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Exactech 2013 Revenue Up 6% to $237.1M, Net Income Up 21% to $15.4M, EPS $1.12

Companies mentioned in this article: Exactech, Inc.

GAINESVILLE, Fla. -- (BUSINESS WIRE) -- Exactech, Inc. (Nasdaq: EXAC), a developer and producer of bone and joint restoration products for hip, knee, shoulder and spine, announced today that revenue for 2013 increased 6% to $237.1 million from $224.3 million in 2012. Diluted earnings per share for the year was $1.12 based on net income of $15.4 million, representing a 21% increase compared to net income of $12.7 million or $0.96 diluted earnings per share during 2012.

2013 Full Year Highlights and Segment Performance

  • Revenue for the year increased 6% to $237.1 million
  • Knee implant revenue decreased 1% to $80.5 million
  • Extremity implant revenue increased 26% to $65.5 million
  • Hip implant revenue increased 0.3% to $41.0 million
  • Biologic & spine revenues increased 4% to $25.5 million
  • Other revenues decreased 4% to $24.6 million

2013 Fourth Quarter Highlights and Segment Performance

For the fourth quarter of 2013 revenue was $61.6 million, an increase of 4% over $59.3 million for the comparable period last year. Net income for the fourth quarter of 2013 increased 18% to $4.6 million, or $0.33 per diluted share, compared to $3.9 million, or $0.29 per diluted share, for the fourth quarter of 2012. Fourth quarter total and segment revenues were as follows:

  • Total revenue for the quarter increased 4% to $61.6 million
  • Knee implant revenue decreased 2% to $20.4 million
  • Extremity implant revenue increased 24% to $18.4 million
  • Hip implant revenue decreased 2% to $10.1 million
  • Biologic & spine revenues increased 3% to $6.6 million
  • Other revenues decreased 13% to $6.0 million

Management Comment

Exactech Chairman and CEO Dr. Bill Petty said, “Overall, we are pleased with these results despite some international economic challenges. Our extremities segment drove the top line with a 26% gain to $65.5 million in 2013. Our domestic knee sales did well, and we were encouraged by improvements in our biologic and spine segment. Our 21% improvement in net income was particularly satisfying, as the people of Exactech worked effectively and efficiently to hold down costs and improve productivity. Looking ahead, our new product pipeline should provide fresh top line momentum in 2014. In addition, we expect our focus on increased productivity and lower costs will continue to contribute to net income growth.”

Exactech President David Petty said, “For the year 2013, U.S. sales increased 10% to $159.7 million, and international sales were down 2% to $77.4 million. During the fourth quarter, U.S. sales increased 9% to $41.8 million. International sales decreased 5% to $19.8 million.

“Our domestic knee product sales did well in the fourth quarter, providing us with good momentum going into 2014. We have increased the number of active trials of our new ExactechGPS® guided personalized surgery system, and that is already driving new knee sales to surgeons. Based on surgeon feedback, we are encouraged about the future impact of the system as a sales catalyst for our knee results. Our extremities business continues to be a growth leader both domestically and internationally. Our surgeon customers repeatedly report excellent patient outcomes, and that is playing an important role in propelling this segment.”

“Our hip business did well internationally but faced some challenges domestically after a particularly strong year in 2012. We are very pleased with improvements in our biologics and spine segment where we are seeing strong growth in the spine portion.”

Chief Financial Officer Jody Phillips said, “Operationally, we made significant improvements during 2013. Gross margins remained flat at 69% for 2013 and 2012 due to continued focus on maintaining cost reductions that offset the impact of the medical device excise tax. Total operating expenses for the year increased 4% to $140.1 million, and as a percentage of sales decreased to 59.1% from 59.8% for 2012. General and administrative expenses increased 5% for 2013 to $21.1 million from $20.1 million. Sales and marketing expenses increased 4% to $85.0 million, primarily due to variable selling expenses. Research and development expenses increased 6% to $17.8 million during 2013, as we continue to actively invest in our new product pipeline.”

Looking forward, Exactech released its initial 2014 revenue guidance of $246-$254 million and diluted EPS target of $1.18-$1.24. For the first quarter of 2014, the company anticipates revenues of $62-$64 million and diluted EPS of $0.28-$0.30. 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 will hold a conference call with CEO Dr. William Petty and key members of the management team on Thursday, February 20th at 10:00 a.m. Eastern Time. The call will cover Exactech’s fourth quarter and year-end 2013 results. Dr. Petty will open the conference call and a question-and-answer session will follow.

To participate in the call, dial 1-877-941-4774 any time after 9:50 a.m. Eastern on February 20th. International and local callers should dial 1-480-629-9760. 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=107717.

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)
December 31, December 31,
2013 2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 6,011 $ 5,838
Accounts receivable, net of allowances of $993 and $1,012 59,109 48,073
Prepaid expenses and other assets, net 2,865 2,877
Income taxes receivable 1,331 502
Inventories – current 71,590 70,699
Deferred tax assets – current   1,653     2,229  
Total current assets 142,559 130,218
 
PROPERTY AND EQUIPMENT:
Land 2,215 2,211
Machinery and equipment 35,439 33,158
Surgical instruments 95,902 85,115
Furniture and fixtures 4,200 3,858
Facilities 19,187 18,033
Projects in process   852     643  
Total property and equipment 157,795 143,018
Accumulated depreciation   (76,127 )   (61,586 )
Net property and equipment 81,668 81,432
 
OTHER ASSETS:
Deferred financing and deposits, net 870 866
Non-current inventories 11,100 5,410
Product licenses and designs, net 9,457 10,534
Patents and trademarks, net 2,005 2,217
Customer relationships, net 669 1,108
Goodwill   13,514     13,356  
Total other assets   37,615     33,491  
TOTAL ASSETS $ 261,842   $ 245,141  
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable $ 16,254 $ 14,773
Income taxes payable 39 2,188
Accrued expenses and other liabilities 10,974 11,726
Other current liabilities 250 250
Current portion of long-term debt   3,000     2,625  
Total current liabilities 30,517 31,562
 
LONG-TERM LIABILITIES:
Deferred tax liabilities 4,200 3,186
Line of credit 10,732 12,197
Long-term debt, net of current portion 23,250 26,250
Other long-term liabilities   719     1,049  
Total long-term liabilities   38,901     42,682  
Total liabilities 69,418 74,244
 
SHAREHOLDERS’ EQUITY:
Common stock 136 133
Additional paid-in capital 69,175 63,918
Accumulated other comprehensive loss (3,902 ) (4,797 )
Retained earnings   127,015     111,643  
Total shareholders’ equity   192,424     170,897  
 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 261,842   $ 245,141  
 
 
EXACTECH, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(Unaudited)
     
Three Month Period Twelve Month Periods
Ended December 31, Ended December 31,
2013 2012 2013 2012
NET SALES $ 61,578 $ 59,254 $ 237,088 $ 224,337
 
COST OF GOODS SOLD   19,228   18,043   73,019   68,731
Gross profit 42,350 41,211 164,069 155,606
 
OPERATING EXPENSES:
Sales and marketing 21,718 21,478 84,999 81,979
General and administrative 5,348 5,192 21,149 20,139
Research and development 4,279 4,173 17,802 16,803
Depreciation and amortization   4,198   4,016   16,190   15,343
Total operating expenses 35,543 34,859 140,140 134,264
       
INCOME FROM OPERATIONS 6,807 6,352 23,929 21,342
 
OTHER INCOME (EXPENSE):
Interest income 3 3 8 11
Other income 69 30 138 87
Interest expense (371 ) (300 ) (1,223 ) (1,456 )
Foreign currency loss   (132 )   (284 )   (444 )   (90 )
Total other income (expense) (431 ) (551 ) (1,521 ) (1,448 )
       
INCOME BEFORE INCOME TAXES 6,376 5,801 22,408 19,894
 
PROVISION FOR INCOME TAXES 1,781 1,921 7,036 7,153
       
NET INCOME $ 4,595 $ 3,880 $ 15,372 $ 12,741
 
 
BASIC EARNINGS PER SHARE $ 0.34 $ 0.29 $ 1.14 $ 0.96
 
DILUTED EARNINGS PER SHARE $ 0.33 $ 0.29 $ 1.12 $ 0.96
 
 
SHARES - BASIC 13,546 13,315 13,462 13,232
 
SHARES - DILUTED 13,844 13,383 13,683 13,317
 


Copyright © Business Wire 2014
Contact:

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