million to $4.0 million; and, revisions to
the leverage ratio financial covenants effective March 31,
2016.
Said Gorder, “The higher borrowing capacity of our amended
credit facilities is an important step in advancing our future
plans. As we look ahead, we are evaluating several options to
enhance our infrastructure and secure channel partners in value
hearing health. Further, continued core technology
investments—including development of ultra-low-power wireless
technology aimed to increase efficiencies and access through
innovative value hearing health distribution channels and medical
biotelemetry markets—are essential to our long-term success.”
Looking AheadConcluded Gorder, “I am encouraged with the
strong revenue and gross margins posted during the quarter and
further progress made in developing our value hearing health
infrastructure and advancing our technology portfolio. We are
committed to accelerating targeted investment that best position
the company for long-term success in the value hearing health and
medical biotelemetry markets. Financially, we anticipate second
quarter net sales consistent with 2016 first-quarter levels and
double-digit gains for the full year.”
Conference Call TodayAs previously announced, the company
will hold an investment community conference call today, Tuesday,
April 26, 2016, beginning at 4 p.m. CT. Mark Gorder, president and
chief executive officer, and Scott Longval, chief financial
officer, will review fourth-quarter performance and discuss the
company’s strategies. To join the conference call, dial:
1-800-344-6698 and provide the conference ID number 7654838 to the
operator.
A replay of the conference call will be available three hours
after the call ends through 7:00 p.m. CT on Tuesday, May 10, 2016.
To access the replay, please visit
https://jsp.premiereglobal.com/webrsvp and enter passcode
7654838.
About IntriCon CorporationHeadquartered 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, United Kingdom 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 StatementsStatements 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, 2015. 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
Amounts) Three Months Ended March
31, March 31, 2016 2015
(Unaudited)
(Unaudited) Sales, net $ 18,258 $ 16,602 Cost
of sales 13,144 12,274 Gross profit
5,114 4,328 Operating expenses: Sales and marketing 1,196 987
General and administrative 2,291 1,709 Research and development
1,416 1,226 Total operating expenses
4,903 3,922 Operating income 211 406
Interest expense (126 ) (103 ) Other income (expense)
(70 ) 136 Income from continuing operations before
income taxes 15 439 Income tax (benefit) expense 34
155 Net Income (Loss) (19 ) 284 Less: Loss allocated
to non-controlling interest (34 ) - Net Income
attributable to IntriCon shareholders $ 15 $ 284
Net income per share attributable to IntriCon shareholders:
Basic $ 0.00 $ 0.05 Diluted $ 0.00 $ 0.05 Average shares
outstanding: Basic 5,981 5,849 Diluted 6,228 6,227
INTRICON CORPORATION Consolidated Condensed Balance
Sheets (In Thousands, Except Per Share Amounts)
March 31, December 31,
2016
2015
Current assets: Cash $ 553 $ 369 Restricted cash 640 610 Accounts
receivable, less allowance for doubtful accounts of $136 at March
31, 2016 and $135 at December 31, 2015 8,924 8,578 Inventories
14,556 14,472 Other current assets 932 860
Total current assets 25,605 24,889 Machinery and
equipment 39,273 38,653 Less: Accumulated depreciation
32,367 31,911 Net machinery and equipment
6,906 6,742 Goodwill 9,551 9,551 Investment in partnerships
188 224 Other assets, net 1,052 480
Total assets $ 43,302 $ 41,886 Current
liabilities: Current maturities of long-term debt $ 1,941 $ 1,908
Accounts payable 8,275 7,785 Accrued salaries, wages and
commissions 1,918 2,559 Deferred gain 28 55 Other accrued
liabilities 965 1,279 Total current
liabilities 13,127 13,586 Long-term debt, less current
maturities 9,603 7,929 Other postretirement benefit obligations 530
542 Accrued pension liabilities 824 812 Other long-term liabilities
137 120 Total liabilities 24,221 22,989
Commitments and contingencies Shareholders’ equity: Common stock,
$1.00 par value per share; 20,000 shares authorized; 5,986 and
5,981 shares issued and outstanding at March 31, 2016 and December
31, 2015, respectively 5,986 5,981 Additional paid-in capital
17,922 17,721 Accumulated deficit (4,031 ) (4,046 ) Accumulated
other comprehensive loss (723 ) (721 ) Total
shareholders' equity 19,154 18,935 Non-controlling interest
(73 ) (38 ) Total equity 19,081 18,897
Total liabilities and equity $ 43,302 $ 41,886
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160426006677/en/
At IntriCon:Scott Longval, CFO,
651-604-9526slongval@intricon.comorAt PadillaCRT:Matt
Sullivan, 612-455-1709matt.sullivan@padillacrt.com
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