GAINESVILLE, Fla., Feb. 27 /PRNewswire-FirstCall/ -- Exactech, Inc. announced today that revenue for fiscal year 2005 increased 11.2% to $91.0 million from $81.8 million in 2004. Net income for the year was $6.6 million or $0.57 diluted earnings per share for the year, compared with net income of $7.3 million or $0.63 diluted earnings per share during 2004.
Exactech Chairman and CEO Bill Petty said, “Results have been within our guidance since the first quarter of 2005, and we made substantial progress in strengthening our internal manufacturing capabilities, improving the dependability of the supply chain and resolving delivery issues that hindered our results earlier in the year.”
For the fourth fiscal quarter ended December 31, 2005, revenue increased 10.0% to $23.1 million compared with $21.0 million in the fourth quarter of 2004. Net income was $1.84 million or $0.16 per diluted share versus net income of $1.86 million or $0.16 per diluted share a year earlier.
Petty said, “Total knee sales increased 2% to $49.6 million in 2005, while hip sales rose 1% to $15.8 million. During the fourth quarter, knee sales were $11.8 million and hip sales were $4.0 million. Revenues from our biologics division were up to $11.4 million and gained momentum in the second half of the year with growth to $3.2 million in the fourth quarter. We recorded growth in sales in other product lines due to success with our new shoulder line and cement lines.
“International sales for the year rose 19% to $18.6 million from $15.7 million in 2004. These sales represented 20% of total sales in 2005, compared with 19% of total sales in 2004. In the fourth quarter, international sales were up 8% to $4.8 million from $4.5 million in the same quarter of 2004 due to strong European sales.
“We remain highly committed to our biologics business. We are working toward developing a family of products that will serve a wide variety of orthopaedic uses. We finished the year on a particularly strong note in our biologics business and we believe we will continue to see positive results in the year ahead.
“The year 2005 marked our company’s 20-year anniversary, which we celebrated with a record number of new products. Our strong commitment to understanding and meeting our customers’ Exactech, Inc. needs has always been a competitive advantage for us and we intend for it to remain so. During the last year, we introduced nine major new products and our new product pipeline remains strong. Our new shoulder system, which we introduced roughly a year ago, has already gained material market share and we are optimistic for its continued growth in 2006.
“During the year, we made progress on a number of other fronts, including international sales. We began direct sales in the United Kingdom, opened a branch office for direct distribution in Canada and acquired the rest of our subsidiary in China. We also added distribution in Ireland, Denmark and Venezuela,” Petty said.
Chief Financial Officer Jody Phillips said, “Our gross margin improved to 67.9% last year from 67.2% in 2004 as we realized the benefit from increased internal manufacturing. By the end of this year, we expect that we will be manufacturing over 50 percent of our product components in our expanded Gainesville facilities. This should be beneficial to our margins and our ability to deliver quality products on a timely basis and in the quantities that we require. Total operating expenses in the year increased 18% to $50.4 million. Our largest increase in expenditures during the year was our 23% increase in research and development expenditures. Sales and marketing expenses increased 17%, and general and administrative expenses increased 18%.”
Looking forward, the company said its target for diluted earnings per share in the first quarter ending March 31, 2006 is in the range of $0.12 to $0.14 based on anticipated revenues of $23.5 million to $25.5 million. The company said its forecast for 2006 is for revenue in the range of $100 million to $106 million and diluted EPS of $0.58 to $0.66. 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.
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 and in more than 25 countries in Europe, Asia, Australia and Latin America.
A conference call to discuss fourth quarter and year-end results is scheduled for 5:00 p.m. Eastern today. To participate, call (866) 709-4186 any time after 4:55 p.m. Eastern on Feb. 27. International and local callers should dial (678) 460-1872. While in conference, if callers should experience any difficulty or require operator assistance, they can press the (*) followed by the (0) button. This will call an operator to the line.
A live and archived webcast will be available on the Internet for 90 days at http://www.hawkassociates.com/exactech/company.htm . Viewers will need Windows Media Player or Real Player to listen to the broadcast.
An investment profile on Exactech may be found at http://www.hawkassociates.com/exactech/profile.htm
Additional information about Exactech, Inc. can be found at http://www.exac.com . An online virtual investor kit containing Exactech press releases, SEC filings, current price quotes, stock charts and other useful information for investors can be found on the Hawk Associates website, http://www.hawkassociates.com . Investors may contact Chief Financial Officer Jody Phillips at (352) 377-1140 or Julie Marshall or Frank Hawkins, Hawk Associates, Inc. at (305) 451-1888, e-mail: info@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 and the effects of government regulation. Results actually achieved may differ materially from expected results included in these statements.
EXACTECH, INC. AND SUBSIDIARIES CONDENSED BALANCE SHEETS (in thousands) (Unaudited) December 31, December 31, 2005 2004 ASSETS CURRENT ASSETS: Cash and cash equivalents $1,007 $490 Trade receivables, net of allowance of $458 and $261 17,360 16,780 Income taxes receivable -- 22 Prepaid expenses and other assets, net 1,040 880 Inventories 53,134 31,172 Deferred tax assets 1,014 545 Total current assets 73,555 49,889 PROPERTY AND EQUIPMENT: Land 1,015 865 Machinery and equipment 13,483 11,385 Surgical instruments 24,186 16,998 Furniture and fixtures 1,957 1,781 Facilities 8,884 8,120 Total property and equipment 49,525 39,149 Accumulated depreciation (18,843) (14,396) Facilities expansion in progress 1,507 -- Net property and equipment 32,189 24,753 OTHER ASSETS: Product licenses and designs, net 1,140 600 Deferred financing costs, net 283 143 Notes receivable - related party 2,053 1,028 Other investments 571 809 Advances and deposits 879 227 Patents and trademarks, net 4,169 4,530 Goodwill 352 -- Total other assets 9,447 7,337 TOTAL ASSETS $115,191 $81,979 LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $10,052 $6,944 Income taxes payable 367 -- Current portion of long-term debt 1,109 815 Commissions payable 1,704 1,441 Royalties payable 625 570 Other liabilities 1,263 1,898 Total current liabilities 15,120 11,668 LONG-TERM LIABILITIES: Deferred tax liabilities 3,757 3,843 Line of credit 17,328 -- Long-term debt, net of current portion 11,253 6,631 Total long-term liabilities 32,338 10,474 Total liabilities 47,458 22,142 SHAREHOLDERS’ EQUITY: Common stock 114 112 Additional paid-in capital 23,698 22,373 Accumulated other comprehensive income (35) -- Retained earnings 43,956 37,352 Total shareholders’ equity 67,733 59,837 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $115,191 $81,979 EXACTECH, INC. AND SUBSIDIARIES CONDENSED STATEMENTS OF INCOME (in thousands, except per share amounts) (Unaudited) Three Month Period Twelve Month Period Ended December 31, Ended December 31, 2005 2004 2005 2004 NET SALES $23,054 $20,960 $91,016 $81,815 COST OF GOODS SOLD 7,358 6,714 29,248 26,799 Gross profit 15,696 14,246 61,768 55,016 OPERATING EXPENSES: Sales and marketing 6,476 5,851 27,046 23,077 General and administrative 2,403 2,093 9,815 8,295 Research and development 1,498 1,293 5,879 4,788 Depreciation and amortization 1,417 1,189 4,989 4,109 Royalties 612 557 2,711 2,427 Total operating expenses 12,406 10,983 50,440 42,696 INCOME FROM OPERATIONS 3,290 3,263 11,328 12,320 OTHER INCOME (EXPENSE): Interest income 47 21 126 46 Interest expense (366) (82) (810) (287) Foreign currency exchange gain (loss) 8 (66) 35 (14) INCOME BEFORE PROVISION FOR INCOME TAXES 2,979 3,136 10,679 12,065 PROVISION FOR INCOME TAXES 1,049 1,153 3,745 4,308 EQUITY IN NET LOSS OF OTHER INVESTMENTS (92) (127) (330) (453) NET INCOME $1,838 $1,856 $6,604 $7,304 BASIC EARNINGS PER SHARE $0.16 $0.17 $0.59 $0.66 DILUTED EARNINGS PER SHARE $0.16 $0.16 $0.57 $0.63 SHARES - BASIC 11,350 11,138 11,209 11,095 SHARES - DILUTED 11,549 11,604 11,509 11,583
Audio: http://www.hawkassociates.com/exactech/company.htmExactech, Inc.
CONTACT: Investors, Jody Phillips, Chief Financial Officer, Exactech,+1-352-377-1140; or Julie Marshall or Frank Hawkins, both of HawkAssociates, Inc., +1-305-451-1888, or info@hawkassociates.com, for Exactech
