Intricon Corporation (NASDAQ: IIN), an
international company engaged in designing, developing,
engineering, manufacturing, and packaging miniature interventional,
implantable and body-worn medical devices, today announced
financial results for its first quarter ended March 31, 2021.
First Quarter Highlights:
- Revenue of $31.8 million increased $10.3 million compared to
$21.5 million in the prior year period
- Gross margin of 25.8%, compared to 21.3% in the prior year
period
- GAAP net income of $0.7 million or $0.07 per diluted share
versus net loss of $2.0 million or $0.22 per diluted share in the
prior year period
- Non-GAAP adjusted net income of $2.5 million or $0.26 per
diluted share in the first quarter of 2021, versus a net loss of
$0.7 million or $0.08 per diluted share, for the 2020 first
quarter
- As of March 31, 2021, the company had $38.3 million of cash and
investment securities, compared to $33.5 million as of December 31,
2020
- Appointed Kathleen Pepski to Board of Directors
"Our first quarter results illustrate a strong start to the year
despite some ongoing pandemic related headwinds. Encouragingly, we
saw meaningful year-over-year improvement throughout our business
driven by pent up demand from Medtronic’s diabetes business and
strong Hearing Health revenues in our legacy OEM business. In
addition, Emerald Medical Services (EMS) continued to grow at a
pace that exceeded our initial expectations, contributing $3.8
million to our topline in the first quarter,” said Scott Longval,
President and Chief Executive Officer.
“As we enter the second quarter, there remains lingering impacts
from COVID-19, including staffing challenges coupled with input
supply constraints primarily associated with the February Texas
storms. I am confident that with our constant focus on strong
execution we will overcome these short-term challenges to deliver
solid year over year growth,” Longval concluded.
First Quarter 2021 Financial Results
Revenue
Net revenue for the fiscal year 2021 first quarter increased 48%
to $31.8 million versus $21.5 million in the comparable prior-year
period.
Revenue in Intricon’s Medical business increased 54% to $25.1
million from $16.4 million in the comparable prior-year period. The
year-over-year increase was driven primarily by higher diabetes
revenues from increased demand for products as COVID-19
restrictions eased as well as the impact of EMS, which the company
acquired in May 2020.
Hearing Health revenue increased 46% to $5.7 million in the
first quarter of 2021 compared to $3.9 million in the prior-year
quarter. The primary growth driver in this market was our legacy
hearing health business, which continued to benefit from increased
access to audiologists as restrictions were lifted. We also saw
revenue contributions in our Indirect to End Consumer market,
related to volumes required to support an initial OTC pilot.
Gross Margin and Operating Expenses
Gross margin in the first quarter of 2021 was 25.8%, compared to
21.3% in the prior-year first quarter, primarily due to higher
volumes and product mix.
Operating expenses for the first quarter were $7.4 million,
compared to $6.6 million in the comparable prior-year period. The
increase was due to $0.9 million of expenses associated with higher
wages, salaries, incentives, and stock-based compensation expense,
$0.6 million in EMS operating expenses, and $0.4 million of
additional amortization expense of certain intangible assets,
partially offset by a $1.1 million reduction in Hearing Help
Express operating expenses due to the second quarter 2020
restructuring.
GAAP Net Income
The company posted GAAP net income of $0.7 million or $0.07 per
diluted share in the first quarter of 2021, versus a net loss of
$2.0 million or $0.22 per diluted share, for the 2020 first
quarter.
Non-GAAP Income
The company posted non-GAAP adjusted net income of $2.5 million
or $0.26 per diluted share in the first quarter of 2021, versus a
net loss of $0.7 million or $0.08 per diluted share, for the 2020
first quarter. See “Reconciliation of Adjusted Net Income and
Earnings Per Share” in the tables that follow.
GuidanceIntricon expects full year 2021 revenue
to range between $119 million and $123 million, representing
year-over-year growth of 16-20%. We do not anticipate providing
regular quarterly guidance. However, we do expect our second
quarter revenue to slightly lag our first quarter results due to
COVID-19 related pent up demand recognized in the first quarter of
2021 and present challenges regarding staffing and input supply
constraints.
Conference Call Intricon will hold a conference
call today, May 10, 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: 9769435. A live and
archived webcast will be available on the “Investors” sections of
the company’s website at: www.Intricon.com.
Use of non-GAAP Adjusted Financial MeasuresThis
press release contains financial measures that have not been
calculated in accordance with accounting principles generally
accepted in the U.S. (GAAP). These non-GAAP measures include:
- Adjusted net income
- Adjusted net income per diluted share
These non-GAAP financial measures reflect adjustments for
expenses and gains that the company believes do not reflect the
company’s core operating performance. We have presented these
non-GAAP financial measures because we believe this presentation,
when reconciled to the corresponding GAAP measures, provides useful
information to investors in evaluating the company’s operational
performance. Management uses these non-GAAP measures internally to
evaluate our performance and in making financial, operational and
planning decisions, including with respect to incentive
compensation. We believe that our presentation of these measures
provides investors with greater transparency with respect to our
results of operations and that these measures are useful for
period-to-period comparison of results and trends. The company
further believes that the use of these non-GAAP financial measures
provides an additional tool for investors in comparing the
company’s financial results with the financial results of other
companies.
The company periodically reassesses the components of our
non-GAAP adjustments for changes in how we evaluate our
performance, changes in how we make financial and operational
decisions, and considers the use of these measures by our
competitors and peers to ensure the adjustments are still relevant
and meaningful.
Non-GAAP financial measures should not be used as a substitute
for GAAP measures, or considered in isolation, for the purpose of
analyzing our operating performance. The presentation of these
non-GAAP financial measures should not be construed as an inference
that future results will not be affected by similar items.
Forward-Looking StatementsStatements made in
this release and in Intricon’s other public filings and releases
that are not historical facts orthat include forward-looking
terminology, including estimates of future results, 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, 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 CorporationIntricon 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.
Investor ContactLeigh Salvo(415)
937-5404 investorrelations@intricon.com
INTRICON CORPORATIONMARKET REVENUE(Unaudited) |
|
|
FIRST QUARTER |
($ in
000's) |
2021 |
|
2020 |
|
Change |
|
|
|
|
|
|
|
|
Diabetes |
$ |
18,364 |
|
$ |
13,530 |
|
35.7 |
% |
Interventional Catheters |
|
3,802 |
|
|
- |
|
100.0 |
% |
Other Medical |
|
2,958 |
|
|
2,828 |
|
4.6 |
% |
Hearing Health Value Based DTEC |
|
937 |
|
|
1,173 |
|
-20.1 |
% |
Hearing Health Value Based ITEC |
|
1,301 |
|
|
744 |
|
74.9 |
% |
Hearing Health Legacy OEM |
|
3,421 |
|
|
1,964 |
|
74.2 |
% |
Professional Audio
Communications |
|
985 |
|
|
1,264 |
|
-22.1 |
% |
|
|
|
|
|
|
|
|
Total |
$ |
31,768 |
|
$ |
21,503 |
|
47.7 |
% |
|
INTRICON CORPORATIONCONSOLIDATED STATEMENT OF OPERATIONS(In
Thousands, Except Per Share Amounts) |
|
|
|
Three Months Ended |
(unaudited) |
|
March 31, |
|
|
March 31, |
|
|
2021 |
|
|
|
2020 |
|
|
|
|
|
|
|
Revenue, net |
$ |
31,768 |
|
|
$ |
21,503 |
|
Cost of goods sold |
|
23,558 |
|
|
|
16,931 |
|
Gross profit |
|
8,210 |
|
|
|
4,572 |
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
Sales and marketing |
|
1,982 |
|
|
|
1,993 |
|
General and administrative |
|
4,052 |
|
|
|
3,416 |
|
Research and development |
|
1,293 |
|
|
|
1,201 |
|
Other operating expenses |
|
35 |
|
|
|
- |
|
Total operating expenses |
|
7,362 |
|
|
|
6,610 |
|
Operating income (loss) |
|
848 |
|
|
|
(2,038 |
) |
|
|
|
|
|
|
Interest (expense) income,
net |
|
(9 |
) |
|
|
184 |
|
Other expense, net |
|
(77 |
) |
|
|
(107 |
) |
Income (loss) before income
taxes |
|
762 |
|
|
|
(1,961 |
) |
Income tax expense |
|
90 |
|
|
|
18 |
|
Net income (loss) |
|
672 |
|
|
|
(1,979 |
) |
Less: Loss allocated to
non-controlling interest |
|
(42 |
) |
|
|
- |
|
Net income (loss) attributable
to Intricon shareholders |
$ |
714 |
|
|
$ |
(1,979 |
) |
|
|
|
|
|
|
Income (loss) per share
attributable to Intricon shareholders: |
|
|
|
|
|
Basic |
$ |
0.08 |
|
|
$ |
(0.22 |
) |
Diluted |
$ |
0.07 |
|
|
$ |
(0.22 |
) |
|
|
|
|
|
|
Average shares
outstanding: |
|
|
|
|
|
Basic |
|
8,994 |
|
|
|
8,813 |
|
Diluted |
|
9,607 |
|
|
|
8,813 |
|
|
|
|
|
|
|
INTRICON CORPORATIONCONSOLIDATED BALANCE SHEET(In Thousands, Except
Per Share Amounts) |
|
|
|
|
|
|
(unaudited) |
|
March 31, |
|
|
December 31, |
|
|
2021 |
|
|
|
2020 |
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
11,757 |
|
|
$ |
8,608 |
|
Restricted cash |
|
654 |
|
|
|
672 |
|
Short-term investment
securities |
|
23,699 |
|
|
|
19,793 |
|
Accounts receivable, net of $152
and $210 of reserves, respectively |
|
9,452 |
|
|
|
10,115 |
|
Inventories |
|
20,336 |
|
|
|
19,513 |
|
Contract assets |
|
8,787 |
|
|
|
9,107 |
|
Other current assets |
|
1,956 |
|
|
|
1,466 |
|
Total current assets |
|
76,641 |
|
|
|
69,274 |
|
|
|
|
|
|
|
Property, plant and
equipment |
|
46,480 |
|
|
|
45,661 |
|
Less: Accumulated depreciation |
|
32,319 |
|
|
|
31,484 |
|
Net property, plant and equipment |
|
14,161 |
|
|
|
14,177 |
|
|
|
|
|
|
|
Goodwill |
|
13,804 |
|
|
|
13,714 |
|
Intangible assets |
|
10,288 |
|
|
|
10,785 |
|
Operating lease right-of-use
assets, net |
|
6,115 |
|
|
|
6,701 |
|
Investment in partnerships |
|
600 |
|
|
|
570 |
|
Long-term investment
securities |
|
2,765 |
|
|
|
5,085 |
|
Other assets, net |
|
876 |
|
|
|
990 |
|
Total assets |
$ |
125,250 |
|
|
$ |
121,296 |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Current financing leases |
$ |
12 |
|
|
$ |
21 |
|
Current operating leases |
|
2,108 |
|
|
|
2,156 |
|
Accounts payable |
|
12,132 |
|
|
|
8,670 |
|
Accrued salaries, wages and
commissions |
|
3,915 |
|
|
|
3,581 |
|
Other accrued liabilities |
|
4,297 |
|
|
|
4,235 |
|
Total current liabilities |
|
22,464 |
|
|
|
18,663 |
|
|
|
|
|
|
|
Noncurrent operating leases |
|
4,166 |
|
|
|
4,726 |
|
Other postretirement benefit
obligations |
|
374 |
|
|
|
385 |
|
Accrued pension liabilities |
|
834 |
|
|
|
907 |
|
Deferred tax liabilities,
net |
|
1,028 |
|
|
|
1,018 |
|
Other long-term liabilities |
|
4,139 |
|
|
|
4,398 |
|
Total liabilities |
|
33,005 |
|
|
|
30,097 |
|
|
|
|
|
|
|
Shareholders’ equity: |
|
|
|
|
|
Common stock, $1.00 par value per
share; 20,000 shares authorized; 8,999 and 8,951 shares issued and
outstanding at March 31, 2021 and December 31, 2020,
respectively |
|
8,999 |
|
|
|
8,951 |
|
Additional paid-in capital |
|
89,926 |
|
|
|
89,702 |
|
Accumulated deficit |
|
(6,096 |
) |
|
|
(6,810 |
) |
Accumulated other comprehensive
loss |
|
(527 |
) |
|
|
(679 |
) |
Total shareholders' equity |
|
92,302 |
|
|
|
91,164 |
|
Non-controlling interest |
|
(57 |
) |
|
|
35 |
|
Total equity |
|
92,245 |
|
|
|
91,199 |
|
Total liabilities and equity |
$ |
125,250 |
|
|
$ |
121,296 |
|
|
|
|
INTRICON CORPORATIONReconciliation of Adjusted Net Income and
Earnings Per Share(Unaudited) |
|
|
|
|
|
Three Months Ended |
|
|
March 31, |
|
|
March 31, |
($ in 000's) |
|
2021 |
|
|
|
2020 |
|
Net income - GAAP attributable
to Intricon |
$ |
714 |
|
|
$ |
(1,979 |
) |
Identified adjustments attributable to Intricon: |
|
|
|
|
|
Depreciation (1) |
|
841 |
|
|
|
686 |
|
Amortization of intangibles (2) |
|
497 |
|
|
|
98 |
|
Stock-based compensation (3) |
|
453 |
|
|
|
376 |
|
Other amortization (4) |
|
102 |
|
|
|
137 |
|
EMS acquisition costs (5) |
|
35 |
|
|
|
- |
|
COVID-19 Singapore government support (6) |
|
(121 |
) |
|
|
- |
|
Non-GAAP adjusted net income attributable to Intricon (7) |
$ |
2,521 |
|
|
$ |
(682 |
) |
|
|
|
|
|
|
Non-GAAP adjusted net income
attributable to Intricon per diluted share |
$ |
0.26 |
|
|
$ |
(0.08 |
) |
|
|
|
|
|
|
(1) Depreciation
represents the expense of property, plant and equipment. |
(2) These expenses
represent amortization expenses of intangible assets. |
(3) Stock-based
compensation represents expenses related to awards under the
Company's equity incentive plans. |
(4) These expenses
represent amortization of other assets. |
(5) These expenses
represent changes in the fair value of contingent consideration in
the period for the purchase of EMS. |
(6) The Singapore
Government provided $121 in COVID-19 financial assistance to our
Singapore subsidiaries during the period. |
(7) None of these
adjustments have material income tax impacts. |
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