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 $1,01254,91848,073
Prepaid expenses and other assets, net3,0262,877
Income taxes receivable1,132502
Inventories, current71,85670,699
Deferred tax assets 2,348 2,229
Total current assets138,969130,218
 
PROPERTY AND EQUIPMENT:
Land2,2102,211
Machinery and equipment34,47133,158
Surgical instruments92,23785,115
Furniture and fixtures3,7983,858
Facilities18,01818,033
Projects in process 424 643
Total property and equipment151,158143,018
Accumulated depreciation (68,808) (61,586)
Net property and equipment82,35081,432
 
OTHER ASSETS:
Deferred financing and deposits, net903866
Non-current inventory9,3415,410
Product licenses and designs, net10,03310,534
Patents and trademarks, net2,1072,217
Customer relationships, net8781,108
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 payable1,5272,188
Accrued expenses10,71811,726
Other current liabilities250250
Current portion of long-term debt 3,000 2,625
Total current liabilities31,81631,562
 
LONG-TERM LIABILITIES:
Deferred tax liabilities2,9383,186
Line of credit17,31412,197
Long-term debt, net of current portion24,75026,250
Other long-term liabilities 699 1,049
Total long-term liabilities 45,701 42,682
Total liabilities77,51774,244
 
COMMITMENTS AND CONTINGENCIES
 
SHAREHOLDERS' EQUITY:
Common stock135133
Additional paid-in capital66,95963,918
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 PeriodsSix 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 profit41,48437,98582,19578,517
 
OPERATING EXPENSES:
Sales and marketing21,48319,96843,00741,788
General and administrative5,3214,73510,41710,383
Research and development4,6054,1608,4558,264
Depreciation and amortization 3,854 3,813 8,029 7,605
Total operating expenses35,26332,67669,90868,040
    
INCOME FROM OPERATIONS6,2215,30912,28710,477
 
OTHER INCOME (EXPENSE):
Interest income2838
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 TAXES5,8364,86411,1879,820
 
PROVISION FOR INCOME TAXES2,1081,8413,6023,512
    
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 - BASIC13,44913,17813,40313,167
 
SHARES - DILUTED13,63113,26813,58713,264



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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