GAINESVILLE, Fla., Oct. 26 /PRNewswire-FirstCall/ -- Exactech, Inc. announced today that revenue for the third quarter of 2005 increased 10% to $21.5 million from $19.5 million in the third quarter of 2004. Diluted earnings per share for the quarter were $0.15 on net income of $1.73 million compared to diluted earnings per share of $0.14 on net income of $1.68 million.
Exactech Chairman and CEO Bill Petty said, "Sales of our Equinoxe shoulder, Cemex cement product lines, revenue from biologics services and overall international sales helped produce an 10% revenue gain for the quarter. Biologic service revenues were up 13% to $2.9 million in the quarter compared to $2.6 million in the third quarter of 2004 thanks to our marketing efforts and contributions from our newly released Optecure(TM) product. International sales were up 19% to $4.0 million from $3.3 million in the third quarter of 2004, while U.S. sales grew 8% to $17.5 million from $16.1 million in the comparable quarter in 2004."
"Sales of our knee products were down 1% to $11.0 million from $11.1 million, and hip product sales decreased 2% to $3.7 million compared with $3.8 million in the third quarter of 2004. These numbers don't yet fully reflect progress we are making to recover and grow business following supply chain issues experienced primarily during the first two quarters. We hope we will begin to see greater benefits from these improvements in the coming quarters," Petty said.
For the first nine months of 2005, revenue was $68.0 million, an increase of 12% over revenue of $60.9 million in the first nine months of 2004. Net income for the first nine months was $4.8 million or $0.42 per diluted share, down 13% from $5.4 million or $0.47 per diluted share in the first nine months of 2004. Year to date net income was down primarily as a result of the first quarter.
"The operating results for the quarter reflected product launch costs associated with our new Connexion(TM) GXL enhanced polyethylene acetabular liners for our AcuMatch(R) A-Series hip system, which has received 510(k) clearance from the U.S. Food and Drug Administration. Connexion complements the press fit femoral stems successfully launched earlier this year as the first element of our Novation(TM) Comprehensive Hip System. The combination of enhanced polyethylene and press fit stems addresses more than 50% of the total hip market. We expect this will contribute to growth of our hip products in the years ahead," Petty said.
Chief Financial Officer Jody Phillips said, "Our gross margin during the quarter improved from 67.9% last year to 69.9%. Total operating expenses in the quarter increased 17% to $12.1 million. Research and development expenses increased 21% to $1.4 million representing 6.5% of sales. As we stated earlier in the year, operating expense growth is anticipated to be higher than sales growth for the balance of this year mainly due to growth in research and development expenses."
Looking forward, the company said its target for diluted earnings per share in the fourth quarter ending December 31, 2005 is in the range of $0.15 to $0.17 based on anticipated revenues of $21.5 million to $23.5 million. The company updated its target range for 2005 revenue to $90 million to $92 million with diluted EPS of $0.56 to $0.58. The company said its initial forecast for 2006 is for revenue in the range of $100 million to $110 million and diluted EPS of $0.58 to $0.66, which includes a projected impact of $0.08 due to stock options expensing. 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 attached.
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.
The company has scheduled a conference call on Thursday, Oct. 27, 2005 at 10 a.m. Eastern. To participate, call (866) 411-4708 any time after 9:55 a.m. Eastern on Oct. 27. 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 CONSOLIDATED BALANCE SHEETS (in thousands) (Unaudited) September 30, December 31, 2005 2004 ASSETS CURRENT ASSETS: Cash and cash equivalents $603 $490 Trade receivables, net of allowance of $527 and $261 16,024 16,780 Income taxes receivable - 22 Prepaid expenses and other assets, net 1,559 880 Inventories 50,473 31,172 Deferred tax assets 1,189 545 Total current assets 69,848 49,889 PROPERTY AND EQUIPMENT: Land 1,015 865 Machinery and equipment 13,000 11,385 Surgical instruments 23,022 16,998 Furniture and fixtures 1,928 1,781 Facilities 8,884 8,120 Total property and equipment 47,849 39,149 Accumulated depreciation (17,500) (14,396) Facilities expansion in progress 1,058 - Net property and equipment 31,407 24,753 OTHER ASSETS: Product licenses and designs, net 1,176 600 Deferred financing costs, net 150 143 Notes receivable - related party 1,543 1,028 Other investments 542 809 Advances and deposits 784 227 Patents and trademarks, net 4,259 4,530 Goodwill 352 - Total other assets 8,806 7,337 TOTAL ASSETS $110,061 $81,979 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $12,683 $6,944 Refundable deposits from customers 112 - Income taxes payable 226 - Line of credit 14,562 - Current portion of long-term debt 815 815 Commissions payable 1,655 1,441 Royalties payable 652 570 Other liabilities 1,914 1,898 Total current liabilities 32,619 11,668 LONG-TERM LIABILITIES: Deferred tax liabilities 3,639 3,843 Long-term debt, net of current portion 7,745 6,631 Total long-term liabilities 11,384 10,474 Total liabilities 44,003 22,142 SHAREHOLDERS' EQUITY: Common stock 113 112 Additional paid-in capital 23,827 22,373 Retained earnings 42,118 37,352 Total shareholders' equity 66,058 59,837 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $110,061 $81,979 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, 2005 2004 2005 2004 NET SALES $21,490 $19,480 $67,962 $60,855 COST OF GOODS SOLD 6,463 6,262 21,891 20,085 Gross profit 15,027 13,218 46,071 40,770 OPERATING EXPENSES: Sales and marketing 6,443 5,532 20,570 17,227 General and administrative 2,417 2,019 7,412 6,234 Research and development 1,389 1,145 4,381 3,463 Depreciation and amortization 1,203 976 3,572 2,921 Royalties 639 646 2,098 1,869 Total operating expenses 12,091 10,318 38,033 31,714 INCOME FROM OPERATIONS 2,936 2,900 8,038 9,056 OTHER INCOME (EXPENSE): Interest income 33 15 78 25 Interest expense (195) (79) (444) (205) Foreign currency exchange gain (loss) 51 (14) 27 52 Total other expenses (111) (78) (339) (128) INCOME BEFORE INCOME TAXES 2,825 2,822 7,699 8,928 PROVISION FOR INCOME TAXES 1,021 1,012 2,695 3,155 INCOME BEFORE EQUITY IN NET LOSS OF OTHER INVESTMENTS 1,804 1,810 5,004 5,773 EQUITY IN NET LOSS OF OTHER INVESTMENTS (74) (134) (238) (326) NET INCOME $1,730 $1,676 $4,766 $5,447 BASIC EARNINGS PER SHARE $0.15 $0.15 $0.42 $0.49 DILUTED EARNINGS PER SHARE $0.15 $0.14 $0.42 $0.47 SHARES - BASIC 11,333 11,122 11,227 11,081 SHARES - DILUTED 11,558 11,608 11,474 11,535
Exactech, 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 e-mail: info@hawkassociates.com, forExactech
