Exactech Q3 Revenue Up 8% to $51.3M, Net Income Up 95% to $2.6M, EPS $0.19; YTD Revenue Up 8% to $16

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Exactech Q3 Revenue Up 8% to $51.3M, Net Income Up 95% to $2.6M, EPS $0.19; YTD Revenue Up 8% to $165.1M, Net Income $8.9M, EPS $0.67

GAINESVILLE, Fla.--(BUSINESS WIRE)-- Exactech, Inc. (NAS: EXAC) , a developer and producer of bone and joint restoration products for hip, knee, shoulder, spine and biologic materials, announced today revenue of $51.3 million for the third quarter of 2012, an 8% increase over $47.3 million in the third quarter of 2011. Net income increased 95% to $2.6 million, or $0.19 per diluted share, compared to $1.3 million, or $0.10 per diluted share, in the same quarter a year ago.

Third Quarter Highlights and Segment Performance

  • Third quarter revenue increased 8% to $51.3 million
  • Net Income increased 95% to $2.6 million
  • Knee implant revenue increased 2% to $18.2 million
  • Extremity implant revenue increased 25% to $12.2 million
  • Hip implant revenue increased 16% to $9.2 million
  • Biologic and Spine revenue increased 10% to $5.9 million
  • Other products revenue decreased 9% to $5.6 million

Nine Months Highlights and Segment Performance

For the first nine months of 2012 revenue was $165.1 million, an increase of 8% over $152.3 million for the comparable period last year. Net income for the first nine months of 2012 increased 27% to $8.9 million, or $0.67 per diluted share compared to $7.0 million, or $0.53 per diluted share for the first nine months of 2011.

  • First nine month revenue increased 8% to $165.1 million
  • Net Income increased 27% to $8.9 million
  • Knee implant revenue increased 1% to $60.7 million
  • Extremity implant revenue increased 29% to $37.2 million
  • Hip implant revenue increased 25% to $30.5 million
  • Biologic and spine revenue decreased 2% to $18.0 million
  • Other products revenue decreased 10% to $18.7 million

Management Comment

Exactech Chairman and CEO Dr. Bill Petty said, "We were pleased with another strong quarter. Again, we outperformed our peer companies as we reported improvements in all major categories of our business led by our extremities and hip segments. We also recorded a welcome improvement in our knee business, our largest operating segment. Growing strength in our spine products line primarily drove a 10% gain in our biologic and spine segment revenue. With a 27% increase in year to date net income, we are now beginning to experience the operating leverage from many of our investments over the last few years."

Exactech President David Petty said, "Based on strong performances of our hip and extremities businesses as well as sequentially improving U.S. knee growth rates, U.S. sales increased 12% to $35.3 million compared with $31.5 million in the third quarter a year ago. This represented our highest quarterly U.S. growth in more than two years. International sales grew 1% to $16.0 million reflecting sales strength in Asian and Latin American markets, offsetting market challenges in Europe as well as a $1.0 million net sales return that was part of an agreement with our former Spanish distributor to settle outstanding accounts receivable. Including this return, sales growth on a constant currency basis in the quarter was 10% worldwide and 7% internationally.

Chief Financial Officer Jody Phillips said, "Gross margins increased to 70% for the third quarter from 68.5% for the third quarter a year ago due to higher growth in the U.S. market and continued cost reductions attributable to internal manufacturing. Total operating expenses for the quarter increased 4% to $31.4 million and as a percentage of sales decreased to 61% from 64% for the third quarter of 2011. General and administrative expenses decreased 10% in the third quarter to $4.6 million from $5.1 million, primarily due to the reduction in compliance costs. R&D expenses increased 25% to $4.4 million during the third quarter, primarily due to robust design and development activities across all of our product lines."

Looking forward, Exactech updated its 2012 revenue guidance to $221-$223 million and changed its diluted EPS target to $0.93 - $0.95. For the fourth quarter ending December 31, 2012, the company anticipates revenues of $56-$58 million 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 has scheduled a conference call on Wednesday, October 31, 2012 at 10:00 a.m. Eastern Time. The call will cover the company's third quarter 2012 results. Dr. Petty will open the conference call and a question-and-answer session will follow.

To participate in the call, dial 1-877-941-4774any time after 9:50 a.m. Eastern on October 31. International and local callers should dial 1-480-629-9760. While in conference, if callers should require operator assistance, they can press the star followed by the zero button. This will call an operator to the line.

A live and archived webcast of the call will be available at http://www.hawkassociates.com/profile/exac.cfm or http://p2.viavid.com/player/index.php?id=102146.

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, compliance costs 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)
September 30,December 31,
20122011
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$3,965$4,663
Accounts receivable, net of allowances of $800 and $3,18645,20145,856
Prepaid expenses and other assets, net3,4383,948
Income taxes receivable452171
Inventories - current71,28861,724
Deferred tax assets - current 1,947  2,869 
Total current assets126,291119,231
 
PROPERTY AND EQUIPMENT:
Land2,2092,209
Machinery and equipment32,42430,164
Surgical instruments84,61177,105
Furniture and fixtures3,8473,753
Facilities18,00817,930
Projects in process 1,778  2,141 
Total property and equipment142,877133,302
Accumulated depreciation (63,177) (56,061)
Net property and equipment79,70077,241
 
OTHER ASSETS:
Deferred financing and deposits, net8931,016
Non-current inventories8,3287,334
Product licenses and designs, net10,55511,380
Patents and trademarks, net2,1391,589
Customer relationships, net1,2111,545
Goodwill 13,276  13,276 
Total other assets 36,402  36,140 
TOTAL ASSETS$242,393 $232,612 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable$14,306$12,909
Income taxes payable1,4754,210
Accrued expenses and other liabilities11,4328,957
Other current liabilities250344
Current portion of long-term debt 2,625  648 
Total current liabilities30,08827,068
 
LONG-TERM LIABILITIES:
Deferred tax liabilities2,6553,520
Line of credit15,21042,410
Long-term debt, net of current portion27,0003,507
Other long-term liabilities 1,130  780 
Total long-term liabilities 45,995  50,217 
Total liabilities76,08377,285
 
SHAREHOLDERS' EQUITY:
Common stock133132
Additional paid-in capital63,56460,565
Accumulated other comprehensive loss(5,150)(4,272)
Retained earnings 107,763  98,902 
Total shareholders' equity 166,310  155,327 
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$242,393 $232,612 
 
 
EXACTECH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(Unaudited)
   
Three Month PeriodsNine Month Periods
Ended September 30,Ended September 30,
2012201120122011
NET SALES$51,270$47,278$165,083$152,329
 
COST OF GOODS SOLD 15,392 14,898 50,688 48,156
Gross profit35,87832,380114,395104,173
 
OPERATING EXPENSES:
Sales and marketing18,71318,04160,50157,292
General and administrative4,5645,07014,94716,555
Research and development4,3663,50212,6309,717
Depreciation and amortization 3,722 3,663 11,327 10,642
Total operating expenses31,36530,27699,40594,206
    
INCOME FROM OPERATIONS4,5132,10414,9909,967
 
OTHER INCOME (EXPENSE):
Interest income83
Other income22305773
Interest expense(322)(281)(1,156)(821)
Foreign currency gain (loss) 60 (48) 194 845
Total other income (expenses)(240)(299)(897)100
    
INCOME BEFORE INCOME TAXES4,2731,80514,09310,067
 
PROVISION FOR INCOME TAXES1,7204945,2322,569
    
NET INCOME$2,553$1,311$8,861$7,004
 
 
BASIC EARNINGS PER SHARE$0.19$0.10$0.67$0.54
 
DILUTED EARNINGS PER SHARE$0.19$0.10$0.67$0.53
 
 
SHARES - BASIC13,27813,12513,20413,083
 
SHARES - DILUTED13,35813,20713,29513,215
 



Exactech, Inc.
Investor contacts
Jody Phillips, 352-377-1140
Chief Financial Officer
or
Hawk Associates
Julie Marshall or Frank Hawkins, 305-451-1888
E-mail: exactech@hawkassociates.com

KEYWORDS:   United States  North America  Florida

INDUSTRY KEYWORDS:

The article Exactech Q3 Revenue Up 8% to $51.3M, Net Income Up 95% to $2.6M, EPS $0.19; YTD Revenue Up 8% to $165.1M, Net Income $8.9M, EPS $0.67 originally appeared on Fool.com.

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