IntriCon Reports Fourth Quarter and Full Year 2018 Results
Medical and Value Hearing Health Performance Drive Record Quarterly Revenue; Company Provides Guidance for 2019
Recent Highlights:
-
Record quarterly revenue of
$30.8 million , a 41.1 percent increase over the prior-year fourth quarter; - Gross margin of 30.0 percent, consistent with the comparable prior-year period;
-
Net income per share of
$0.09 versus$0.05 in the 2017 fourth quarter; - Grew revenue from its largest medical customer by 74.8 percent compared to fourth quarter 2017;
- Increased indirect-to-end-consumer hearing healthcare revenue by 79.9 percent year over year;
- Continued buildout of infrastructure to meet future demand;
- Acquired source code from Soundperience for its Sentibo Smart Brain self-fitting software; and
-
Hired
Doug Pletcher as vice president of medical biotelemetry business development.
“Our medical and indirect-to-end-consumer value hearing health
businesses continued to drive strong top-line performance, leading to
another quarter of record revenue,” said
“I am confident that we are entering 2019 in our strongest position to date. We have the capital to pursue strategic initiatives and a well-developed infrastructure to support our efforts in medical and value hearing health. I believe that we are well positioned in the early stages of long-term, sustained growth within our core markets. The diabetes market is experiencing tremendous growth, with continuous glucose monitoring (CGM) a critical component to serving the needs of many diabetics. And as the value-hearing healthcare space emerges, we believe we are at the forefront of providing affordable and accessible solutions to unserved or underserved hearing-impaired Americans.”
Fourth Quarter 2018 Financial Results
For the 2018 fourth
quarter, the company reported net revenue of
Fourth-quarter gross margins were 30.0 percent, consistent with 30.0 percent in the prior-year fourth quarter. Gross margins in the quarter were constrained by costs related to additional infrastructure investments.
Operating expenses for the fourth quarter were
The company posted net income of
Full Year 2018 Financial Results
For the full year ended
Gross margins were 31.9 percent, up from 29.5 percent in 2017. The increase in margin was primarily due to the increased volume throughout 2018.
Operating expenses were
Net income attributable to shareholders was
Guidance for Full Year 2019
The company anticipates 2019
revenue to range between
Business Update
Revenue in the company’s medical business
increased 64.8 percent in the 2018 fourth quarter over the comparable
prior-year period. The gain was primarily driven by the ongoing
production of wireless CGM systems for the company’s largest customer.
Revenue to this customer increased 74.8 percent in the fourth quarter
over the comparable prior year period. The company remains very well
positioned with this customer for 2019, providing key system components
including CGM systems, sensor assembly and related accessories.
During the year, the company expanded its infrastructure to support
anticipated growth from its current medical customers and other new
business development efforts. Expansion efforts include a newly leased
37,000-square-foot medical manufacturing and clean room facility in
Recently, the company hired
On the hearing health front, total revenue increased by 10.3 percent over the prior-year fourth quarter, led by the company’s value-based indirect-to-end-consumer business, which posted strong revenue growth of 79.9 percent. This gain was partially offset by a temporary decline in the direct-to-end-consumer channel and expected continued waning in the conventional sales channel.
The company continues to build its value hearing health technology portfolio, with wireless and self-fitting technologies. Last month, the company closed on its acquisition of the Sentibo Smart Brain self-fitting software source code from Soundperience, positioning the company to capitalize on the pending over-the-counter (OTC) hearing aid regulation. Sentibo Smart Brain self-fitting software is designed to improve both channel productivity and the quality of first-time fittings, resulting in lower prices, greater access and increased customer satisfaction.
Conference Call
The company will hold a conference call
today,
About
Headquartered in
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
INTRICON CORPORATION | ||||||||||||||||||
MARKET REVENUE | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
FOURTH QUARTER | YEAR TO DATE | |||||||||||||||||
($ in 000's) | 2018 | 2017 | Growth | 2018 | 2017 | Growth | ||||||||||||
Medical | $ | 20,158 | $ | 12,232 | 64.8 | % | $ | 75,645 | $ | 53,452 | 41.5 | % | ||||||
Diabetes | 17,666 | 10,104 | 74.8 | % | 65,197 | 43,365 | 50.3 | % | ||||||||||
Other Medical | 2,492 | 2,128 | 17.1 | % | 10,448 | 10,087 | 3.6 | % | ||||||||||
Hearing Health | 8,761 | 7,943 | 10.3 | % | 33,578 | 31,019 | 8.2 | % | ||||||||||
Value Based Direct-to-End-Consumer | 1,525 | 1,904 | -19.9 | % | 6,858 | 6,492 | 5.6 | % | ||||||||||
Value Based Indirect-to-End-Consumer | 3,681 | 2,046 | 79.9 | % | 11,949 | 7,908 | 51.1 | % | ||||||||||
Legacy OEM | 3,555 | 3,993 | -11.0 | % | 14,771 | 16,619 | -11.1 | % | ||||||||||
Professional Audio Communications | 1,886 | 1,662 | 13.5 | % | 7,239 | 6,166 | 17.4 | % | ||||||||||
Total | $ | 30,805 | $ | 21,837 | 41.1 | % | $ | 116,462 | $ | 90,637 | 28.5 | % | ||||||
INTRICON CORPORATION | ||||||||||||||||
Consolidated Condensed Statements of Operations | ||||||||||||||||
(In Thousands, Except Per Share Amounts) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | December 31, | December 31, | |||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
(as adjusted) |
(as adjusted) |
|||||||||||||||
Revenue, net | $ | 30,805 | $ | 21,837 | $ | 116,462 | $ | 90,637 | ||||||||
Cost of sales | 21,568 | 15,290 | 79,299 | 63,890 | ||||||||||||
Gross profit | 9,237 | 6,547 | 37,163 | 26,747 | ||||||||||||
Operating expenses: | ||||||||||||||||
Sales and marketing | 3,640 | 2,590 | 12,369 | 9,447 | ||||||||||||
General and administrative | 3,575 | 2,378 | 13,009 | 10,339 | ||||||||||||
Research and development | 978 | 1,146 | 4,671 | 4,458 | ||||||||||||
Total operating expenses | 8,193 | 6,114 | 30,049 | 24,244 | ||||||||||||
Operating income | 1,044 | 433 | 7,114 | 2,503 | ||||||||||||
Interest (income) expense, net | 139 | (168 | ) | (314 | ) | (716 | ) | |||||||||
Other expense | (189 | ) | (39 | ) | (769 | ) | (367 | ) | ||||||||
Income from continuing operations before income taxes and discontinued operations | 994 | 226 | 6,031 | 1,420 | ||||||||||||
Income tax expense (benefit) | 126 | (157 | ) | 484 | 8 | |||||||||||
Income before discontinued operations | 868 | 383 | 5,547 | 1,412 | ||||||||||||
Loss on sale of discontinued operations, net of income taxes | - | - | - | (164 | ) | |||||||||||
Loss from discontinued operations, net of income taxes | - | - | - | (128 | ) | |||||||||||
Net Income | 868 | 383 | 5,547 | 1,120 | ||||||||||||
Less: Loss allocated to non-controlling interest | - | (13 | ) | - | (938 | ) | ||||||||||
Net Income attributable to shareholders | $ | 868 | $ | 396 | $ | 5,547 | $ | 2,058 | ||||||||
Basic income (loss) per share attributable to shareholders: | ||||||||||||||||
Continuing operations | $ | 0.10 | $ | 0.06 | $ | 0.73 | $ | 0.34 | ||||||||
Discontinued operations | - | - | - | (0.04 | ) | |||||||||||
Net income per share: | $ | 0.10 | $ | 0.06 | $ | 0.73 | $ | 0.30 | ||||||||
Diluted income (loss) per share attributable to shareholders: | ||||||||||||||||
Continuing operations | $ | 0.09 | $ | 0.05 | $ | 0.64 | $ | 0.32 | ||||||||
Discontinued operations | - | - | - | (0.04 | ) | |||||||||||
Net income per share: | $ | 0.09 | $ | 0.05 | $ | 0.64 | $ | 0.28 | ||||||||
Average shares outstanding: | ||||||||||||||||
Basic | 8,647 | 6,883 | 7,599 | 6,852 | ||||||||||||
Diluted | 9,439 | 7,646 | 8,630 | 7,307 | ||||||||||||
INTRICON CORPORATION | ||||||||
Consolidated Condensed Balance Sheets | ||||||||
(In Thousands, Except Per Share Amounts) | ||||||||
(Unaudited) | ||||||||
December 31, | December 31, | |||||||
2018 | 2017 | |||||||
(as adjusted) |
||||||||
Current assets: | ||||||||
Cash, cash equivalents and restricted cash | $ | 8,047 | $ | 1,017 | ||||
Available for sale securities | 38,093 | - | ||||||
Accounts receivable, less allowance for doubtful accounts of $807 at December 31, 2018 and $332 at December 31, 2017 | 11,479 | 9,052 | ||||||
Inventories | 18,981 | 13,708 | ||||||
Contract assets | 5,624 | 2,979 | ||||||
Other current assets | 2,320 | 1,544 | ||||||
Total current assets | 84,544 | 28,300 | ||||||
Machinery and equipment | 37,161 | 40,124 | ||||||
Less: Accumulated depreciation | 25,429 | 32,949 | ||||||
Net machinery and equipment | 11,732 | 7,175 | ||||||
Goodwill | 10,808 | 10,808 | ||||||
Intangible assets | 2,585 | 2,740 | ||||||
Investment in partnerships | 2,091 | 1,616 | ||||||
Other assets, net | 3,488 | 3,835 | ||||||
Total assets | $ | 115,248 | $ | 54,474 | ||||
Current liabilities: | ||||||||
Current maturities of long-term debt | $ | - | $ | 2,040 | ||||
Accounts payable | 13,191 | 10,423 | ||||||
Accrued salaries, wages and commissions | 4,409 | 3,113 | ||||||
Other accrued liabilities | 4,014 | 3,739 | ||||||
Total current liabilities | 21,614 | 19,315 | ||||||
Long-term debt, less current maturities | - | 9,321 | ||||||
Other postretirement benefit obligations | 377 | 455 | ||||||
Accrued pension liabilities | 739 | 772 | ||||||
Other long-term liabilities | 544 | 3,172 | ||||||
Total liabilities | 23,274 | 33,035 | ||||||
Commitments and contingencies | ||||||||
Shareholders’ equity: | ||||||||
Common stock, $1.00 par value per share; 20,000 shares authorized; 8,664 and 6,900 shares issued and outstanding at December 31, 2018 and December 31, 2017, respectively | 8,664 | 6,900 | ||||||
Additional paid-in capital | 84,999 | 21,581 | ||||||
Accumulated deficit | (509 | ) | (6,056 | ) | ||||
Accumulated other comprehensive loss | (927 | ) | (733 | ) | ||||
Total shareholders' equity | 92,227 | 21,692 | ||||||
Non-controlling interest | (253 | ) | (253 | ) | ||||
Total equity | 91,974 | 21,439 | ||||||
Total liabilities and equity | $ | 115,248 | $ | 54,474 | ||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20190219005995/en/
Source:
Lynn Pieper Lewis or Leigh Salvo
(415) 937-5404
investorrelations@intricon.com