Intricon Reports Third Quarter 2020 Results

November 09, 2020

ARDEN HILLS, Minn., Nov. 09, 2020 (GLOBE NEWSWIRE) -- Intricon Corporation (NASDAQ: IIN), an international company engaged in designing, developing, engineering and manufacturing miniature interventional, implantable and body-worn medical devices, today announced financial results for its third quarter ended September 30, 2020.

"Third quarter results included both year-over-year and sequential revenue growth as we see improvement across all our target medical markets. Continued emphasis on expense control while leveraging our core competencies to enter new medical markets for long-term growth remains a priority," said Scott Longval, President and Chief Executive Officer. "Our acquisition of Emerald Medical Services earlier this year is already demonstrating a meaningful contribution, while our directed focus on partnerships with innovators entering the emerging hearing health market is gaining traction." 

Third Quarter Highlights:
• Revenue of $27.4 million compared to $26.9 million in the prior year

  • Diabetes revenue declined 7.7% year-over-year
  • Other medical revenue increased 81.6% year-over-year, which included the contribution from recently acquired Emerald Medical Services

• Gross margin of 26.3%, compared to 25.2% in the prior year period
• Net income per diluted share of $0.07 versus net loss of $0.03 per diluted share in the prior year period

Third Quarter 2020 Financial Results
For the 2020 third quarter, the company reported net revenue of $27.4 million versus $26.9 million in the comparable prior-year period.

Revenue in Intricon’s Medical business was $20.6 million, an increase from $19.1 million in the comparable prior-year period. The year-over-year increase was driven primarily by our medical coils business and the impact of Emerald Medical Services which the company acquired in May 2020, partially offset by the reduction in orders due to uncertainty surrounding the COVID-19 pandemic.

Hearing Health revenue was $5.5 million in the third quarter of 2020 compared to $6.4 million in the prior-year third quarter. The revenue decline during the third quarter was largely attributed to the absence of hi Health Innovations revenue and a reduction in advertising as part of the Hearing Help Express restructuring efforts.

Gross margin in the third quarter of 2020 was 26.3%, compared to 25.2% in the prior-year third quarter, primarily due to the cost reduction initiatives and higher volumes.

Operating expenses for the third quarter were $6.7 million, compared to $7.2 million in the comparable prior-year period. The change in operating expenses year over year was due to the cost reduction initiatives.

The company posted a net income of $0.6 million or $0.07 per diluted share in the third quarter of 2020, versus net loss of $0.3 million or $0.03 per diluted share, for the 2019 third quarter.

Conference Call
Intricon will hold a conference call today, November 9, 2020, beginning at 4:00 p.m. CT / 5:00 p.m. ET. Investors interested in listening to the conference call may do so by dialing 866-795-7248 for domestic callers or 470-495-9160 for international callers, using conference ID: 6348919. A live and archived webcast will be available on the “Investors” sections of the company’s website at: 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, the impact of the Emerald acquisition, statements regarding the estimated costs and expenses of the restructuring and estimated annual expense savings, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be affected by known and unknown risks, uncertainties and other factors that are beyond Intricon’s control, including without limitation, the impacts of the COVID-19 pandemic and measures taken in response, the risks associated with the Emerald acquisition, , 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, 2019 and the Quarterly Report on Form 10-Q for the quarter ended June 30, 2020. 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 interventional, implantable and 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
Leigh Salvo
(415) 937-5404 
investorrelations@intricon.com

INTRICON CORPORATION
MARKET REVENUE
(Unaudited)

  THIRD QUARTER   YEAR TO DATE
($ in 000's) 2020   2019   Change   2020   2019   Change
                               
Medical $ 20,649   $ 19,099   8.1 %   $ 55,125   $ 60,784   -9.3 %
Diabetes   14,518     15,723   -7.7 %     41,569     50,837   -18.2 %
Other Medical   6,131     3,376   81.6 %     13,556     9,947   36.3 %
                               
Hearing Health   5,491     6,358   -13.6 %     13,845     20,044   -30.9 %
Value Based Direct-to-End-Consumer   953     1,510   -36.9 %     3,513     4,876   -28.0 %
Value Based Indirect-to-End-Consumer   1,779     2,443   -27.2 %     3,888     7,419   -47.6 %
Legacy OEM   2,759     2,405   14.7 %     6,444     7,749   -16.8 %
                               
Professional Audio Communications   1,227     1,436   -14.6 %     3,502     4,972   -29.6 %
                               
Total $ 27,367   $ 26,893   1.8 %   $ 72,472   $ 85,800   -15.5 %

INTRICON CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)

    Three Months Ended     Nine Months Ended
(unaudited)   September 30,     September 30,     September 30,     September 30,
    2020     2019      2020      2019 
                       
Revenue, net $ 27,367   $ 26,893     $ 72,472     $ 85,800  
Cost of goods sold   20,169     20,120       54,096       62,253  
Gross profit   7,198     6,773       18,376       23,547  
                       
Operating expenses:                      
Sales and marketing   1,365     2,609       5,038       9,071  
General and administrative   3,654     3,715       11,673       10,551  
Research and development   1,458     840       3,868       2,902  
Restructuring charges   -     -       1,171       -  
Impairment loss   -     -       -       3,765  
Other operating expenses   253     -       746       -  
Total operating expenses   6,730     7,164       22,496       26,289  
Operating income (loss)   468     (391 )     (4,120 )     (2,742 )
                       
Interest income, net   41     240       322       703  
Other income (expense), net   192     (52 )     293       (458 )
Income (loss) from continuing operations before income taxes and discontinued operations   701     (203 )     (3,505 )     (2,497 )
Income tax expense   47     87       94       334  
Income (loss) from continuing operations before discontinued operations   654     (290 )     (3,599 )     (2,831 )
Loss on disposal of discontinued operations   -     -       -       (1,116 )
Loss from discontinued operations   -     -       -       (597 )
Net income (loss)   654     (290 )     (3,599 )     (4,544 )
Less: Income allocated to non-controlling interest   10     -       17       -  
Net income (loss) attributable to IntriCon shareholders $ 644   $ (290 )   $ (3,616 )   $ (4,544 )
                       
Basic income (loss) per share attributable to IntriCon shareholders:                      
Continuing operations $ 0.07   $ (0.03 )   $ (0.41 )   $ (0.32 )
Discontinued operations   -     -       -       (0.20 )
Net income (loss) per share: $ 0.07   $ (0.03 )   $ (0.41 )   $ (0.52 )
                       
Diluted income (loss) per share attributable to IntriCon shareholders:                      
Continuing operations $ 0.07   $ (0.03 )   $ (0.41 )   $ (0.32 )
Discontinued operations   -     -       -       (0.20 )
Net income (loss) per share: $ 0.07   $ (0.03 )   $ (0.41 )   $ (0.52 )
                       
Average shares outstanding:                      
Basic   8,936     8,764       8,877       8,738  
Diluted   9,272     8,764       8,877       8,738  

INTRICON CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEET
(In Thousands, Except Share Amounts)

(unaudited)   September 30,     December 31,
    2020      2019 
Current assets:          
Cash and cash equivalents $ 16,081     $ 8,523  
Restricted cash   647       639  
Short-term investment securities   14,176       23,451  
Accounts receivable, less provision for doubtful accounts of $365 at September 30, 2020 and $325 at December 31, 2019   9,192       8,993  
Inventories   20,463       16,377  
Contract assets   10,592       10,237  
Other current assets   1,426       1,975  
Current assets of discontinued operations   -       80  
Total current assets   72,577       70,275  
           
Machinery and equipment   45,083       41,073  
Less: Accumulated depreciation   30,915       27,522  
Net machinery and equipment   14,168       13,551  
           
Goodwill   13,714       9,551  
Intangible assets   11,282       5,545  
Operating lease right-of-use assets, net   3,812       4,372  
Investment in partnerships   623       1,160  
Long-term investment securities   -       8,629  
Other assets, net   289       510  
Total assets $ 116,465     $ 113,593  
           
Current liabilities:          
Current financing leases $ 34     $ 101  
Current operating leases   1,512       1,729  
Accounts payable   8,340       9,876  
Accrued salaries, wages and commissions   4,271       2,274  
Other accrued liabilities   4,429       2,869  
Liabilities of discontinued operations   -       77  
Total current liabilities   18,586       16,926  
           
Noncurrent financing leases   2       30  
Noncurrent operating leases   2,475       2,937  
Other postretirement benefit obligations   349       382  
Accrued pension liabilities   667       655  
Deferred tax liabilities, net   1,104       -  
Other long-term liabilities   3,790       2,171  
Total liabilities   26,973       23,101  
Commitments and contingencies          
Shareholders’ equity:          
Common stock, $1.00 par value per share; 20,000 shares authorized; 8,943 and 8,781 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively   8,943       8,781  
Additional paid-in capital   88,908       86,770  
Accumulated deficit   (7,902 )     (4,286 )
Accumulated other comprehensive loss   (474 )     (520 )
Total shareholders' equity   89,475       90,745  
Non-controlling interest   17       (253 )
Total equity   89,492       90,492  
Total liabilities and equity $ 116,465     $ 113,593  


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Source: IntriCon Corporation