GAINESVILLE, Fla., Oct. 30 /PRNewswire-FirstCall/ -- Exactech, Inc. announced today that revenue for the third quarter of 2006 increased 13% to $24.3 million from $21.5 million in the third quarter of 2005. Diluted earnings per share for the quarter was $0.16 based on net income of $1.8 million, compared to diluted earnings per share of $0.15 on net income of $1.7 million for the third quarter of 2005.
For the first nine months of 2006, revenue was $76.3 million, an increase of 12% over revenue of $68.0 million in the first nine months of 2005. Net income for the first nine months increased 15% to $5.5 million, or $0.47 per diluted share, compared to $4.8 million, or $0.42 per diluted share, in the first three quarters of 2005.
Exactech Chairman and CEO Bill Petty said, “We saw a healthy increase in our third quarter sales across the board as our product portfolio has grown. Knee implants increased 9% to $12.0 million from $11.0 million in third quarter of 2005. The year-to-date knee implant sales also increased compared to the same period last year, from $37.8 million to $40.3 million, a 7% increase. Sales of hip implants increased by 22% to $4.5 million in the third quarter, compared to $3.7 million in the third quarter of 2005. This was largely due to gaining momentum with our Novation(TM) hip system. Hip sales year-to-date were $12.9 million, up 10% from $11.8 million in the comparable period in 2005. Revenue from Biologics of $3.4 million for the quarter represented an increase of 15% from $2.9 million in the same quarter of last year. For the quarter, sales of other products, which include the Equinoxe shoulder system and cement products, increased 12% to $4.4 million from $3.9 million in the third quarter of last year.”
Petty said, “U.S. sales were up 13% to $19.9 million from $17.5 million in the same quarter last year. International sales increased 11% to $4.4 million in the third quarter from $4.0 million in the third quarter of 2005. For the quarter, international sales represented 18% of total sales, compared to 19% in the third quarter of 2005.”
Chief Financial Officer Jody Phillips said, “Gross margin percentage during the quarter decreased to 68% from 70% in the third quarter of 2005, primarily as a result of unfavorable overhead variances. Total operating expenses for the quarter were $13.0 million, an increase of 7% from $12.1 million. As a percent of sales, operating expenses were down from 56% in the third quarter of 2005 to 53% for the third quarter of 2006. General and Administrative expenses remained constant at $2.4 million for the third quarters of 2006 and 2005. Research and Development expenses in the third quarter also remained relatively constant at $1.4 million for both 2006 and 2005. Sales and Marketing expenses increased 10% to $7.1 million for the quarter from $6.4 million for the third quarter of 2005.”
Looking forward, the company said its target for diluted earnings per share in the fourth quarter ending December 31, 2006 is in the range of $0.17 to $0.18 based on anticipated revenues of $24.0 million to $26.6 million. The company’s target range for 2006 revenue is $101 million to $103 million with diluted EPS of $0.64 to $0.65. The company said its initial forecast for 2007 is for revenue in the range of $112 million to $118 million and diluted EPS of $0.70 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 company has scheduled a conference call on Monday, Oct. 30 at 5 p.m. Eastern Time. To participate, call (877) 502-9272 any time after 4:50 p.m. Eastern Time on Oct. 30. International and local callers should dial (913) 981-5581.
A live webcast of the call will be available at http://viavid.net/dce.aspx?sid=0000368F. The webcast will be available for one month. Viewers will need Windows Media Player or Real Player to listen to the broadcast. To download Media Player, go to http://www.microsoft.com/windows/windowsmedia/download.
The financial statements are below.
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 in more than 25 countries in Europe, Asia, Australia and Latin America. For more information, visit http://www.exac.com .
An investment profile on Exactech may be found at http://www.hawkassociates.com/exacprofile.aspx .
An online virtual investor relations 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 CONSOLIDATED BALANCE SHEETS (in thousands) (Unaudited) September 30, December 31, 2006 2005 ASSETS CURRENT ASSETS: Cash and cash equivalents $771 $1,007 Trade receivables, net of allowances of $519 and $458 19,102 17,360 Prepaid expenses and other assets, net 1,618 1,040 Inventories 51,907 53,134 Deferred tax assets 1,224 1,014 Total current assets 74,622 73,555 PROPERTY AND EQUIPMENT: Land 1,015 1,015 Machinery and equipment 14,769 13,483 Surgical instruments 25,800 24,186 Furniture and fixtures 2,060 1,957 Facilities 10,477 8,884 Total property and equipment 54,121 49,525 Accumulated depreciation (21,781) (18,843) Facilities expansion in progress - 1,507 Net property and equipment 32,340 32,189 OTHER ASSETS: Product licenses and designs, net 1,030 1,140 Deferred financing costs, net 258 283 Notes receivable - related party 2,905 2,053 Other investments 403 571 Advances and deposits 289 879 Patents and trademarks, net 4,036 4,169 Goodwill 352 352 Total other assets 9,273 9,447 TOTAL ASSETS $116,235 $115,191 LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $6,277 $9,874 Income taxes payable 600 367 Current portion of long-term debt 1,570 1,109 Commissions payable 1,854 1,704 Royalties payable 685 625 Other liabilities 1,641 1,406 Total current liabilities 12,627 15,085 LONG-TERM LIABILITIES: Deferred tax liabilities 3,718 3,757 Line of credit 13,910 17,328 Long-term debt, net of current portion 11,383 11,253 Other long-term liabilities 9 35 Total long-term liabilities 29,020 32,373 Total liabilities 41,647 47,458 SHAREHOLDERS’ EQUITY: Common stock 115 114 Additional paid-in capital 25,024 23,698 Accumulated other comprehensive loss (9) (35) Retained earnings 49,458 43,956 Total shareholders’ equity 74,588 67,733 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $116,235 $115,191 EXACTECH, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts) (Unaudited) Three Month Periods Nine Month Periods Ended September 30, Ended September 30, 2006 2005 2006 2005 NET SALES $24,286 $21,490 $76,262 $67,962 COST OF GOODS SOLD 7,816 6,463 25,071 21,891 Gross profit 16,470 15,027 51,191 46,071 OPERATING EXPENSES: Sales and marketing 7,059 6,443 22,130 20,570 General and administrative 2,411 2,417 7,276 7,412 Research and development 1,423 1,389 4,627 4,381 Depreciation and amortization 1,378 1,203 4,210 3,572 Royalties 691 639 2,373 2,098 Total operating expenses 12,962 12,091 40,616 38,033 INCOME FROM OPERATIONS 3,508 2,936 10,575 8,038 OTHER INCOME (EXPENSE): Interest income 81 33 176 78 Interest expense (652) (195) (1,729) (444) Foreign currency exchange (loss) gain (49) 51 (95) 27 Total other expenses (620) (111) (1,648) (339) INCOME BEFORE INCOME TAXES 2,888 2,825 8,927 7,699 PROVISION FOR INCOME TAXES 991 1,021 3,258 2,695 INCOME BEFORE EQUITY IN NET LOSS OF OTHER INVESTMENTS 1,897 1,804 5,669 5,004 EQUITY IN NET LOSS OF OTHER INVESTMENTS (53) (74) (167) (238) NET INCOME $1,844 $1,730 $5,502 $4,766 BASIC EARNINGS PER SHARE $0.16 $0.15 $0.48 $0.42 DILUTED EARNINGS PER SHARE $0.16 $0.15 $0.47 $0.42 SHARES - BASIC 11,487 11,333 11,423 11,227 SHARES - DILUTED 11,688 11,558 11,642 11,474
Exactech, Inc.
CONTACT: Jody Phillips, Chief Financial Officer of Exactech, Inc.,+1-352-377-1140; or Julie Marshall or Frank Hawkins of Hawk AssociatesInc., +1-305-451-1888, or e-mail: info@hawkassociates.com
