GAINESVILLE, Fla., July 31 /PRNewswire-FirstCall/ -- Exactech, Inc. announced today that revenue for the second quarter of 2006 increased 11% to $26.6 million from $23.9 million in the second quarter of 2005. Diluted earnings per share for the quarter was $0.18 based on net income of $2.1 million, compared to diluted earnings per share of $0.16 on net income of $1.9 million for the second quarter of 2005.
For the first six months of 2006, revenue was $52.0 million, an increase of 12% over revenue of $46.5 million in the first six months of 2005. Net income for the first six months increased 21% to $3.7 million, or $0.31 per diluted share, compared to $3.0 million, or $0.27 per diluted share, in the first half of 2005.
Exactech Chairman and CEO Bill Petty said, “We saw welcome improvements in a number of areas during the quarter. Sales of knee products, our largest business segment, increased 4% to $14.4 million from $13.8 million in the same quarter of 2005. Hip product sales rose 13% to $4.6 million, compared with $4.1 million in the second quarter of 2005. We also had a solid 12% gain in revenues from tissue services to $3.0 million in the quarter compared to $2.6 million. The other products category includes our Equinoxe(TM) shoulder system and pre-formed antibiotic cement spacers. These have grown substantially compared to the second quarter of 2005, rounding out our line of product offerings for total joint repair for hips, knees and shoulders.”
Petty said, “U.S. sales grew 9% to $20.1 million from $18.4 million in the comparable quarter in 2005 while international sales were up 19% to $6.5 million from $5.4 million in the second quarter of 2005. Our international business remains consistently strong. We are making real progress on the domestic front in all product areas, including our hip and knee segments.”
Chief Financial Officer Jody Phillips said, “Gross margin percentage during the quarter declined from 67% last year to 66% as a result of the larger international sales mix and unfavorable production variances due to our inventory rationalization. Total operating expenses in the quarter increased 4% to $13.4 million. R&D expenses increased 7%, sales and marketing expenses increased 3% and general and administrative expenses decreased 6% during the quarter due to lower insurance expenses. Interest expenses had a meaningful impact on our earnings, but we were encouraged by the improvements in our balance sheet during the quarter with a reduction in our inventory and credit line levels.”
Looking forward, the company said its target for diluted earnings per share in the third quarter ending September 30, 2006 is in the range of $0.15 to $0.16 based on anticipated revenues of $22.5 million to $24.5 million. The company’s target range for 2006 revenue is $100 million to $106 million with diluted EPS of $0.60 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.
The company has scheduled a conference call on Tuesday, Aug. 1 at 10 a.m. Eastern time. To participate, call (888) 802-2280 any time after 9:50 a.m. Eastern on Aug. 1. International and local callers should dial (913) 312-1266.
A live webcast of the call will be available at http://viavid.net/dce.aspx?sid=00003318 . 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.
An investment profile on Exactech may be found at http://www.hawkassociates.com/exactech/profile.php .
Additional information about Exactech, Inc. can be found at http://www.exac.com . 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) June 30, December 31, 2006 2005 ASSETS CURRENT ASSETS: Cash and cash equivalents $2,255 $1,007 Trade receivables, net of allowances of $558 and $458 18,926 17,360 Prepaid expenses and other assets, net 1,937 1,040 Inventories 53,171 53,134 Deferred tax assets 1,153 1,014 Total current assets 77,442 73,555 PROPERTY AND EQUIPMENT: Land 1,015 1,015 Machinery and equipment 13,734 13,483 Surgical instruments 24,728 24,186 Furniture and fixtures 2,042 1,957 Facilities 10,455 8,884 Total property and equipment 51,974 49,525 Accumulated depreciation (20,538) (18,843) Facilities expansion in progress 21 1,507 Net property and equipment 31,457 32,189 OTHER ASSETS: Product licenses and designs, net 1,067 1,140 Deferred financing costs, net 243 283 Notes receivable - related party 2,897 2,053 Other investments 456 571 Advances and deposits 889 879 Patents and trademarks, net 4,130 4,169 Goodwill 352 352 Other non-current assts 48 -- Total other assets 10,082 9,447 TOTAL ASSETS $118,981 $115,191 LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $6,510 $9,874 Refundable deposits from customers 221 178 Income taxes payable 981 367 Current portion of long-term debt 1,416 1,109 Commissions payable 1,977 1,704 Royalties payable 854 625 Other liabilities 2,223 1,228 Total current liabilities 14,182 15,085 LONG-TERM LIABILITIES: Deferred tax liabilities 3,646 3,757 Line of credit 17,944 17,328 Long-term debt, net of current portion 10,901 11,253 Other long-term liabilities -- 35 Total long-term liabilities 32,491 32,373 Total liabilities 46,673 47,458 SHAREHOLDERS’ EQUITY: Common stock 115 114 Additional paid-in capital 24,531 23,698 Accumulated other comprehensive income (loss) 48 (35) Retained earnings 47,614 43,956 Total shareholders’ equity 72,308 67,733 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $118,981 $115,191 EXACTECH, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts) (Unaudited) Three Month Periods Six Month Periods Ended June 30, Ended June 30, 2006 2005 2006 2005 NET SALES $26,565 $23,865 $51,976 $46,472 COST OF GOODS SOLD 9,115 7,790 17,255 15,428 Gross profit 17,450 16,075 34,721 31,044 OPERATING EXPENSES: Sales and marketing 7,185 6,971 15,071 14,127 General and administrative 2,304 2,444 4,865 4,995 Research and development 1,663 1,562 3,204 2,992 Depreciation and amortization 1,421 1,220 2,832 2,369 Royalties 850 770 1,682 1,459 Total operating expenses 13,423 12,967 27,654 25,942 INCOME FROM OPERATIONS 4,027 3,108 7,067 5,102 OTHER INCOME (EXPENSE): Interest income 52 20 95 45 Interest expense (581) (147) (1,077) (249) Foreign currency exchange (loss) gain (36) 25 (46) (24) Total other expenses (565) (102) (1,028) (228) INCOME BEFORE INCOME TAXES 3,462 3,006 6,039 4,874 PROVISION FOR INCOME TAXES 1,330 1,056 2,267 1,674 INCOME BEFORE EQUITY IN NET LOSS OF OTHER INVESTMENTS 2,132 1,950 3,772 3,200 EQUITY IN NET LOSS OF OTHER INVESTMENTS (50) (72) (114) (164) NET INCOME $2,082 $1,878 $3,658 $3,036 BASIC EARNINGS PER SHARE $0.18 $0.17 $0.32 $0.27 DILUTED EARNINGS PER SHARE $0.18 $0.16 $0.31 $0.27 SHARES - BASIC 11,448 11,199 11,423 11,175 SHARES - DILUTED 11,665 11,415 11,642 11,443
Audio: http://viavid.net/dce.aspx?sid=00003318Exactech, Inc.
CONTACT: 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
