GAINESVILLE, Fla., Feb. 26 /PRNewswire-FirstCall/ -- Exactech, Inc. announced today that revenue for fiscal year 2006 increased 13% to $102.4 million from $91.0 million in 2005. Net income for the year was $7.8 million or $0.67 diluted earnings per share for the year, compared with net income of $6.6 million or $0.57 diluted earnings per share during 2005.
Exactech Chairman and CEO Bill Petty said, "Our results in 2006 exceeded our guidance given earlier in the year. For the first time in our company's history we surpassed $100 million in annual sales. We continued to improve our internal manufacturing capabilities, further strengthened our supply chain and made significant advancements in the development of new product lines."
For the fourth fiscal quarter ended December 31, 2006, revenue increased 13% to $26.2 million compared with $23.0 million in the fourth quarter of 2005. Net income for the fourth quarter was $2.3 million or $0.19 per diluted share versus net income of $1.8 million or $0.16 per diluted share a year earlier.
Petty said, "Total knee sales increased 8% to $53.6 million in 2006, while hip sales rose 13% to $17.9 million. During the fourth quarter, knee sales were up 12% to $13.3 million and hip sales were up 22% to $4.9 million. Revenues from our biologics division were up 17% for the year to $13.3 million. International sales for the year rose 20% to $22.3 million from $18.6 million in 2005. International sales represented 21.7% of total sales in 2006, compared with 21.5% of total sales in the prior period. In the fourth quarter, international sales increased 11% to $5.7 million from $5.1 million in the same quarter of 2005.
"We believe 2007 will be another strong year for our business as we build on the momentum of 2006. Our flagship Optetrak(R) knee system is enhanced by the roll-out of a unicondylar option, Ligament Balancing System(TM) and Low Profile Instrumentation(TM), as well as the expansion of our Rotating Bearing Knee system outside of the U.S. Important, on-going expansions to the Novation hip system support the recent growth we've experienced with our hip line. We continue to build strong relationships with shoulder surgeons who have shown great interest in the reverse shoulder system, which is pending FDA clearance. Our 2006 introduction of the InterSpace pre-formed cement shoulder spacer expands this unique product line.
Exactech's Biologics division is rapidly expanding the Optecure(TM) brand and is currently launching a line extension that includes cortical cancellous bone chips. Additional formulations are also in development with introduction targeted for later this year. Market introduction of our Accelerate(TM) platelet concentrating system is in process and proving to be of interest to a wide range of surgeons."
Chief Financial Officer Jody Phillips said, "We made significant financial improvements during 2006 by reducing our inventories by $2.7 million and our total debt by $6.4 million, both during a time when we expanded our product lines. Our gross margins in 2006 were relatively steady at 64.3% as compared to 64.9% in the prior year. A reclassification of royalty expenses to cost of sales from operating expenses in the amount of 3.0% of sales had an offsetting immaterial impact on both years. As a percent of sales, total operating expenses for the year were 50.7% in 2006 compared to 52.4% in 2005, due to leverage of administration and overhead costs over the larger sales base. General and administrative expenses increased 1% for the year and sales and marketing expenses increased 11%, consistent with the company's growth in sales. Research and development expenses in 2006 increased 6%, but decreased slightly as a percent of sales compared to 2005.
Looking forward, the company said its target for diluted earnings per share in the first quarter ending March 31, 2007 is in the range of $0.15 to $0.16 based on anticipated revenues of $27 million to $29 million. The company said its forecast for 2007 is for revenue in the range of $112 million to $118 million and diluted EPS of $0.72 to $0.76. 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 follow.
A conference call to discuss fourth quarter and year-end results is scheduled for 5 p.m. Eastern today. To participate, call (800) 819-9193 any time after 4:50 p.m. Eastern Time on Feb. 26. International and local callers should dial (913) 981-4911. 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 webcast of the call will be available at http://www.vcall.com/IC/CEPage.asp?ID=113505 and http://www.hawkassociates.com/exacmore.aspx . It will be archived until May 27.
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 and Australia, and in more than 25 countries in Europe, Asia and Latin America. 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/exacprofile.aspx .
Questions should be directed to Frank Hawkins or Julie Marshall of 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 CONSOLIDATED BALANCE SHEETS (in thousands) (Unaudited) December 31, December 31, 2006 2005 ASSETS CURRENT ASSETS: Cash and cash equivalents $2,006 $1,007 Trade receivables, net of allowances of $572 and $458 17,524 17,360 Prepaid expenses and other assets, net 1,544 1,040 Inventories 50,421 53,134 Deferred tax assets 1,228 1,014 Total current assets 72,723 73,555 PROPERTY AND EQUIPMENT: Land 1,015 1,015 Machinery and equipment 14,851 13,483 Surgical instruments 26,189 24,186 Furniture and fixtures 2,078 1,957 Facilities 10,481 8,884 Total property and equipment 54,614 49,525 Accumulated depreciation (22,386) (18,843) Facilities expansion in progress -- 1,507 Net property and equipment 32,228 32,189 OTHER ASSETS: Product licenses and designs, net 994 1,140 Deferred financing costs, net 228 283 Notes receivable - related party 2,904 2,053 Other investments 398 571 Advances and deposits 466 879 Patents and trademarks, net 3,938 4,169 Goodwill 352 352 Total other assets 9,280 9,447 TOTAL ASSETS $114,231 $115,191 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $5,621 $9,874 Income taxes payable 113 367 Current portion of long-term debt 1,633 1,109 Commissions payable 2,091 1,704 Royalties payable 703 625 Other liabilities 1,779 1,406 Total current liabilities 11,940 15,085 LONG-TERM LIABILITIES: Deferred tax liabilities 3,577 3,757 Line of credit 11,116 17,328 Long-term debt, net of current portion 10,668 11,253 Other long-term liabilities 7 35 Total long-term liabilities 25,368 32,373 Total liabilities 37,308 47,458 SHAREHOLDERS' EQUITY: Common stock 115 114 Additional paid-in capital 25,105 23,698 Accumulated other comprehensive income (5) (35) Retained earnings 51,708 43,956 Total shareholders' equity 76,923 67,733 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $114,231 $115,191 EXACTECH, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts) (Unaudited) Three Month Period Twelve Month Period Ended December 31, Ended December 31, 2006 2005 2006 2005 NET SALES $26,155 $23,054 $102,430 $91,016 COST OF GOODS SOLD 9,121 7,970 36,571 31,959 Gross profit 17,034 15,084 65,859 59,057 OPERATING EXPENSES: Sales and marketing 7,870 6,476 30,012 27,046 General and administrative 2,691 2,403 9,955 9,815 Research and development 1,614 1,498 6,241 5,879 Depreciation and amortization 1,508 1,417 5,718 4,989 Total operating expenses 13,683 11,794 51,926 47,729 INCOME FROM OPERATIONS 3,351 3,290 13,933 11,328 OTHER INCOME (EXPENSE): Interest income 69 47 238 126 Interest expense (450) (366) (2,179) (810) Foreign currency exchange (loss) gain (20) 8 (114) 35 INCOME BEFORE PROVISION FOR INCOME TAXES 2,950 2,979 11,878 10,679 PROVISION FOR INCOME TAXES 695 1,049 3,954 3,745 EQUITY IN NET LOSS OF OTHER INVESTMENTS (5) (92) (172) (330) NET INCOME $2,250 $1,838 $7,752 $6,604 BASIC EARNINGS PER SHARE $0.20 $0.16 $0.68 $0.59 DILUTED EARNINGS PER SHARE $0.19 $0.16 $0.67 $0.57 SHARES - BASIC 11,509 11,350 11,441 11,209 SHARES - DILUTED 11,710 11,549 11,651 11,509
Exactech, Inc.CONTACT: Frank Hawkins or Julie Marshall of Hawk Associates, Inc.,+1-305-451-1888, or info@hawkassociates.com
