ARDEN HILLS, Minn.--(BUSINESS WIRE)--IntriCon Corporation (NASDAQ:IIN), a designer, developer, manufacturer and distributor of miniature and micro-miniature body-worn devices, today announced financial results for its third quarter ended September 30, 2014.
Third-Quarter Highlights Compared to Year-Earlier Quarter:
- Net sales of $17.0 million reflects an increase of 38 percent;
- Gross margins of 26.3 percent rise significantly from 21.9 percent;
- IntriCon achieves net income of $558,000, up from a net loss of $(825,000);
- The company’s medical business posts strong results, with revenues rising 59 percent; and
- IntriCon reduces bank debt by more than $600,000 during the 2014 third quarter.
Financial Results
For the 2014 third quarter, the company
reported net sales of $17.0 million, up from $12.3 million in the
prior-year period. IntriCon had net income of $558,000, or $0.09 per
diluted share, compared to a net loss of $(825,000), or $(0.14) per
diluted share, for the 2013 third quarter. Included in 2013
third-quarter results was a net loss from discontinued operations of
$(393,000), or $(0.07) per diluted share, stemming from restructuring
initiatives.
“The IntriCon team delivered double-digit, top- and bottom-line gains for the third consecutive quarter. All of our businesses were strong, which led to higher year-over-year earnings,” said Mark S. Gorder, president and chief executive officer of IntriCon. “We are pleased with the company’s performance year to date and remain focused on our strategy of generating business with our key medical and hearing health customers, and concentrating on our highest potential opportunities in value hearing health and medical biotelemetry.
“Contributions from Medtronic’s 530G insulin pump system fueled our medical business and accounted for a large portion of our sales increase. In value hearing health, we saw gains from hi HealthInnovations with the introduction of a new behind-the-ear hearing aid. Also notable were our professional audio communication sales that nearly doubled from the same period in 2013.”
Gross profit margins grew to 26.3 percent from 21.9 percent in the prior-year third quarter. The gains stemmed primarily from volume increases and cost reductions achieved from the company’s previously disclosed global restructuring plan.
Nine-Month Results
For the 2014 nine-month period, IntriCon
reported higher net sales of $51.8 million and net income of $1.9
million, or $0.31 per diluted share. This compares to 2013 nine-month
net sales of $37.9 million and a net loss of $(4.7) million, or $(0.83)
per diluted share. Net income from continuing operations for the 2014
nine-months was $2.2 million, or $0.36 per diluted share, with a
discontinued operations net loss of $(270,000), or $(0.04) per diluted
share. The 2013 nine-month results included a loss from continuing
operations of $(2.4) million, or $(0.43) per diluted share, and a
discontinued operations net loss of $(2.3) million, or $(0.41) per
diluted share.
Gross profit margins increased to 27.1 percent from 22.0 percent for the prior-year, nine-month period. Again, the improvement was primarily due to volume increases and cost reductions.
Year to date, IntriCon has lowered its bank debt in 2014 by approximately $1.9 million, including a $600,000 reduction in the third quarter.
Business Update
Sales in IntriCon’s medical business rose 59
percent in the 2014 third quarter compared to the year-ago period. As
previously disclosed, IntriCon’s largest customer, Medtronic, received
FDA approval for their MiniMed 530G insulin pump in late 2013, and that
business has been a large contributor to 2014 sales gains. In addition,
the company grew sales of its proprietary cardiac diagnostic monitoring
products by 44 percent in the third quarter compared to the prior-year
period as it continued to expand its customer base. IntriCon is
receiving positive feedback from its customers about the treatment
flexibility and economic benefits of remote patient monitoring.
Hearing health sales grew during the quarter, rising 11 percent from the prior-year quarter, chiefly due to strong device sales to hi HealthInnovations, partially offset by lower conventional channel sales.
Said Gorder, “As we’ve previously noted, within the conventional hearing health channel, industry growth continues to be constrained by high device costs, distribution inefficiencies and retail consolidation. These factors, among others, have created a need for an outcomes-based hearing health model. To capitalize on this opportunity, we are concentrating our efforts on significant prospective partnerships and customers, and are aggressively pursuing the value hearing aid and personal sound amplifier products, or PSAP, channels.”
Third-quarter professional audio communication sales rose 48 percent from the prior-year. During the quarter, the company continued delivery on a significant contract with the Singapore government to provide technically advanced headsets worn in military applications. This contract will run through the end of 2014. IntriCon will continue to leverage its core technologies in professional audio communication to support existing customers, as well as seek related hearing health and medical product opportunities.
Looking Ahead
Concluded Gorder, “The business has clearly
shown positive momentum throughout 2014 and we plan to build on this
foundation of growth in the future. We anticipate an annual 2014
year-over-year revenue increase between 28 and 30 percent. We are guided
by our strategic goals: aggressively pursuing opportunities in value
hearing health and medical biotelemetry, while driving profitability.”
Conference Call Today
As previously announced, the company
will hold an investment community conference call today, Wednesday,
October 29, 2014, beginning at 4 p.m. CT. Mark Gorder, president and
chief executive officer, and Scott Longval, chief financial officer,
will review third-quarter performance and discuss the company’s
strategies. To join the conference call, dial: 1-888-503-8169 and
provide the conference ID number 9611505 to the operator.
A replay of the conference call will be available three hours after the call ends through 7 p.m. CT on Wednesday, November 12, 2014. To access the replay, dial 1-888-203-1112 and enter passcode: 9611505.
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.
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 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, 2013. 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 CORPORATION | ||||||||||||||||||||
Consolidated Condensed Statements of Operations | ||||||||||||||||||||
(In Thousands, Except Per Share Amounts) | ||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||
(Unaudited) |
(Unaudited) |
(Unaudited) |
(Unaudited) |
|||||||||||||||||
Sales, net | $ | 17,005 | $ | 12,330 | $ | 51,822 | $ | 37,935 | ||||||||||||
Cost of sales | 12,529 | 9,629 | 37,801 | 29,603 | ||||||||||||||||
Gross profit | 4,476 | 2,701 | 14,021 | 8,332 | ||||||||||||||||
Operating expenses: | ||||||||||||||||||||
Sales and marketing | 917 | 801 | 2,815 | 2,424 | ||||||||||||||||
General and administrative | 1,647 | 1,512 | 4,887 | 4,439 | ||||||||||||||||
Research and development | 1,214 | 519 | 3,530 | 2,997 | ||||||||||||||||
Restructuring charges | - | - | 83 | 199 | ||||||||||||||||
Total operating expenses | 3,778 | 2,832 | 11,315 | 10,059 | ||||||||||||||||
Operating income (loss) | 698 | (131 | ) | 2,706 | (1,727 | ) | ||||||||||||||
Interest expense | (99 | ) | (161 | ) | (362 | ) | (468 | ) | ||||||||||||
Equity in loss of partnerships | (49 | ) | (49 | ) | (157 | ) | (184 | ) | ||||||||||||
Other income (expense) | 76 | 30 | 122 | 113 | ||||||||||||||||
Income (loss) from continuing operations before income taxes and discontinued operations | 626 | (311 | ) | 2,309 | (2,266 | ) | ||||||||||||||
Income tax expense | 68 | 121 | 151 | 159 | ||||||||||||||||
Income (loss) before discontinued operations | 558 | (432 | ) | 2,158 | (2,425 | ) | ||||||||||||||
Loss on sale of discontinued operations | - | - | (120 | ) | - | |||||||||||||||
Loss from discontinued operations, net of income taxes | - | (393 | ) | (150 | ) | (2,314 | ) | |||||||||||||
Net income (loss) | $ | 558 | $ | (825 | ) | $ | 1,888 | $ | (4,739 | ) | ||||||||||
Basic income (loss) per share: | ||||||||||||||||||||
Continuing operations | $ | 0.10 | $ | (0.08 | ) | $ | 0.37 | $ | (0.43 | ) | ||||||||||
Discontinued operations | - | (0.07 | ) | (0.05 | ) | (0.41 | ) | |||||||||||||
Net income (loss) per share: | $ | 0.10 | $ | (0.14 | ) | $ | 0.33 | $ | (0.83 | ) | ||||||||||
Diluted income (loss) per share: | ||||||||||||||||||||
Continuing operations | $ | 0.09 | $ | (0.08 | ) | $ | 0.36 | $ | (0.43 | ) | ||||||||||
Discontinued operations | - | (0.07 | ) | (0.04 | ) | (0.41 | ) | |||||||||||||
Net income (loss) per share: | $ | 0.09 | $ | (0.14 | ) | $ | 0.31 | $ | (0.83 | ) | ||||||||||
Average shares outstanding: | ||||||||||||||||||||
Basic | 5,820 | 5,702 | 5,777 | 5,694 | ||||||||||||||||
Diluted | 6,148 | 5,702 | 6,037 | 5,694 | ||||||||||||||||
INTRICON CORPORATION | ||||||||||
Consolidated Condensed Balance Sheets | ||||||||||
(In Thousands, Except Per Share Amounts) | ||||||||||
September 30, | December 31, | |||||||||
2014 |
2013 |
|||||||||
(Unaudited) | ||||||||||
Current assets: | ||||||||||
Cash | $ | 408 | $ | 217 | ||||||
Restricted cash | 665 | 568 | ||||||||
Accounts receivable, less allowance for doubtful accounts of $118 at September 30, 2014 and $124 at December 31, 2013 | 7,103 | 5,433 | ||||||||
Inventories | 10,106 | 9,400 | ||||||||
Other current assets | 1,270 | 1,337 | ||||||||
Current assets of discontinued operations | - | 382 | ||||||||
Total current assets | 19,552 | 17,337 | ||||||||
Machinery and equipment | 34,789 | 33,971 | ||||||||
Less: Accumulated depreciation | 30,568 | 29,232 | ||||||||
Net machinery and equipment | 4,221 | 4,739 | ||||||||
Goodwill | 9,194 | 9,194 | ||||||||
Investment in partnerships | 436 | 569 | ||||||||
Other assets, net | 550 | 749 | ||||||||
Other assets of discontinued operations | - | 132 | ||||||||
Total assets | $ | 33,953 | $ | 32,720 | ||||||
Current liabilities: | ||||||||||
Checks written in excess of cash | $ | - | $ | 279 | ||||||
Current maturities of long-term debt | 2,014 | 2,210 | ||||||||
Accounts payable | 5,456 | 5,037 | ||||||||
Accrued salaries, wages and commissions | 2,662 | 1,676 | ||||||||
Deferred gain | 110 | 110 | ||||||||
Other accrued liabilities | 2,057 | 1,893 | ||||||||
Liabilities of discontinued operations | - | 154 | ||||||||
Total current liabilities | 12,299 | 11,359 | ||||||||
Long-term debt, less current maturities | 4,571 | 6,271 | ||||||||
Other postretirement benefit obligations | 493 | 531 | ||||||||
Accrued pension liabilities | 736 | 839 | ||||||||
Deferred gain | 83 | 165 | ||||||||
Other long-term liabilities | 143 | 247 | ||||||||
Total liabilities | 18,325 | 19,412 | ||||||||
Commitments and contingencies | ||||||||||
Shareholders’ equity: | ||||||||||
Common stock, $1.00 par value per share; 20,000 shares authorized; 5,825 and 5,727 shares issued and outstanding at September 30, 2014 and December 31, 2013, respectively | 5,825 | 5,727 | ||||||||
Additional paid-in capital | 16,813 | 16,434 | ||||||||
Accumulated deficit | (6,634 | ) | (8,522 | ) | ||||||
Accumulated other comprehensive loss | (376 | ) | (331 | ) | ||||||
Total shareholders' equity | 15,628 | 13,308 | ||||||||
Total liabilities and shareholders’ equity | $ | 33,953 | $ | 32,720 | ||||||