UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported) August 2, 2017

 

 

INTRICON CORPORATION

(Exact name of registrant as specified in its charter)

 

Pennsylvania 1-5005 23-1069060
(State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification No.)
     
1260 Red Fox Road, Arden Hills, MN 55112
(Address of principal executive offices)  (Zip Code)
 
Registrant’s telephone number, including area code  (651) 636-9770
 
N/A
(Former name or former address, if changed since last report)
       

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 
 

Item 2.02Results of Operations and Financial Condition.

The following information is being provided pursuant to Item 2.02. Such information, including Exhibit 99.1 attached hereto, should not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

On August 2, 2017, IntriCon Corporation (the “Company”) announced earnings for the quarter ended June 30, 2017. A copy of the press release is furnished as Exhibit 99.1 and is incorporated herein by reference.

 

Item 7.01Regulation FD Disclosure.

The following information is being provided pursuant to Item 7.01. Such information, including Exhibit 99.1 attached hereto, should not be deemed “filed” for purposes of Section 18 of the Exchange Act.

The information contained under Item 2.02 is incorporated herein by reference.

 

Item 9.01Financial Statements and Exhibits.
(d)Exhibits.

Exhibit No.

Description

99.1 Press Release dated August 2, 2017.

 

 

2 
 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

INTRICON CORPORATION

   
By:

/s/ Scott Longval

Name: Scott Longval
Title: Chief Financial Officer

Date: August 2, 2017

 

S-3 
 

Exhibit Index

Exhibit No.

Description

99.1 Press Release dated August 2, 2017.

 

E-4 

INTRICON REPORTS 2017 SECOND-QUARTER RESULTS

Significant Gains in Medical and Value Hearing Health Drive Record Sales

 

ARDEN HILLS, Minn. — August 2, 2017 — IntriCon Corporation (NASDAQ: IIN), a designer, developer, manufacturer and distributor of miniature and micro-miniature body-worn devices, today announced financial results for its second quarter ended June 30, 2017.

 

Highlights:

 

Financial Results

For the 2017 second quarter, the company reported net sales of $22.0 million, up 32.1 percent from $16.6 million in the prior-year period. The increase was primarily due to year-over-year revenue gains from IntriCon’s largest medical customer, as well as growing traction in value hearing health.

IntriCon posted net income attributable to shareholders of $610,000, or $0.08 per diluted share, versus a net loss attributable to shareholders of ($1.5) million, or ($0.23) per diluted share, for the 2016 second quarter.

 

 

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IntriCon Corporation 2017 Second-Quarter Results

August 2, 2017

Page 2

 

“Gains in medical and value hearing health are driving strong top- and bottom-line performance—and we expect that to continue in the third quarter,” said Mark S. Gorder, president and chief executive officer of IntriCon. “In addition, we’re making meaningful progress in creating and cultivating a new channel to deliver superior, outcomes-based, affordable hearing healthcare directly to consumers.”

Second-quarter gross profit margins were 30.0 percent, up significantly from 23.1 percent in the prior-year second quarter. The increase was primarily driven by greater volume and the inclusion of the HHE direct-to-consumer business in 2017.

Operating expenses for the second quarter were $6.0 million, compared to $4.7 million in the prior-year second quarter. The increase was largely due to the inclusion of HHE in 2017.

 

Business Update

Sales in IntriCon’s medical business increased 45.9 percent in the 2017 second quarter from the year-earlier period. The gain was primarily driven by the expected production ramp of Medtronic’s MiniMed 630G and 670G wireless glucose monitoring systems.

The company remains well positioned with Medtronic, with 2017 second-half sales also expected to be at record levels. In June, Medtronic announced the U.S. launch of the MiniMed 670G system, the world’s first Hybrid Closed Loop system for people with type 1 diabetes. Medtronic began fulfilling orders from patients enrolled in their Priority Access Program, which they anticipate will continue into the fall of 2017. In parallel, Medtronic began taking new orders from interested customers who want to be next in line to receive the system after the Priority Access orders are filled.

Hearing health sales increased 32.5 percent from the prior-year second quarter, primarily stemming from growing traction in the company’s value hearing health initiatives, including 55 percent growth from hi HealthInnovations and a $1.4 million contribution from HHE, partially offset by declining conventional channel sales. As previously announced, IntriCon acquired a 20 percent stake in DeKalb, Ill.-based HHE, a direct-to-consumer mail order hearing aid provider, in the fourth quarter of 2016. In January 2017, the company announced that it exercised its option to acquire the remaining 80 percent stake in HHE—the purchase is expected to close during the fourth quarter.

 

 

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IntriCon Corporation 2017 Second-Quarter Results

August 2, 2017

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Since taking its initial stake in HHE, IntriCon has made substantial progress integrating and optimizing the organization. In 2017, IntriCon:

·Completed the relocation of the business, merging two locations into one;
·Hired Jim Houlihan as vice president of direct-to-consumer hearing healthcare sales and president of HHE;
·Enhanced HHE’s sales and marketing capabilities, and increased advertising; and,
·Introduced IntriCon’s digital hearing devices into the HHE portfolio, most recently adding the Apollo 6200, the Apollo 6310 and the Ranger 7610 digital hearing aids.

Said Gorder, “From a financial perspective, we are seeing great traction in our direct-to-consumer model. In the second quarter, HHE increased hearing aid orders 75 percent over the 2017 first-quarter and we anticipate second-half revenue to be up 35 percent over the first half of 2017.”

In addition to HHE, IntriCon announced in April 2017 that it entered into an agreement to acquire a 49 percent stake in Soundperience, headquartered in Frankfurt, Germany. Soundperience has designed the first psycho-acoustic way of analyzing peripheral hearing and central hearing processing, branded as the Sentibo Smart Brain System. The software is a sophisticated self-fitting hearing aid and brain training software technology, that is being used in the German market today, most notably through IntriCon’s previously disclosed Signison joint venture with Soundperience

Sentibo is currently being integrated with IntriCon’s wireless hearing aids, and the company anticipates an initial roll out in Germany during the current quarter. In addition to its international application, IntriCon also views this software technology to be a critical component to its domestic value-based hearing healthcare model. Sentibo, as well as the company’s other proprietary fitting systems, are designed to improve both channel productivity and the quality of first-time fittings, resulting in lower prices, greater access and increased customer satisfaction. Just recently, IntriCon began piloting a cloud-based version of the Sentibo Smart Brain System in the United States.

Added Gorder, “We continue to be very encouraged by developments on the public policy front. In December 2016, legislation was introduced in the House and Senate to make hearing aids available over the counter for those with mild to moderate hearing loss.”

 

 

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IntriCon Corporation 2017 Second-Quarter Results

August 2, 2017

Page 4

 

The proposed legislation would require the U.S. Food and Drug Administration (FDA) to write regulations ensuring that this new category of over-the-counter hearing aids meets the same high standards for safety, consumer labeling and manufacturing protections as all medical devices, providing consumers the option of an FDA-regulated device at lower cost.

Said Gorder, “Just recently, on July 12, the House of Representatives passed by voice vote, H.R. 2430, the FDA Reauthorization Act, which includes the Over-the-Counter Hearing Aid Act. The legislation will next go before the full U.S. Senate for consideration. While no timeline has yet been set for a floor vote, the Senate is expected to act prior to the August recess.

“We believe that this legislation has the potential to remove the significant barriers existing today that prevent innovative hearing health solutions. We believe that it would invigorate competition, spur innovation and facilitate the development of an ecosystem of hearing healthcare that provides affordable and accessible solutions to millions of unserved or underserved Americans.”

 

Looking Ahead

Concluded Gorder, “We have never been better positioned for growth. As our medical business thrives and delivers strong performance, we’re also gaining critical momentum in our value hearing healthcare business. And we continue to believe that this effort will drive success for IntriCon and deliver value for our shareholders. Based on information currently available, we anticipate 2017 third-quarter net sales to range between $22.0 million and $23.0 million, compared to $15.6 million in the prior-year period, and positive EPS. For the year, we anticipate net sales to range between $86.0 million and $88.0 million, compared to $68.0 million in 2016.”

 

Conference Call Today

As previously announced, the company will hold an investment community conference call today, Wednesday, August 2, 2017, beginning at 4 p.m. CT. Mark Gorder, president and chief executive officer, and Scott Longval, chief financial officer, will review second-quarter performance and discuss the company’s strategies. To join the conference call, dial: 1-877-856-1958 and provide the conference ID number 2957816 to the operator. To access the replay, dial 1-888-203-1112 and enter passcode 2957816.

 

 

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IntriCon Corporation 2017 Second-Quarter Results

August 2, 2017

Page 5

 

About IntriCon Corporation
Headquartered in Arden Hills, Minn., IntriCon Corporation designs, develops and manufactures miniature and micro-miniature body-worn devices. These advanced products help medical, healthcare and professional communications companies meet the rising demand for smaller, more intelligent and better connected devices. IntriCon has facilities in the United States, Asia, the United Kingdom and Europe. The company’s common stock trades under the symbol “IIN” on the NASDAQ Global Market. For more information about IntriCon, visit www.intricon.com.

 

Forward-Looking Statements

Statements made in this release and in IntriCon’s other public filings and releases that are not historical facts or that include forward-looking terminology, including estimates of future results, are “forward-looking statements” within the meaning of the Securities Exchange Act of 1934, as amended. These forward-looking statements may be affected by known and unknown risks, uncertainties and other factors that are beyond IntriCon’s control, and may cause IntriCon’s actual results, performance or achievements to differ materially from the results, performance and achievements expressed or implied in the forward-looking statements. These risks, uncertainties and other factors are detailed from time to time in the company’s filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the year ended December 31, 2016. The company disclaims any intent or obligation to publicly update or revise any forward-looking statements, regardless of whether new information becomes available, future developments occur or otherwise.

 

Contacts      
At IntriCon:   At Padilla:  
Scott Longval, CFO   Matt Sullivan  

651-604-9526

  612-455-1709  

slongval@intricon.com

  matt.sullivan@padillaco.com  

 

 

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IntriCon Corporation 2017 Second-Quarter Results

August 2, 2017

Page 6

 

INTRICON CORPORATION

Consolidated Condensed Statement of Operations

(In Thousands, Except Per Share Amounts)

 

   Three Months Ended  Six Months Ended
   June 30,  June 30,  June 30,  June 30,
   2017  2016  2017  2016
   (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)
             
Sales, net  $21,961   $16,628   $42,049   $34,692 
Cost of sales   15,380    12,795    29,792    25,761 
Gross profit   6,581    3,833    12,257    8,931 
                     
Operating expenses:                    
Sales and marketing   2,204    1,160    4,515    2,316 
General and administrative   2,705    2,083    5,263    4,349 
Research and development   1,112    1,321    2,265    2,486 
Restructuring charges   —      132    —      132 
Total operating expenses   6,021    4,696    12,043    9,283 
Operating income (loss)   560    (863)   214    (352)
                     
Interest expense   (189)   (126)   (371)   (252)
Other income (expense)   (47)   (221)   9    (291)
Income (loss) from continuing operations before  income taxes and discontinued operations   324    (1,210)   (148)   (895)
                     
Income tax expense   54    52    118    86 
Income (loss) before discontinued operations   270    (1,262)   (266)   (981)
Loss on sale of discontinued operations, net of income taxes   —      —      (164)   —   
Loss from discontinued operations, net of income taxes   (15)   (265)   (128)   (565)
Net Income (loss)   255    (1,527)   (558)   (1,546)
Less: Loss allocated to non-controlling interest   (355)   (37)   (740)   (71)
Net Income (loss) attributable to shareholders  $610   $(1,490)  $182   $(1,475)
                     
                     
Basic income (loss) per share attributable to shareholders:                    
  Continuing operations  $0.09   $(0.19)  $0.07   $(0.15)
  Discontinued operations   (0.00)   (0.04)   (0.04)   (0.09)
   Net income (loss) per share:  $0.09   $(0.23)  $0.03   $(0.24)
                     
Diluted income (loss) per share attributable to shareholders:                    
  Continuing operations  $0.09   $(0.19)  $0.07   $(0.15)
  Discontinued operations   (0.00)   (0.04)   (0.04)   (0.09)
   Net income (loss) per share:  $0.08   $(0.23)  $0.03   $(0.24)
                     
Average shares outstanding:                    
Basic   6,845    6,370    6,828    6,078 
Diluted   7,187    6,370    7,142    6,078 

 

 

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IntriCon Corporation 2017 Second-Quarter Results

August 2, 2017

Page 7

 

 

INTRICON CORPORATION

Consolidated Condensed Balance Sheets
(in thousands, except per share data)

 

   June 30,  December 31,
   2017  2016
   (unaudited)   
Current assets:          
Cash   $363   $667 
Restricted cash   632    595 
Accounts receivable, less allowance for doubtful accounts of $190 at June 30, 2017 and $170 at December 31, 2016   8,208    7,289 
Inventories   13,976    12,343 
Other current assets   1,074    957 
Current assets of discontinued operations   —      123 
Total current assets   24,253    21,974 
           
  Machinery and equipment   40,522    40,152 
Less:  Accumulated depreciation   34,165    33,546 
Net machinery and equipment   6,357    6,606 
           
Goodwill   10,555    10,555 
Intangible Assets   2,817    2,920 
Investment in partnerships   226    146 
Other assets, net   1,751    1,557 
Total assets (a)  $45,959   $43,758 
           
Current liabilities:          
Current maturities of long-term debt  $2,389   $2,346 
Accounts payable    8,825    6,722 
Accrued salaries, wages and commissions   2,868    2,413 
Other accrued liabilities   1,961    1,914 
Liabilities of discontinued operations   —      123 
Total current liabilities   16,043    13,518 
           
Long-term debt, less current maturities   8,823    9,284 
Other postretirement benefit obligations   479    501 
Accrued pension liabilities   744    737 
Other long-term liabilities   714    707 
Total liabilities (a)   26,803    24,747 
Commitments and contingencies          
Shareholders’ equity:          
Common stock, $1.00 par value per share; 20,000 shares authorized; 6,849 and 6,820 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively   6,849    6,820 
Additional paid-in capital   21,908    21,383 
Accumulated deficit   (8,451)   (8,633)
Accumulated other comprehensive loss   (864)   (1,014)
Total shareholders' equity   19,442    18,556 
Non-controlling interest   (286)   455 
Total equity   19,156    19,011 
Total liabilities and equity  $45,959   $43,758 
           

 

(a) Assets of Hearing Help Express (HHE), a consolidated variable interest entity, that can only be used to settle obligations of HHE were $5,471 at June 30, 2017 and $5,159 at December 31, 2016, respectively. Liabilities of HHE, for which creditors do not have recourse to the general credit of IntriCon, were $5,023 at June 30, 2017 and $3,833 at December 31, 2016, respectively.  

 

 

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