Exactech Q2 Net Income up 23% to $3.7 Million. Diluted EPS $0.27 vs. $0.23. Worldwide Sales Up 10% t

Exactech Q2 Net Income up 23% to $3.7 Million. Diluted EPS $0.27 vs. $0.23. Worldwide Sales Up 10% to $60.6 Million. U.S. Sales Increased 13%

YTD Revenue Up 5% to $119.9M, Net Income $7.6M, EPS $0.56

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 sales of $60.6 million for the second quarter of 2013, a 10% increase over $55.2 million in the second quarter of 2012. Net income was $3.7 million, or $0.27 per diluted share, compared to $3.0 million, or $0.23 per diluted share, in the same quarter a year ago.


Second Quarter Segment Performance

  • Knee implant sales remained flat at $21.0 million

  • Extremity implant sales increased 36% to $16.3 million

  • Hip implant sales increased 3% to $10.6 million

  • Biologic and Spine sales increased 15% to $6.8 million

  • Other sales decreased 2% to $5.9 million

Six Months Highlights and Segment Performance

For the first six months of 2013 revenue was $119.9 million, an increase of 5% over $113.8 million for the comparable period last year. Net income for the first six months of 2013 increased 20% to $7.6 million, or $0.56 per diluted share compared to $6.3 million, or $0.48 per diluted share for the first six months of 2012. First six month product revenues were as follows:

  • Knee implant revenue decreased 2% to $41.5 million

  • Extremity implant revenue increased 28% to $32.0 million

  • Hip implant revenue decreased 1% to $21.0 million

  • Biologic and spine revenue increased 6% to $12.9 million

  • Other products revenue decreased 5% to $12.5 million

Management Comment

Exactech Chairman and CEO Dr. Bill Petty said, "This was a strong quarter for Exactech. We were pleased with our bottom line performance with a 23% gain in net income and welcomed operating margin expansion. Our overall revenue gain of 10% was led by 36% growth in our shoulder sales and a 15% rise in revenue in our biologic and spine category. We are especially pleased with the continued robust growth of the Equinoxe shoulder. This ongoing success is due to the clinical advantages of the system that provide improved patient outcomes. Surgeons recognize these advantages and appreciate the excellent educational programs that Exactech offers to improve their ability to use the system to its full potential. We believe we are poised for continued growth with this offering and renewed growth for our hip and knee systems as we continue to introduce new products in these lines and expand our distribution channels."

Exactech President David Petty said, "U.S. sales increased 13% to $39.9 million compared with $35.2 million in the second quarter a year ago. International sales increased 4% to $20.7 million. U.S. sales represented 66% of total sales and international sales were 34% of the total. For the first six months of 2013, U.S. sales rose 9% to $78.8 million compared with $72.0 million in 2012. International sales for the first six months of 2013 decreased 2% to $41.0 million and decreased to 34% of total sales from 37% of total sales for the first six months of 2012 due to relative weakness in some European markets. On a constant currency basis, international sales increased 7% and worldwide sales grew 11% for the second quarter."

Chief Financial Officer Jody Phillips said, "Our focus on operating margin expansion during 2013 continues to pay off as we have expanded our operating profit during the first six months of the year to 10.2% of sales from 9.2% of sales during the first six months of 2012. We achieved this despite the gross margin decrease to 68.5% during the quarter as compared to 68.8% for the second quarter of 2012 primarily as a result of the impact of the Medical Device Excise Tax. Total operating expenses for the second quarter increased 8% to $35.3 million and as a percentage of sales decreased to 58% from 59% for the second quarter of 2012. We continue to feel that we are on track with our 2013 financial performance plan."

Looking forward, Exactech narrowed its 2013 sales guidance to $237 - $241 million and its diluted EPS target to $1.05 - $1.09. For the third quarter ending September 30, 2013, the company said it anticipates sales of $54 - $56 million and diluted EPS of $0.20 - $0.22. 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 at 10:00 a.m. Eastern Time on Wednesday, July 24. The call will cover the company's first quarter results. CEO Bill Petty will open the conference call and a question-and-answer session will follow.

To participate in the call, dial 1-877-941-8416 any time after 9:50 a.m. Eastern on July 24th. International and local callers should dial 1-480-629-9808. 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=105311.

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)

June 30,

December 31,

2013

2012

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

5,689

$

5,838

Trade receivables, net of allowances of $1,098 and $1,012

54,918

48,073

Prepaid expenses and other assets, net

3,026

2,877

Income taxes receivable

1,132

502

Inventories, current

71,856

70,699

Deferred tax assets

2,348

2,229

Total current assets

138,969

130,218

PROPERTY AND EQUIPMENT:

Land

2,210

2,211

Machinery and equipment

34,471

33,158

Surgical instruments

92,237

85,115

Furniture and fixtures

3,798

3,858

Facilities

18,018

18,033

Projects in process

424

643

Total property and equipment

151,158

143,018

Accumulated depreciation

(68,808

)

(61,586

)

Net property and equipment

82,350

81,432

OTHER ASSETS:

Deferred financing and deposits, net

903

866

Non-current inventory

9,341

5,410

Product licenses and designs, net

10,033

10,534

Patents and trademarks, net

2,107

2,217

Customer relationships, net

878

1,108

Goodwill

13,303

13,356

Total other assets

36,565

33,491

TOTAL ASSETS

$

257,884

$

245,141

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable

$

16,321

$

14,773

Income taxes payable

1,527

2,188

Accrued expenses

10,718

11,726

Other current liabilities

250

250

Current portion of long-term debt

3,000

2,625

Total current liabilities

31,816

31,562

LONG-TERM LIABILITIES:

Deferred tax liabilities

2,938

3,186

Line of credit

17,314

12,197

Long-term debt, net of current portion

24,750

26,250

Other long-term liabilities

699

1,049

Total long-term liabilities

45,701

42,682

Total liabilities

77,517

74,244

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:

Common stock

135

133

Additional paid-in capital

66,959

63,918

Accumulated other comprehensive loss, net of tax

(5,955

)

(4,797

)

Retained earnings

119,228

111,643

Total shareholders' equity

180,367

170,897

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

257,884

$

245,141

EXACTECH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(Unaudited)

Three Month Periods

Six Month Periods

Ended June 30,

Ended June 30,

2013

2012

2013

2012

NET SALES

$

60,559

$

55,185

$

119,860

$

113,813

COST OF GOODS SOLD

19,075

17,200

37,665

35,296

Gross profit

41,484

37,985

82,195

78,517

OPERATING EXPENSES:

Sales and marketing

21,483

19,968

43,007

41,788

General and administrative

5,321

4,735

10,417

10,383

Research and development

4,605

4,160

8,455

8,264

Depreciation and amortization

3,854

3,813

8,029

7,605

Total operating expenses

35,263

32,676

69,908

68,040

INCOME FROM OPERATIONS

6,221

5,309

12,287

10,477

OTHER INCOME (EXPENSE):

Interest income

2

8

3

8

Other income (loss)

22

(32

)

51

(15

)

Interest expense

(288

)

(382

)

(571

)

(834

)

Foreign currency exchange (loss) gain

(121

)

(39

)

(583

)

184

Total other income (expenses)

(385

)

(445

)

(1,100

)

(657

)

INCOME BEFORE INCOME TAXES

5,836

4,864

11,187

9,820

PROVISION FOR INCOME TAXES

2,108

1,841

3,602

3,512

NET INCOME

$

3,728

$

3,023

$

7,585

$

6,308

BASIC EARNINGS PER SHARE

$

0.28

$

0.23

$

0.57

$

0.48

DILUTED EARNINGS PER SHARE

$

0.27

$

0.23

$

0.56

$

0.48

SHARES - BASIC

13,449

13,178

13,403

13,167

SHARES - DILUTED

13,631

13,268

13,587

13,264



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

KEYWORDS: United States North America Florida

INDUSTRY KEYWORDS:

The article Exactech Q2 Net Income up 23% to $3.7 Million. Diluted EPS $0.27 vs. $0.23. Worldwide Sales Up 10% to $60.6 Million. U.S. Sales Increased 13% originally appeared on Fool.com.

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