SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule l2b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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|Item 2.02||Results 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 February 25, 2021, IntriCon Corporation (the “Company”) announced earnings for the quarter and year ended December 31, 2020. A copy of the press release is furnished as Exhibit 99.1 and is incorporated herein by reference.
|Item 7.01||Regulation 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 9.01||Financial Statements and Exhibits.|
|99.1||Press Release dated February 25, 2021.|
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.
|Title:||President and Chief Executive Officer|
Date: February 25, 2021
INTRICON REPORTS FOURTH QUARTER AND FULL YEAR 2020 RESULTS
ARDEN HILLS, Minn. — February 25, 2021 — 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 fourth quarter and year ended December 31, 2020.
Fourth Quarter Highlights:
|●||Revenue of $30.3 million compared to $27.7 million in the prior year period|
|o||Diabetes revenue was flat compared to the prior year period|
|o||Other medical revenue increased 74.3% over the prior year period, which included the contribution from Emerald Medical Services (“EMS”) acquired in May 2020|
|●||Gross margin of 25.7%, compared to 26.9% in the prior year period|
|●||Net income of $0.12 per diluted share versus net income of $0.08 per diluted share in the prior year period|
|●||As of December 31, 2020, the company had approximately $33.5 million of cash and investments|
Full Year Financial Highlights:
|●||Revenue of $102.8 million compared to $113.5 million in the prior year|
|o||Diabetes revenue declined 13.5% year-over-year|
|o||Other medical revenue increased 46.3% year-over-year, which included the contribution from the acquisition of EMS|
|●||Gross margin of 25.5%, compared to 27.3% in the prior year|
|●||Net loss per diluted share of $0.28 versus net loss of $0.43 per diluted share in the prior year|
“Despite the ongoing impact of COVID-19, we were able to generate solid fourth quarter results and advance our operational goals,” said Scott Longval, President and Chief Executive Officer. “I’m proud of the meaningful progress we’ve made towards expanding existing key relationships and leveraging our core competencies to diversify our customer base and medical markets. Our successful acquisition of Emerald Medical Services last May further supported our growth while also allowing us to expand into new markets. And, most recently, we welcomed Ellen Scipta as CFO to further build out our leadership team.
“To highlight Intricon’s evolution, as well as our renewed commitment to our corporate vision, we recently completed an extensive rebranding effort that incorporated an enhanced website that also includes our Environmental, Social, and Governance (ESG) policies and disclosures,” added Longval. “We enter 2021 focused more than ever on our underlying mission to be the leading joint development manufacturer in micromedical technology.”
Fourth Quarter 2020 Financial Results
For the 2020 fourth quarter, the company reported net revenue of $30.3 million versus $27.7 million in the comparable prior-year period.
Revenue in Intricon’s Medical business was $23.9 million, an increase from $21.3 million in the comparable prior-year period. The year-over-year increase was driven primarily by the impact of EMS, which the company acquired in May 2020.
Hearing Health revenue was $5.1 million in the fourth quarter of 2020 compared to $4.9 million in the prior-year fourth quarter. The revenue increase was largely attributed to stronger legacy OEM and indirect-to-end-consumer sales, reflecting pent-up demand from the early days of the COVID-19 pandemic, partially offset by the expected decline in direct-to-end-consumer business.
Gross margin in the fourth quarter of 2020 was 25.7%, compared to 26.9% in the prior-year fourth quarter, primarily due to product mix.
Operating expenses for the fourth quarter were $6.8 million, compared to $6.7 million in the comparable prior-year period. The slight increase was due to $0.5 million in EMS operating expenses and a $0.4 million expense related to increases in fair value of the EMS earn-out liability, partially offset by previously disclosed cost reduction initiatives.
The company posted net income of $1.1 million or $0.12 per diluted share in the fourth quarter of 2020, versus net income of $0.77 million or $0.08 per diluted share, for the 2019 fourth quarter.
Full Year 2020 Financial Results
For 2020, the company reported net revenue of $102.8 million versus $113.5 million in 2019.
Revenue in Intricon’s Medical business was $79.0 million for 2020, a decrease from $82.1 million in 2019. The year-over-year decrease was driven primarily by the reduction in orders due to uncertainty surrounding the COVID-19 pandemic partially offset by the previously mentioned acquisition of EMS, which contributed $7.4 million in revenue during 2020.
Hearing Health revenue was $19.0 million in 2020 compared to $24.9 million in 2019. The revenue decrease year-over-year 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, leading to reduced sales.
Gross margin in 2020 was 25.5%, compared to 27.3% in 2019, primarily due to lower revenues volumes, product mix, partially offset by cost reduction initiatives implemented in the 2020 second quarter.
Operating expenses for 2020 were $29.3 million, compared to $33.0 million in 2019. The change in operating expenses year-over-year was due to cost reduction initiatives, partially offset by $1.5 million in EMS operating expenses, $0.7 million of expense related increases in fair value of the EMS earn-out liability and $0.8 million in costs associated with the CEO Transition Agreement signed in June 2020.
The company posted a net loss of $2.5 million or $0.28 per diluted share for 2020, versus net loss of $3.8 million or $0.43 per diluted share, for 2019.
Total cash and investments was $33.5 million as of December 31, 2020, compared to $40.6 million as of December 31, 2019.
Due to continued uncertainties resulting from the COVID-19 global pandemic, the company is not issuing 2021 financial guidance at this time.
Intricon will hold a conference call today, February 25, 2021, 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: 5468087. A live and archived webcast will be available on the “Investors” sections of the company’s website at: www.Intricon.com.
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, 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, 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 September 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.
Intricon is a Joint Development Manufacturer that integrates components and assemblies to advance micro-medical technology across a range of device platforms for global customers. Intricon approaches each engagement with an all-in commitment, working with customers every step of the way- from the earliest idea stages to ongoing production - in order to advance program performance and deliver results. With a focus on key device platforms, Intricon helps advance clinical outcomes by always looking ahead with proactive support and resources through integration of its core competencies. 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.
|FOURTH QUARTER||YEAR TO DATE|
|($ in 000’s)||2020||2019||Change||2020||2019||Change|
|Value Hearing Health - Direct-to-End-Consumer||917||1,244||-26.3||%||4,430||6,120||-27.6||%|
|Value Hearing Health - Indirect-to-End-Consumer||1,546||1,491||3.7||%||5,558||8,910||-37.6||%|
|Hearing Health - Legacy OEM||2,648||2,144||23.5||%||8,968||9,892||-9.3||%|
|Professional Audio Communications||1,278||1,506||-15.1||%||4,780||6,478||-26.2||%|
CONSOLIDATED STATEMENT OF OPERATIONS
(In Thousands, Except Per Share Amounts)
|Three Months Ended||Twelve Months Ended|
|December 31,||December 31,||December 31,||December 31,|
|Cost of goods sold||22,502||20,254||76,598||82,507|
|Sales and marketing||1,633||2,428||6,671||11,498|
|General and administrative||3,334||3,382||15,007||13,933|
|Research and development||1,380||928||5,248||3,830|
|Other operating expenses||407||—||1,153||—|
|Total operating expenses||6,754||6,738||29,250||33,026|
|Operating income (loss)||1,045||702||(3,075||)||(2,040||)|
|Interest income, net||9||217||331||920|
|Other income (expense), net||23||(284||)||316||(743||)|
|Income (loss) from continuing operations before income taxes and discontinued operations||1,077||635||(2,428||)||(1,863||)|
|Income tax expense (benefit)||(33||)||(133||)||61||201|
|Income (loss) from continuing operations before discontinued operations||1,110||768||(2,489||)||(2,064||)|
|Loss on disposal of discontinued operations||—||—||—||(1,116||)|
|Loss from discontinued operations||—||—||—||(597||)|
|Net income (loss)||1,110||768||(2,489||)||(3,777||)|
|Less: Income allocated to non-controlling interest||18||—||35||—|
|Net income (loss) attributable to Intricon shareholders||$||1,092||$||768||$||(2,524||)||$||(3,777||)|
|Basic income (loss) per share attributable to Intricon shareholders:|
|Net income (loss) per share:||$||0.12||$||0.09||$||(0.28||)||$||(0.43||)|
|Diluted income (loss) per share attributable to Intricon shareholders:|
|Net income (loss) per share:||$||0.12||$||0.08||$||(0.28||)||$||(0.43||)|
|Average shares outstanding:|
CONSOLIDATED BALANCE SHEET
(In Thousands, Except Per Share Amounts)
|December 31,||December 31,|
|Cash and cash equivalents||$||8,608||$||8,523|
|Short-term investment securities||19,793||23,451|
|Accounts receivable, less provision for doubtful accounts of $210 at December 31, 2020 and $325 at December 31, 2019||10,115||8,993|
|Other current assets||1,466||1,975|
|Current assets of discontinued operations||—||80|
|Total current assets||69,274||70,275|
|Machinery and equipment||45,661||41,073|
|Less: Accumulated depreciation||31,484||27,522|
|Net machinery and equipment||14,177||13,551|
|Operating lease right-of-use assets, net||6,701||4,372|
|Investment in partnerships||570||1,160|
|Long-term investment securities||5,085||8,629|
|Other assets, net||990||510|
|Current financing leases||$||21||$||101|
|Current operating leases||2,156||1,729|
|Accrued salaries, wages and commissions||3,581||2,274|
|Other accrued liabilities||4,235||2,869|
|Liabilities of discontinued operations||—||77|
|Total current liabilities||18,663||16,926|
|Noncurrent financing leases||—||30|
|Noncurrent operating leases||4,726||2,937|
|Other postretirement benefit obligations||385||382|
|Accrued pension liabilities||907||655|
|Deferred tax liabilities, net||1,018||—|
|Other long-term liabilities||4,398||2,171|
|Commitments and contingencies|
|Common stock, $1.00 par value per share; 20,000 shares authorized; 8,951 and 8,781 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively||8,951||8,781|
|Additional paid-in capital||89,702||86,770|
|Accumulated other comprehensive loss||(679||)||(520||)|
|Total shareholders’ equity||91,164||90,745|
|Total liabilities and equity||$||121,296||$||113,593|