IntriCon Reports Fourth Quarter and Full Year 2019 Results
Full Year 2019 Financial Highlights:
- Revenue of
$113.5 million - Revenue from largest medical customer increased 5% year-over-year
- Medical coil revenue increased 82% year-over-year
- Gross margin of 27.3%
- Net loss per diluted share of
$0.43 versus net income of$0.64 per diluted share in the prior year
Fourth Quarter 2019 Financial Highlights:
- Revenue of
$27.7 million - Revenue from largest medical customer increased 1% year-over-year
- Gross margin of 26.9%
- Net income per diluted share of
$0.08 versus net income of$0.09 per diluted share in the prior year
“In 2019, our team committed to continuing to meet the volume demands of our key customers and partners, while pursuing new business opportunities that could best leverage our core competencies to accelerate future growth and diversify our revenue base. We made meaningful progress throughout the year that ultimately has enabled us to enter 2020 focused on what we do best – serving as a joint development manufacturer to deliver complex micro-miniature devices requiring specialized design expertise and high production volumes,” said
“We continue to see meaningful revenue contribution from our long-standing relationship with our largest customer Medtronic despite the stern competitive pressures they are facing domestically. We are also especially encouraged by opportunities we have identified to expand our medical business into other market segments that can significantly leverage our microelectronics, medical coil and specialty molding expertise. Similarly, we have identified new potential partnerships that we believe will position us as a leading supplier in the much-anticipated emergence of over-the-counter hearing aid sales. In order to concentrate our resources on this opportunity, we have decided to pivot our direct-to-end-consumer initiatives through Hearing Help Express entirely towards supporting product development in order to best capture the near-term benefits we see through an indirect-to-end consumer approach.”
Fourth Quarter 2019 Financial Results
For the 2019 fourth quarter, the company reported net revenue of
Revenue in IntriCon’s Medical business in the fourth quarter of 2019 was
Hearing Health revenue was
Gross margin in the fourth quarter of 2019 was 26.9%, down from 29.9% in the prior-year fourth quarter. Gross margins continued to be constrained by ongoing validation and qualification expense and excess capacity related to the recent manufacturing expansion to meet the anticipated higher volume requirements of its existing and future customers.
Operating expenses for the fourth quarter were
The company posted net income of approximately
Full Year 2019 Financial Results
For the full year ended
Gross margin was 27.3%, down from 31.8% in the prior year. The decrease in margin was primarily due to excess capacity related to the manufacturing expansion to meet the anticipated higher volume requirements of the company’s existing and future customers.
Operating expenses were
Net loss attributable to shareholders was
Guidance for Full Year 2020
The company expects 2020 revenue to range between
Conference Call
IntriCon’s management team will hold a conference call today,
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, 2018. 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.
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, 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.
Investor Contact
(415) 937-5404
investorrelations@intricon.com
MARKET REVENUE | |||||||||||||||||
(Unaudited) | |||||||||||||||||
FOURTH QUARTER | YEAR TO DATE | ||||||||||||||||
($ in 000's) | 2019 | 2018 | Change | 2019 | 2018 | Change | |||||||||||
Medical | $ | 21,309 | $ | 20,158 | 5.7 | % | $ | 82,093 | $ | 75,645 | 8.5 | % | |||||
Diabetes | 17,769 | 17,666 | 0.6 | % | 68,606 | 65,197 | 5.2 | % | |||||||||
Other Medical | 3,540 | 2,492 | 42.1 | % | 13,487 | 10,448 | 29.1 | % | |||||||||
Hearing Health | 4,879 | 8,313 | -41.3 | % | 24,922 | 31,064 | -19.8 | % | |||||||||
Value Based Direct-to-End-Consumer | 1,244 | 1,525 | -18.4 | % | 6,120 | 6,858 | -10.8 | % | |||||||||
Value Based Indirect-to-End-Consumer | 1,491 | 3,681 | -59.5 | % | 8,910 | 11,949 | -25.4 | % | |||||||||
Legacy OEM | 2,144 | 3,107 | -31.0 | % | 9,892 | 12,257 | -19.3 | % | |||||||||
1,506 | 1,886 | -20.1 | % | 6,478 | 7,239 | -10.5 | % | ||||||||||
Total | $ | 27,694 | $ | 30,357 | -8.8 | % | $ | 113,493 | $ | 113,948 | -0.4 | % | |||||
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS | |||||||||||||||
(In Thousands, Except Per Share Amounts) |
|||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(as adjusted) | (as adjusted) | ||||||||||||||
Revenue, net | $ | 27,694 | $ | 30,358 | $ | 113,493 | $ | 113,948 | |||||||
Cost of sales | 20,254 | 21,282 | 82,507 | 77,717 | |||||||||||
Gross profit | 7,440 | 9,076 | 30,986 | 36,231 | |||||||||||
Operating expenses: | |||||||||||||||
Sales and marketing | 2,428 | 3,444 | 11,498 | 11,467 | |||||||||||
General and administrative | 3,382 | 3,289 | 13,933 | 11,718 | |||||||||||
Research and development | 928 | 978 | 3,830 | 4,671 | |||||||||||
Impairment loss | - | - | 3,765 | - | |||||||||||
Total operating expenses | 6,738 | 7,711 | 33,026 | 27,856 | |||||||||||
Operating income (loss) | 702 | 1,365 | (2,040 | ) | 8,375 | ||||||||||
Interest income (expense), net | 217 | 139 | 920 | (314 | ) | ||||||||||
Other expense, net | (284 | ) | (165 | ) | (743 | ) | (815 | ) | |||||||
Income (loss) from continuing operations before income taxes and discontinued operations | 635 | 1,339 | (1,863 | ) | 7,246 | ||||||||||
Income tax expense (benefit) | (133 | ) | 126 | 201 | 484 | ||||||||||
Income (loss) from continuing operations before discontinued operations | 768 | 1,213 | (2,064 | ) | 6,762 | ||||||||||
Loss on disposal of discontinued operations, net of income taxes | - | - | (1,116 | ) | - | ||||||||||
Loss from discontinued operations, net of income taxes | - | (345 | ) | (597 | ) | (1,215 | ) | ||||||||
Net income (loss) | 768 | 868 | (3,777 | ) | 5,547 | ||||||||||
Less: Loss allocated to non-controlling interest | - | - | - | - | |||||||||||
Net income (loss) attributable to shareholders | $ | 768 | $ | 868 | $ | (3,777 | ) | $ | 5,547 | ||||||
Basic income (loss) per share attributable to shareholders: | |||||||||||||||
Continuing operations | $ | 0.09 | $ | 0.14 | $ | (0.23 | ) | $ | 0.89 | ||||||
Discontinued operations | - | (0.04 | ) | (0.20 | ) | (0.16 | ) | ||||||||
Net income per share: | $ | 0.09 | $ | 0.10 | $ | (0.43 | ) | $ | 0.73 | ||||||
Diluted income (loss) per share attributable to shareholders: | |||||||||||||||
Continuing operations | $ | 0.08 | $ | 0.13 | $ | (0.23 | ) | $ | 0.78 | ||||||
Discontinued operations | - | (0.04 | ) | (0.20 | ) | (0.14 | ) | ||||||||
Net income per share: | $ | 0.08 | $ | 0.09 | $ | (0.43 | ) | $ | 0.64 | ||||||
Average shares outstanding: | |||||||||||||||
Basic | 8,779 | 8,647 | 8,748 | 7,599 | |||||||||||
Diluted | 9,398 | 9,439 | 8,748 | 8,630 | |||||||||||
CONSOLIDATED BALANCE SHEET |
|||||||
(In Thousands, Except Per Share Amounts) | |||||||
2019 | 2018 | ||||||
Current assets: | |||||||
Cash, cash equivalents and restricted cash | $ | 9,162 | $ | 8,047 | |||
Short-term investments | 23,451 | 38,093 | |||||
Accounts receivable, less allowance for doubtful accounts of |
8,993 | 11,266 | |||||
Inventories | 16,377 | 18,163 | |||||
Contract assets | 10,237 | 5,624 | |||||
Other current assets | 1,975 | 2,146 | |||||
Current assets of discontinued operations | 80 | 1,205 | |||||
Total current assets | 70,275 | 84,544 | |||||
Machinery and equipment | 41,073 | 36,725 | |||||
Less: Accumulated depreciation | 27,522 | 25,303 | |||||
Net machinery and equipment | 13,551 | 11,422 | |||||
9,551 | 10,808 | ||||||
Intangible assets, net | - | 2,585 | |||||
Operating lease right of use assets, net | 4,372 | - | |||||
Investment in partnerships | 1,160 | 2,091 | |||||
Long-term investments | 8,629 | - | |||||
Other assets, net | 6,055 | 3,427 | |||||
Noncurrent assets of discontinued operations | - | 371 | |||||
Total assets | $ | 113,593 | $ | 115,248 | |||
Current liabilities: | |||||||
Current financing leases | $ | 101 | $ | - | |||
Current operating leases | 1,729 | - | |||||
Accounts payable | 9,876 | 12,871 | |||||
Accrued salaries, wages and commissions | 2,274 | 4,409 | |||||
Other accrued liabilities | 2,869 | 4,031 | |||||
Liabilities of discontinued operations | 77 | 336 | |||||
Total current liabilities | 16,926 | 21,647 | |||||
Noncurrent financing leases | 30 | - | |||||
Noncurrent operating leases | 2,937 | - | |||||
Other postretirement benefit obligations | 382 | 377 | |||||
Accrued pension liabilities | 655 | 706 | |||||
Other long-term liabilities | 2,171 | 544 | |||||
Total liabilities | 23,101 | 23,274 | |||||
Commitments and contingencies | |||||||
Shareholders’ equity: | |||||||
Common stock, |
8,781 | 8,664 | |||||
Additional paid-in capital | 86,770 | 84,999 | |||||
Accumulated deficit | (4,286 | ) | (509 | ) | |||
Accumulated other comprehensive loss | (520 | ) | (927 | ) | |||
Total shareholders' equity | 90,745 | 92,227 | |||||
Non-controlling interest | (253 | ) | (253 | ) | |||
Total equity | 90,492 | 91,974 | |||||
Total liabilities and equity | $ | 113,593 | $ | 115,248 | |||
(See accompanying notes to the consolidated financial statements) | |||||||
Source: IntriCon Corporation