EX-99.1 2 exacform8-k3q13earningsex9.htm EXHIBIT Exac Form 8-K 3Q13 Earnings Ex 99.1
EXHIBIT 99.1



Exactech Q3 Net Income up 25% to $3.2 Million. Diluted EPS $0.23 vs. $0.19. Worldwide Sales Up 9% to $55.7 Million. U.S. Sales Increased 11%.

YTD Revenue Up 6% to $175.5M, Net Income $10.8M, EPS $0.79

Gainesville, Fla. - October 22, 2013 -- Exactech, Inc. (Nasdaq: EXAC), a developer and producer of bone and joint restoration products for hip, knee, shoulder, spine and biologic materials, announced today sales of $55.7 million for the third quarter of 2013, a 9% increase over $51.3 million in the third quarter of 2012. Net income was $3.2 million, or $0.23 per diluted share, compared to $2.6 million, or $0.19 per diluted share, in the same quarter a year ago.

Third Quarter Segment Performance
•
Knee implant sales increased 2% to $18.6 million
•
Extremity implant sales increased 24% to $15.1 million
•
Hip implant sales increased 6% to $9.8 million
•
Biologic and Spine sales increased 1% to $6.0 million
•
Other sales increased 8% to $6.1 million

Nine Months Highlights and Segment Performance
For the first nine months of 2013 revenue was $175.5 million, an increase of 6% over $165.1 million for the comparable period last year. Net income for the first nine months of 2013 increased 22% to $10.8 million, or $0.79 per diluted share compared to $8.9 million, or $0.67 per diluted share for the first nine months of 2012. First nine month product revenues were as follows:

•
Knee implant revenue decreased 1% to $60.2 million
•
Extremity implant revenue increased 27% to $47.1 million
•
Hip implant revenue increased 1% to $30.8 million
•
Biologic and spine revenue increased 5% to $18.9 million
•
Other products revenue decreased 1% to $18.6 million

Management Comment
Exactech Chairman and CEO Dr. Bill Petty said, “We had a very successful quarter recording improvement in each of our operating segments. This resulted in a strong boost to net income and improved positive cash flow. Business strengthened pretty much across the board and we also benefited from a number of factors including a more favorable Euro exchange rate. New product lines are largely meeting our expectations and we continue to get welcomed favorable feedback from our surgeons and other customers. We also continue to benefit from strong cost controls supported in part by efficiencies from internal manufacturing operations.”


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Exactech President David Petty said, “U.S. sales increased 11% to $39.1 million compared with $35.3 million in the third quarter a year ago and international sales increased 4% to $16.6 million. U.S. sales represented 70% of total sales and international sales were 30% of the total. For the first nine months of 2013, U.S. sales rose 10% to $117.9 million compared with $107.3 million in 2012. International sales for the first nine months of 2013 decreased 0.3% to $57.6 million and decreased to 33% of total sales from 35% of total sales for the first nine months of 2012 due to relative weakness in a few specific markets earlier in the year. On a constant currency basis, international sales increased 6% and worldwide sales grew 9% for the third quarter.”

Chief Financial Officer Jody Phillips said, “We continued to make financial progress during the third quarter of 2013 with the 25% increase in net income. Particularly encouraging was the gross margin improvement to 71% of sales, which was a function of higher than expected U.S. sales mix as well as lower costs due to our internal manufacturing operations. The 11% increase in operating expenses was largely in line with our expectations although we are projecting lower increases in operating expenses for the fourth quarter.”

Looking forward, Exactech narrowed its 2013 sales guidance of $237 - $239 million and increased its full year diluted EPS target to $1.09 - $1.11. For the fourth quarter ending December 31, 2013, the company said it anticipates sales of $61.5 - $63.5 million and diluted EPS of $0.30 - $0.32. 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.

Conference Call
The company has scheduled a conference call at 10:00 a.m. Eastern Time on Wednesday, October 23. The call will cover the company’s third quarter results. CEO Bill 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 October 23rd. International and local callers should dial 1-480-629-9712. A live webcast of the call will be available at http://www.hawkassociates.com/profile/exac.cfm or http://public.viavid.com/index.php?id=106302.
This call will be archived for approximately 90 days.

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, 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.

An investment profile on Exactech may be found at http://www.hawkassociates.com/profile/exac.cfm. To receive future releases in e-mail alerts, sign up at http://www.hawkassociates.com/about/alert.


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

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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.


Investor contacts                        Julie Marshall or Frank Hawkins
Jody Phillips                             Hawk Associates
Chief Financial Officer                    305-451-1888
352-377-1140                            E-mail: exactech@hawkassociates.com




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EXACTECH, INC. AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED BALANCE SHEETS
 
(in thousands)
 
 
 
 
(unaudited)
 
(audited)
 
 
September 30,
 
December 31,
 
 
2013
 
2012
 
ASSETS
 
 
 
 
CURRENT ASSETS:
 
 
 
 
Cash and cash equivalents
$
6,779

 
$
5,838

 
Accounts receivable, net of allowances of $1,231 and $1,012
56,300

 
48,073

 
Prepaid expenses and other assets, net
2,834

 
2,877

 
Income taxes receivable
1,489

 
502

 
Inventories – current
71,779

 
70,699

 
Deferred tax assets – current
2,621

 
2,229

 
Total current assets
141,802

 
130,218

 
 
 
 
 
 
PROPERTY AND EQUIPMENT:
 
 
 
 
Land
2,213

 
2,211

 
Machinery and equipment
34,751

 
33,158

 
Surgical instruments
95,091

 
85,115

 
Furniture and fixtures
3,840

 
3,858

 
Facilities
18,058

 
18,033

 
Projects in process
858

 
643

 
Total property and equipment
154,811

 
143,018

 
Accumulated depreciation
(72,745
)
 
(61,586
)
 
Net property and equipment
82,066

 
81,432

 
 
 
 
 
 
OTHER ASSETS:
 
 
 
 
Deferred financing and deposits, net
915

 
866

 
Non-current inventories
11,074

 
5,410

 
Product licenses and designs, net
9,841

 
10,534

 
Patents and trademarks, net
2,033

 
2,217

 
Customer relationships, net
777

 
1,108

 
Goodwill
13,435

 
13,356

 
Total other assets
38,075

 
33,491

 
TOTAL ASSETS
$
261,943

 
$
245,141

 
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
CURRENT LIABILITIES:
 
 
 
 
Accounts payable
$
14,539

 
$
14,773

 
Income taxes payable
472

 
2,188

 
Accrued expenses and other liabilities
11,605

 
11,726

 
Other current liabilities
250

 
250

 
Current portion of long-term debt
3,000

 
2,625

 
Total current liabilities
29,866

 
31,562

 
 
 
 
 
 
LONG-TERM LIABILITIES:
 
 
 
 
Deferred tax liabilities
3,019

 
3,186

 
Line of credit
18,386

 
12,197

 
Long-term debt, net of current portion
24,000

 
26,250

 
Other long-term liabilities
817

 
1,049

 
Total long-term liabilities
46,222

 
42,682

 
Total liabilities
76,088

 
74,244

 
 
 
 
 
 
SHAREHOLDERS’ EQUITY:
 
 
 
 
Common stock
135

 
133

 
Additional paid-in capital
67,848

 
63,918

 
Accumulated other comprehensive loss
(4,548
)
 
(4,797
)
 
Retained earnings
122,420

 
111,643

 
Total shareholders’ equity
185,855

 
170,897

 
 
 
 
 
 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
261,943

 
$
245,141

 
 
 
 
 
 
 



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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,
 
 
2013
 
2012
 
2013
 
2012
 
NET SALES
$
55,650

 
$
51,270

 
$
175,510

 
$
165,083

 
 
 
 
 
 
 
 
 
 
COST OF GOODS SOLD
16,126

 
15,392

 
53,791

 
50,688

 
Gross profit
39,524

 
35,878

 
121,719

 
114,395

 
 
 
 
 
 
 
 
 
 
OPERATING EXPENSES:
 
 
 
 
 
 
 
 
Sales and marketing
20,274

 
18,713

 
63,281

 
60,501

 
General and administrative
5,384

 
4,564

 
15,801

 
14,947

 
Research and development
5,068

 
4,366

 
13,523

 
12,630

 
Depreciation and amortization
3,963

 
3,722

 
11,992

 
11,327

 
Total operating expenses
34,689

 
31,365

 
104,597

 
99,405

 
 
 
 
 
 
 
 
 
 
INCOME FROM OPERATIONS
4,835

 
4,513

 
17,122

 
14,990

 
 
 
 
 
 
 
 
 
 
OTHER INCOME (EXPENSE):
 
 
 
 
 
 
 
 
Interest income
2

 
—

 
5

 
8

 
Other income (loss)
18

 
22

 
69

 
57

 
Interest expense
(281
)
 
(322
)
 
(852
)
 
(1,156
)
 
Foreign currency exchange gain (loss)
271

 
60

 
(312
)
 
194

 
Total other income (expenses)
10

 
(240
)
 
(1,090
)
 
(897
)
 
 
 
 
 
 
 
 
 
 
INCOME BEFORE INCOME TAXES
4,845

 
4,273

 
16,032

 
14,093

 
 
 
 
 
 
 
 
 
 
PROVISION FOR INCOME TAXES
1,653

 
1,720

 
5,255

 
5,232

 
 
 
 
 
 
 
 
 
 
NET INCOME
$
3,192

 
$
2,553

 
$
10,777

 
$
8,861

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BASIC EARNINGS PER SHARE
$
0.24

 
$
0.19

 
$
0.80

 
$
0.67

 
 
 
 
 
 
 
 
 
 
DILUTED EARNINGS PER SHARE
$
0.23

 
$
0.19

 
$
0.79

 
$
0.67

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SHARES - BASIC
13,494

 
13,278

 
13,433

 
13,204

 
 
 
 
 
 
 
 
 
 
SHARES - DILUTED
13,712

 
13,358

 
13,632

 
13,295

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


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