Exactech 2012 Revenue Up 9% to $224.3M, Net Income Up 44% to $12.7M, EPS $0.96
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 2012 increased 9% to $224.3 million from $205.4 million in 2011. Diluted earnings per share for the year was $0.96 based on net income of $12.7 million representing a 44% increase compared to net income of $8.8 million or $0.67 diluted EPS during 2011.
2012 Full Year Highlights and Segment Performance
• Revenue for the year increased 9% to $224.3 million
• Knee implant revenue increased 2% to $81.4 million
• Extremity implant revenue increased 30% to $52.1 million
• Hip implant revenue increased 21% to $40.8 million
• Biologic & spine segment revenues increased 1% to $24.5 million
• Other revenues decreased 6% to $25.6 million
2012 Fourth Quarter Highlights and Segment Performance
For the fourth quarter of 2012 revenue was $59.3 million, an increase of 12% over $53.1 million for the comparable period last year. Net income for the fourth quarter of 2012 increased 113% to $3.9 million, or $0.29 per diluted share compared to $1.8 million, or $0.14 per diluted share for the fourth quarter of 2011. Fourth quarter product revenues were as follows:
• Total revenue for the quarter increased 12% to $59.3 million
• Knee implant revenue increased 3% to $20.7 million
• Extremity implant revenue increased 35% to $14.9 million
• Hip implant revenue increased 12% to $10.4 million
• Biologic & spine segment revenues increased 9% to $6.4 million
• Other revenues increased 3% to $6.9 million
Exactech Chairman and CEO Dr. Bill Petty said, “Exactech finished 2012 on a strong note with a fourth quarter top line increase of 12%. For the full year, our growth again continued to exceed the market with a 9% improvement over 2011. The ongoing rollout of new products that are getting excellent reception from our surgeon customers and their patients together with improving growth in the U.S. domestic market and robust growth in the Asian and Latin American markets all contributed to a solid performance.
“We are especially pleased with the 44% increase in net income for 2012 compared to 2011. That reflected not only lower compliance costs, but also robust sales throughout our organization and focused efforts to control costs and increase margins through greater efficiencies. Great credit is due to the people of Exactech around the world, who performed exceptionally well and deserve full recognition for our ongoing success.”
Exactech President David Petty said, “We continue to be enthusiastic about the market acceptance of our new product introductions and the results of the investments that we are making in R&D. Nothing characterizes this more than the exceptional growth rates of our shoulder replacement products. We have now led the industry in growth in this category for several years, which validates our leadership in providing meaningful clinical solutions for shoulder patients.
“Exactech hips also grew substantially above market rates at 21% even prior to new product launches planned for 2013. We are highly encouraged by early results from the limited release of our Element line extension and our new Crown Cup® acetabular system with InteGrip™ technology.
“Our knee products developed fresh momentum in the fourth quarter as we continued to transition to our new Optetrak Logic® platform. Additionally, business growth in Asia and Latin America was important to our 2012 results with strong hip and knee performance in Asia and hip, knee and shoulder growth in Latin America.”
During the fourth quarter International sales grew 10% to $21.0 million. U.S. sales increased 13% to $38.3 million. For the full year 2012, U.S. sales increased 9% to $145.6 million, and international sales were up 9% to $78.7 million.
Chief Financial Officer Jody Phillips said, “Operationally, we made significant improvements during 2012. Gross margins increased to 69.4% for 2012 from 68.4% in 2011 due to continued cost reductions attributable to internal manufacturing. Total operating expenses for the year increased 6% to $134.3 million and as a percentage of sales decreased to 59.8% from 61.7% for 2011. General and administrative expenses decreased 8% for 2012 to $20.1 million from $22.0 million, primarily due to a reduction in compliance costs. Sales and marketing expenses increased 6% to $82.0 million primarily due to variable selling expenses. Research and development expenses increased 29% to $16.8 million during 2012 as we continue to actively invest in our new product pipeline.”
Looking forward, Exactech released its initial 2013 revenue guidance of $236-$242 million and diluted EPS target of $1.03-$1.09. For the first quarter of 2013, the company anticipates revenues of $60-$62 million and diluted EPS of $0.28-$0.30 including an estimated $0.03 benefit due to the reinstatement of the Research and Development tax credit. 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.
The company has scheduled a conference call on Wednesday, February 27th at 10:00 a.m. Eastern Time. The call will cover the company's fourth quarter 2012 results. Dr. Petty will open the conference call and a question-and-answer session will follow.
To participate in the call, dial 1-877-941-2068 any time after 9:50 a.m. Eastern on February 27. International and local callers should dial 1-480-629-9712. 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://public.viavid.com/index.php?id=103302. This call will be archived for approximately 90 days.
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.
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|
|December 31,||December 31,|
|Cash and cash equivalents||$||5,838||$||4,663|
|Accounts receivable, net of allowances of $1,012 and $3,186||48,073||45,856|
|Prepaid expenses and other assets, net||2,877||3,948|
|Income taxes receivable||502||171|
|Inventories – current||70,699||61,724|
|Deferred tax assets – current||2,229||2,869|
|Total current assets||130,218||119,231|
|PROPERTY AND EQUIPMENT:|
|Machinery and equipment||33,158||30,164|
|Furniture and fixtures||3,858||3,753|
|Projects in process||643||2,141|
|Total property and equipment||143,018||133,302|
|Net property and equipment||81,432||77,241|
|Deferred financing and deposits, net||866||1,016|
|Product licenses and designs, net||10,534||11,380|
|Patents and trademarks, net||2,217||1,589|
|Customer relationships, net||1,108||1,545|
|Total other assets||33,491||36,140|
|LIABILITIES AND SHAREHOLDERS' EQUITY|
|Income taxes payable||2,188||4,210|
|Accrued expenses and other liabilities||11,726||8,957|
|Other current liabilities||250||344|
|Current portion of long-term debt||2,625||648|
|Total current liabilities||31,562||27,068|
|Deferred tax liabilities||3,186||3,520|
|Line of credit||12,197||42,410|
|Long-term debt, net of current portion||26,250||3,507|
|Other long-term liabilities||1,049||780|
|Total long-term liabilities||42,682||50,217|
|Additional paid-in capital||63,918||60,565|
|Accumulated other comprehensive loss||(4,797||)||(4,272||)|
|Total shareholders' equity||170,897||155,327|
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY||$||245,141||$||232,612|
|EXACTECH, INC. AND SUBSIDIARIES|
|CONDENSED CONSOLIDATED STATEMENTS OF INCOME|
|(in thousands, except per share amounts)|
|Three Month Period||Twelve Month Periods|
|Ended December 31,||Ended December 31,|
|COST OF GOODS SOLD||18,043||16,691||68,731||64,847|
|Sales and marketing||21,478||19,951||81,979||77,243|
|General and administrative||5,192||5,414||20,139||21,969|
|Research and development||4,173||3,342||16,803||13,059|
|Depreciation and amortization||4,016||3,813||15,343||14,455|
|Total operating expenses||34,859||32,520||134,264||126,726|
|INCOME FROM OPERATIONS||6,352||3,857||21,342||13,824|
|OTHER INCOME (EXPENSE):|
|Other (expense) income||30||24||87||97|
|Foreign currency gain (loss)||(284||)||(339||)||(90||)||506|
|Total other income (expenses)||(551||)||(614||)||(1,448||)||(514||)|
|INCOME BEFORE INCOME TAXES||5,801||3,243||19,894||13,310|
|PROVISION FOR INCOME TAXES||1,921||1,421||7,153||4,484|
|BASIC EARNINGS PER SHARE||$||0.29||$||0.14||$||0.96||$||0.67|
|DILUTED EARNINGS PER SHARE||$||0.29||$||0.14||$||0.96||$||0.67|
|SHARES - BASIC||13,315||13,142||13,232||13,098|
|SHARES - DILUTED||13,383||13,205||13,317||13,212|
Jody Phillips, 352-377-1140
Chief Financial Officer
Julie Marshall or Frank Hawkins, 305-451-1888