Exactech Inc. (NSDQ:EXAC) posted fourth-quarter sales of $48.3 million for the three months ended Dec. 31, 2009, up 19.9 percent compared with $40.3 million during the same period in 2008. Net income fell 84.1 percent to $494,000, compared with $3.1 million during Q4 2008:
Press Release
Exactech 2009 Revenue Up 10% to $177M; Q4 Revenue Up 20% to
$48.3M, EPS $0.04 includes Charge to Earnings for Estimated DOJ
Settlement
GAINESVILLE, Fla.–(BUSINESS WIRE)–Exactech, Inc. (Nasdaq:EXAC), a developer and producer of bone and joint
restoration products for hip, knee, extremities, spine and biologic
materials, announced today that revenue for 2009 increased 10% to $177.3
million from $161.7 million in 2008. Diluted earnings per share for the
year was $0.65 based on net income of $8.3 million. This compares with
net income of $11.1 million or $0.87 diluted EPS a year ago. Net income
for 2009 included pre-tax legal expenses and estimated settlement costs
of $7.0 million related to the ongoing Department of Justice (DOJ)
inquiry. Excluding the impact of these legal expenses, 2009 net income
was $13.2 million or $1.03 diluted EPS compared with $12.7 million or
$0.99 diluted EPS in 2008.
2009 Fourth Quarter Highlights and Segment Performance |
• Total revenue for the quarter increased 20% to $48.3 million |
• Knee implant revenue increased 24% to $21.1 million |
• Hip implant revenue increased 29% to $6.8 million |
• Biologic & spine segment revenues remained flat at $7.0 million |
• Extremity implant revenue increased 29% to $6.5 million |
• Other revenues increased 17% to $7.0 million |
2009 Full Year Highlights and Segment Performance |
• Revenue for the year increased 10% to $177.3 million |
• Knee implant revenue increased 4% to $75.8 million |
• Hip implant revenue increased 18% to $26.8 million |
• Biologic & spine segment revenues increased 4% to $27.4 million |
• Extremity implant revenue increased 36% to $22.8 million |
• Other revenues increased 6% to $24.4 million |
For the fourth quarter of 2009, revenue was $48.3 million, an increase
of 20% over $40.3 million for the fourth quarter last year. Net income
for the fourth quarter of 2009 was down 84% to $0.5 million compared to
$3.1 million for the same quarter of 2008. Diluted EPS was $0.04 for the
fourth quarter of 2009 compared to $0.24 in the fourth quarter of 2008.
Excluding legal costs and estimated settlement of $3.6 million
associated with the ongoing DOJ inquiry, diluted EPS for the fourth
quarter of 2009 was $0.25. A reconciliation of the adjusted net income
and adjusted diluted EPS is included at the end of the attached
financial statements.
Exactech Chairman and CEO Bill Petty said, “The second half of the year
resulted in excellent performance for Exactech. Exactech’s revenue
growth rate strongly outpaced our peers in the second half of the year
with record sales and continuing gains in market share. Among the top
seven companies in our industry, we were the only one with double-digit
growth in 2009.
“This year we are celebrating our 25th year in business. As
we look forward, we have set in place targets and milestones that are
part of our vision of being the world’s leading provider of innovative
bone and joint restoration products that improve patient outcomes.
“We intend to reach these new levels through a growth strategy built on
strong corporate values and our customer-centric culture. It is a
strategy driven by our robust current product line as well as a pipeline
of new and innovative products, market opportunities and financial and
sales strategies. Our international business is growing and we continue
to strengthen our position in key markets. This year we expect to roll
out new shoulder and knee systems, additions to our hip line, and new
biologic products.
“During the fourth quarter, we recorded a $3.6 million charge to
earnings which includes anticipation of a possible settlement with the
Department of Justice. While it is premature to provide details and we
do not have a definitive settlement at this time, we hope this matter
will be resolved in the near future,” Petty said.
Exactech President David Petty said, “During the fourth quarter, our
growth was strong on both the domestic and international fronts. U.S.
sales increased 11% to $32.2 million, and international sales were up
43% to $16.1 million. International sales represented 33% of total
sales, compared with 28% for the same quarter last year. We recorded
fourth quarter sales growth of over 20% in our hip, knee and extremity
segments.
“For the full year 2009, U.S. sales increased 9% to $122.4 million, and
international sales were up 11% to $54.9 million. International sales
represented 31% of total sales, compared with 30% for the same quarter
last year.”
Exactech CFO Jody Phillips said, “Gross margin percentage for the year
decreased to 63.3% compared to 63.8% for last year primarily due to a
large mix shift to international business in the fourth quarter. Total
operating expenses in 2009 were $97.6 million, up 15% from $84.6 million
in the comparable period last year. The increase in operating expenses
was primarily due to the $4.4 million increase in DOJ inquiry related
expenses and variable selling expenses. From a balance sheet
perspective, we significantly strengthened the company during 2009
despite the challenging economic environment as reflected in our $5.4
million reduction in total inventory and $9.6 million reduction in total
debt.
Looking forward, the company released its 2010 revenue guidance of
$188-$196 million and diluted EPS of $0.90 – $0.96 on a GAAP basis and
diluted EPS of $1.10-$1.16 excluding the impact of compliance and
FAS123R expenses. The company is projecting approximately $2.0 million
in compliance and $2.2 million in FAS123R expenses during 2010. For the
first quarter of 2010, the company said it anticipates revenues of $46 –
$48 million and diluted EPS of $0.21 – $0.23 on a GAAP basis. The
foregoing statements regarding targets are forward-looking and actual
results may differ materially. These are the company’s targets, not
predictions of actual performance.