Intricon Corporation (NASDAQ: IIN), an
international joint development manufacturer engaged in designing,
developing, engineering, manufacturing, and packaging miniature
interventional, implantable and body-worn medical devices, today
announced financial results for its second quarter ended June 30,
2021.
Second Quarter Highlights:
- Revenue of $30.2 million, a 28% increase compared to the prior
year period
- Gross profit margin of 26.1%, compared to 28.0% in the prior
year period
- GAAP net loss of $1.2 million versus net loss of $2.3 million
in the prior year period
- Non-GAAP adjusted net income of $2.1 million versus $2.1
million in the prior year period
- Cash and investment securities of $32.9 million as of June 30,
2021
- Hired David Liebl as Vice President of R&D on August 9,
2021
“Our second quarter results were driven by outperformance across
our business, as we saw a strong resurgence in demand, particularly
in our diabetes and hearing health markets. We were pleased to see
the initial success and subsequent expansion of the pilot program
with HearX, a partnership that places our hardware and firmware in
hearing aids sold over-the-counter (OTC) in select Walgreen's
stores,” said Scott Longval, President and Chief Executive
Officer.
“Despite a challenging environment, we have made significant
progress in the transformation and expansion of our business in the
markets we serve, while at the same time, taking steps to build our
pipeline and diversify our customer base. We’ve also made great
progress in adding to our leadership team, giving me the confidence
that we are in the best position to date to leverage our core
competencies in high growth markets,” Longval concluded.
Second Quarter 2021 Financial
ResultsRevenue
Net revenue for the second quarter 2021 increased 28% to $30.2
million versus $23.6 million in the comparable prior-year period.
Each key business line, including Diabetes, Hearing Health,
Interventional Catheter, and Surgical Navigation posted double
digit growth year-over-year.
Diabetes revenue increased 13% to $15.2 million compared to
$13.5 million in the prior-year second quarter. The growth was
primarily attributable to the continued launch success of the
Medtronic MiniMed™ 780G in certain international markets and the
MiniMed™ 770G in the U.S.
Interventional Catheter revenue increased 266% to $4.2 million
from $1.1 million in the comparable prior-year period. The
year-over-year increase was driven primarily by the expansion of
Medtronic’s Chocolate Balloon manufactured by Emerald Medical
Systems (EMS) and full quarter impact of EMS, which the company
acquired in May 2020.
Surgical Navigation revenue was $1.7 million an increase of 54%
second quarter year-over-year and 56% sequentially from the first
quarter of 2021. This increase was driven by added production
capacity as the company worked through specific labor challenges
faced earlier in the year.
Hearing Health revenue increased 32% to $7.3 million compared to
$5.5 million in the prior-year second quarter. The primary growth
driver in this market was the Indirect to End Consumer business
related to volumes required to support the OTC pilot program.
Gross Profit Margin and Operating Expenses
Gross profit margin in the second quarter of 2021 was 26.1%,
compared to 28.0% in the prior-year second quarter. The lower
margin was due to both an increase in direct labor costs and
temporary Q2 2020 cost reductions as part of the company’s COVID
response.
Operating expenses for the second quarter were $8.8 million,
compared to $9.2 million in the prior-year period. The decrease was
primarily due to an overall lower cost structure post the 2020
restructuring of Hearing Health Direct to End Consumer operations
and timing of certain one-time events impacting both the current
and prior periods.
GAAP Net Income
The company posted GAAP net loss of $1.2 million or $0.13 per
diluted share in the second quarter of 2021, versus a net loss of
$2.3 million or $0.26 per diluted share, for the 2020 second
quarter.
Non-GAAP Income
The company posted non-GAAP adjusted net income of $2.1 million
or $0.23 per diluted share in the second quarter of 2021, versus
net income of $2.1 million or $0.23 per diluted share, for the 2020
second quarter. See “Reconciliation of Adjusted Net Income and
Earnings Per Share” in the tables that follow.
GuidanceIntricon now expects 2021 revenue to
range between $121 million to $125 million, representing
year-over-year growth of 18-22%. This compares to the previous
range of $119 million to $123 million, or 16-20% year-over-year
growth.
Conference Call Intricon will hold a conference
call today, August 9, 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: 6328219. 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 Measures
This 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. The company has presented
these non-GAAP financial measures because the company believes 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. The company believes that the
presentation of these measures provides investors with greater
transparency with respect to the company’s 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 non-GAAP
adjustments for changes in how the company evaluates Intricon’s
performance, changes in how the company makes financial and
operational decisions, and considers the use of these measures by
Intricon’s 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 or that 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)
|
SECOND QUARTER |
|
YEAR TO DATE |
($ in
000's) |
2021 |
|
2020 |
|
Change |
|
2021 |
|
2020 |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diabetes |
$ |
15,247 |
|
$ |
13,521 |
|
12.8 |
% |
|
|
33,611 |
|
|
27,051 |
|
24.3 |
% |
|
Interventional Catheters |
|
4,198 |
|
|
1,146 |
|
266.3 |
% |
|
|
8,000 |
|
|
1,146 |
|
598.1 |
% |
|
Other Medical |
|
3,510 |
|
|
3,451 |
|
1.7 |
% |
|
|
6,468 |
|
|
6,279 |
|
3.0 |
% |
|
Hearing Health Value Based DTEC |
|
950 |
|
|
1,387 |
|
-31.5 |
% |
|
|
1,887 |
|
|
2,560 |
|
-26.3 |
% |
|
Hearing Health Value Based ITEC |
|
2,570 |
|
|
1,365 |
|
88.3 |
% |
|
|
4,555 |
|
|
2,109 |
|
116.0 |
% |
|
Hearing Health Legacy OEM |
|
2,888 |
|
|
1,721 |
|
67.8 |
% |
|
|
5,625 |
|
|
3,685 |
|
52.6 |
% |
|
Professional Audio Communications |
|
852 |
|
|
1,011 |
|
-15.7 |
% |
|
|
1,837 |
|
|
2,275 |
|
-19.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
$ |
30,215 |
|
$ |
23,602 |
|
28.0 |
% |
|
$ |
61,983 |
|
$ |
45,105 |
|
37.4 |
% |
|
INTRICON CORPORATIONCONSOLIDATED STATEMENT OF
OPERATIONS(In Thousands, Except Per Share Amounts)
|
|
Three Months Ended |
|
|
Six Months Ended |
(unaudited) |
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue, net |
$ |
30,215 |
|
|
$ |
23,602 |
|
|
$ |
61,983 |
|
|
$ |
45,105 |
|
Cost of goods sold |
|
22,343 |
|
|
|
16,996 |
|
|
|
45,901 |
|
|
|
33,927 |
|
Gross profit |
|
7,872 |
|
|
|
6,606 |
|
|
|
16,082 |
|
|
|
11,178 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing |
|
2,021 |
|
|
|
1,680 |
|
|
|
4,003 |
|
|
|
3,673 |
|
General and administrative |
|
4,070 |
|
|
|
4,603 |
|
|
|
8,049 |
|
|
|
8,019 |
|
Research and development |
|
1,309 |
|
|
|
1,209 |
|
|
|
2,602 |
|
|
|
2,410 |
|
Other operating expenses |
|
1,415 |
|
|
|
- |
|
|
|
1,523 |
|
|
|
- |
|
Restructuring charges |
|
- |
|
|
|
1,171 |
|
|
|
- |
|
|
|
1,171 |
|
Acquisition costs |
|
- |
|
|
|
493 |
|
|
|
- |
|
|
|
493 |
|
Total operating expenses |
|
8,815 |
|
|
|
9,156 |
|
|
|
16,177 |
|
|
|
15,766 |
|
Operating loss |
|
(943 |
) |
|
|
(2,550 |
) |
|
|
(95 |
) |
|
|
(4,588 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Interest (expense) income,
net |
|
(14 |
) |
|
|
97 |
|
|
|
(23 |
) |
|
|
281 |
|
Other (expense) income,
net |
|
(91 |
) |
|
|
208 |
|
|
|
(168 |
) |
|
|
101 |
|
Income (loss) before income
taxes |
|
(1,048 |
) |
|
|
(2,245 |
) |
|
|
(286 |
) |
|
|
(4,206 |
) |
Income tax expense |
|
80 |
|
|
|
29 |
|
|
|
170 |
|
|
|
47 |
|
Net loss |
|
(1,128 |
) |
|
|
(2,274 |
) |
|
|
(456 |
) |
|
|
(4,253 |
) |
Less: Income allocated to
non-controlling interest |
|
51 |
|
|
|
7 |
|
|
|
9 |
|
|
|
7 |
|
Net loss attributable to
Intricon shareholders |
$ |
(1,179 |
) |
|
$ |
(2,281 |
) |
|
$ |
(465 |
) |
|
$ |
(4,260 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share attributable to
Intricon shareholders: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
(0.13 |
) |
|
$ |
(0.26 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.48 |
) |
Diluted |
$ |
(0.13 |
) |
|
$ |
(0.26 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.48 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Average shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
9,074 |
|
|
|
8,881 |
|
|
|
9,034 |
|
|
|
8,847 |
|
Diluted |
|
9,074 |
|
|
|
8,881 |
|
|
|
9,034 |
|
|
|
8,847 |
|
INTRICON CORPORATIONCONSOLIDATED BALANCE SHEET(In
Thousands, Except Per Share Amounts)
(unaudited) |
|
June 30, |
|
|
December 31, |
|
|
2021 |
|
|
2020 |
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
6,077 |
|
|
$ |
8,608 |
|
Restricted cash |
|
658 |
|
|
|
672 |
|
Short-term investment
securities |
|
23,022 |
|
|
|
19,793 |
|
Accounts receivable, net of $80
and $210 of reserves, respectively |
|
9,592 |
|
|
|
10,115 |
|
Inventories |
|
22,189 |
|
|
|
19,513 |
|
Contract assets |
|
11,618 |
|
|
|
9,107 |
|
Other current assets |
|
1,872 |
|
|
|
1,466 |
|
Total current assets |
|
75,028 |
|
|
|
69,274 |
|
|
|
|
|
|
|
Property, plant and
equipment |
|
47,320 |
|
|
|
45,661 |
|
Less: Accumulated depreciation |
|
33,080 |
|
|
|
31,484 |
|
Net property, plant and equipment |
|
14,240 |
|
|
|
14,177 |
|
|
|
|
|
|
|
Goodwill |
|
13,873 |
|
|
|
13,714 |
|
Intangible assets, net |
|
9,791 |
|
|
|
10,785 |
|
Operating lease right-of-use
assets, net |
|
5,782 |
|
|
|
6,701 |
|
Investment in partnerships |
|
592 |
|
|
|
570 |
|
Long-term investment
securities |
|
3,794 |
|
|
|
5,085 |
|
Other assets, net |
|
987 |
|
|
|
990 |
|
Total assets |
$ |
124,087 |
|
|
$ |
121,296 |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Current financing leases |
$ |
7 |
|
|
$ |
21 |
|
Current operating leases |
|
2,027 |
|
|
|
2,156 |
|
Accounts payable |
|
10,102 |
|
|
|
8,670 |
|
Accrued salaries, wages and
commissions |
|
4,438 |
|
|
|
3,581 |
|
Other accrued liabilities |
|
6,059 |
|
|
|
4,235 |
|
Total current liabilities |
|
22,633 |
|
|
|
18,663 |
|
|
|
|
|
|
|
Noncurrent operating leases |
|
3,896 |
|
|
|
4,726 |
|
Other postretirement benefit
obligations |
|
363 |
|
|
|
385 |
|
Accrued pension liabilities |
|
809 |
|
|
|
907 |
|
Deferred tax liabilities,
net |
|
1,028 |
|
|
|
1,018 |
|
Other long-term liabilities |
|
3,403 |
|
|
|
4,398 |
|
Total liabilities |
|
32,132 |
|
|
|
30,097 |
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity: |
|
|
|
|
|
Common stock, $1.00 par value per
share; 20,000 shares authorized; 9,082 and 8,951 shares issued and
outstanding, respectively |
|
9,082 |
|
|
|
8,951 |
|
Additional paid-in capital |
|
90,532 |
|
|
|
89,702 |
|
Accumulated deficit |
|
(7,275 |
) |
|
|
(6,810 |
) |
Accumulated other comprehensive
loss |
|
(446 |
) |
|
|
(679 |
) |
Total shareholders' equity |
|
91,893 |
|
|
|
91,164 |
|
Non-controlling interest |
|
62 |
|
|
|
35 |
|
Total equity |
|
91,955 |
|
|
|
91,199 |
|
Total liabilities and equity |
$ |
124,087 |
|
|
$ |
121,296 |
|
INTRICON CORPORATIONReconciliation of Adjusted
Net Income and Earnings Per Share(Unaudited)
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
June 30, |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
Net loss - GAAP attributable to Intricon |
$ |
(1,179 |
) |
|
$ |
(2,281 |
) |
|
$ |
(465 |
) |
|
$ |
(4,260 |
) |
Identified adjustments attributable to Intricon: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation (1) |
|
751 |
|
|
|
757 |
|
|
|
1,592 |
|
|
|
1,443 |
|
Amortization of intangibles (2) |
|
497 |
|
|
|
364 |
|
|
|
994 |
|
|
|
462 |
|
Stock-based compensation (3) |
|
566 |
|
|
|
936 |
|
|
|
1,019 |
|
|
|
1,312 |
|
Other amortization (4) |
|
99 |
|
|
|
11 |
|
|
|
201 |
|
|
|
148 |
|
Legal settlement and related Fees (5) |
|
1,360 |
|
|
|
142 |
|
|
|
1,433 |
|
|
|
173 |
|
Fair value of contingent consideration (6) |
|
55 |
|
|
|
- |
|
|
|
90 |
|
|
|
- |
|
COVID-19 Singapore government support (7) |
|
(20 |
) |
|
|
(356 |
) |
|
|
(141 |
) |
|
|
(356 |
) |
EMS acquisition costs (8) |
|
- |
|
|
|
493 |
|
|
|
- |
|
|
|
493 |
|
Restructuring charges (9) |
|
- |
|
|
|
1,171 |
|
|
|
- |
|
|
|
1,171 |
|
CEO Retirement costs (10) |
|
- |
|
|
|
823 |
|
|
|
- |
|
|
|
823 |
|
Non-GAAP adjusted net income attributable to Intricon (11) |
$ |
2,129 |
|
|
$ |
2,060 |
|
|
$ |
4,723 |
|
|
$ |
1,409 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjusted net income
attributable to Intricon per diluted share |
$ |
0.23 |
|
|
$ |
0.23 |
|
|
$ |
0.52 |
|
|
$ |
0.16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(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) The Company's
subsidiary, Hearing Help Express, Inc., settled its Telephone
Consumer Protection Act litigation in the second quarter of 2021
for $1,300. The settlement will be paid during the 2021 third
quarter. Additional fees included herein relate to the legal fees
associated with the TCPA defense. |
(6) These
expenses represent changes in the fair value of contingent
consideration in the period for the purchase of EMS. |
(7) Singapore
Government provided COVID-19 financial assistance to our Singapore
subsidiaries during the periods. |
(8) In May of
2020, the Company acquired EMS and recorded $493 in acquisition
related costs in the 2020 second quarter. |
(9) On May 20,
2020, the Company announced a strategic restructuring plan designed
to accelerate the Company’s future growth by focusing resources on
the highest potential growth areas. Total restructuring charges for
the three and six months ended June 30, 2020 were $1,171, including
$732 related to one-time employee termination benefits, $326 for
lease modification costs at Hearing Help Express and $113 for
losses on disposal of assets. |
(10) The CEO
Transition Agreement signed in June 2020 included payment of $443
(equal to one year’s salary) and $400 of RSUs issuable to our
retired CEO Mark Gorder. |
(11) None of
these adjustments have a material income tax impact. |
Intricon (NASDAQ:IIN)
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