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CST: 16/12/2019 04:29:41   

Intricon Reports Third Quarter 2019 Results

41 Days ago

ARDEN HILLS, Minn., Nov. 04, 2019 (GLOBE NEWSWIRE) -- 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, 2019.

Third Quarter Highlights:

  • Revenue of $26.9 million
    • Revenue from largest medical customer declined 5.6% year-over-year
  • Gross margin of 25.2%
  • Net loss per diluted share of $0.03 versus net income of $0.22 per diluted share

“In the third quarter, we continued to make progress growing our addressable market in our two core businesses: Medical Biotelemetry and Hearing Health. We also made important strides forward in identifying new partners in markets where our core competencies can provide value and significantly expand our market opportunity,” said Mark Gorder, president and chief executive officer of IntriCon. “We anticipate our diabetes business to gradually ramp-up with further acceleration in 2020, following recent international regulatory approvals. We have also begun to focus our efforts pursuing exciting opportunities within interventional pulmonology and electrophysiology, as these markets have high growth rates and steep technology curves that harbor significant potential for IntriCon. We eagerly await the draft guidance for over-the-counter hearing aids and have taken steps to ensure we are well positioned to address the need for an alternative to medically prescribed hearing aids.”

Third Quarter 2019 Financial Results
For the 2019 third quarter, the company reported net revenue of $26.9 million versus $29.6 million in the comparable prior-year period.

Revenue in IntriCon’s Medical business in the third quarter of 2019 was $19.1 million, a decrease from $19.4 million in the comparable prior-year period. The year over year decline was driven primarily by continued slower than expected international rollout from a large medical device customer, partially offset by increased sales to its medical coil customers.  

Hearing Health revenue was $6.4 million in the third quarter of 2019 compared to $8.2 million in the prior-year third quarter. Similar to the second quarter of 2019, revenue decline during the third quarter was largely attributed to restructuring activities within a large insurance customer’s hearing health business, as they pivot towards a more traditional “brick-and-mortar” approach that no longer aligns with IntriCon’s partnership strategy to reach the end customer. In addition, as anticipated the company experienced a decline in its legacy OEM business.

Gross margin in the third quarter of 2019 was 25.2%, down from 31.6% in the prior-year third quarter. Gross margins were constrained by ongoing validation and qualification expense and excess capacity related to the recent manufacturing expansion to meet the anticipated higher volume requirements of its existing and future customers.

Operating expenses for the third quarter were $7.2 million, compared to $7.0 million in the comparable prior-year period. The increase stemmed from higher non-cash stock compensation expense of $648,000 and severance expense, slightly offset by decreases in research and development expense and advertising expense in its Direct-to-End-Consumer business. 

The company posted a net loss of approximately $290,000 or $0.03 per diluted share in the third quarter of 2019, versus net income of approximately $1.9 million or $0.22 per diluted share, for the 2018 third quarter.

2019 Guidance
Due to lower than expected diabetes revenue, revenue loss from the company’s large insurance customer, and the result of conscious reduction in advertising spend at HHE, IntriCon now expects revenue in the range of $112 million to $113 million and gross margin in the range of 26.5% to 27.0% for the full year 2019. This compares to prior guidance of $115 million to $117.5 million and gross margins in the range of 27.0% to 28.5% for the full year 2019.   

Conference Call
IntriCon’s management team will hold a conference call today, Monday, November 4, 2019, 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: 7296587. A live and archived webcast will be available on the “Investors” sections of the company’s website at: 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, including estimates of future results, 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, 2018. 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 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.

Investor Contact
Leigh Salvo
(415) 937-5404 
investorrelations@intricon.com


 
INTRICON CORPORATION
MARKET REVENUE
(Unaudited) 
 
   THIRD QUARTER    YEAR TO DATE
($ in 000's) 2019   2018   Change   2019   2018   Change
                               
Medical  

$
  19,099    

$
  19,356    

-1.3


%
   

$
   60,784    

$
  55,487    

9.5


%
Diabetes     15,723       16,662    

-5.6


%
      50,837       47,531    

7.0


%
Other Medical     3,376       2,694    

25.3


%
      9,947       7,956    

25.0


%
                               
Hearing Health     6,358       8,206    

22.5


%
      20,044       22,750    

-11.9


%
Value Based Direct-to-End-Consumer     1,510       1,490    

1.3


%
      4,876       5,327    

-8.5


%
Value Based Indirect-to-End-Consumer     2,443       3,660    

-33.3


%
      7,419       8,923    

-16.9


%
Legacy OEM     2,405       3,056    

-21.3


%
      7,749       8,500    

-8.8


%
                               
Professional Audio Communications     1,436       2,004    

-28.3


%
      4,972       5,353   -7.1 %
                               
Total  

$
  26,893    

$
 29,566    

-9.0


%
   

$
  85,800    

$
  83,590    

2.6


%



 
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,
    2019      2018      2019      2018 
    (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)
                       
Revenue, net $ 26,893     $ 29,566     $ 85,800     $ 83,590  
Cost of goods sold     20,120         20,236         62,253         56,435  
Gross profit     6,773         9,330         23,547         27,155  
                       
Operating expenses:                      
Sales and marketing     2,609         2,784         9,071         8,023  
General and administrative     3,715         2,921         10,551         8,429  
Research and development     840         1,251         2,902         3,693  
Impairment loss     -         -         3,765         -  
Total operating expenses      7,164         6,956         26,289         20,145  
Operating income (loss)     (391 )       2,374         (2,742 )       7,010  
                       
Interest income (expense), net     240         (48 )       703         (453 )
Other expense, net     (52 )       (221 )       (458 )       (650 )
Income (loss) from continuing operations before income taxes and discontinued operations     (203 )       2,105         (2,497 )       5,907  
Income tax expense     87         (97 )       334         358  
Income (loss) from continuing operations before discontinued operations     (290 )       2,202         (2,831 )       5,549  
Loss on disposal of discontinued operations     -         -         (1,116 )       -  
Loss from discontinued operations, net of income taxes     -         (299 )       (597 )       (870 )
Net income (loss) $   (290 )   $   1,903     $   (4,544 )   $   4,679  
                       
Basic income (loss) per share attributable to IntriCon shareholders:                      
Continuing operations $   (0.03 )   $   0.28     $   (0.32 )   $   0.77  
Discontinued operations     -          (0.04 )       (0.20 )       (0.12 )
Net income (loss) per share: $   (0.03 )   $   0.24     $   (0.52 )   $   0.65  
                       
Diluted income (loss) per share attributable to IntriCon shareholders:                      
Continuing operations $   (0.03 )   $   0.25     $   (0.32 )   $   0.66  
Discontinued operations     -          (0.03 )       (0.20 )       (0.10 )
Net income (loss) per share: $   (0.03 )   $   0.22     $   (0.52 )   $   0.56  
                       
Average shares outstanding:                      
Basic   8,764       7,825       8,738       7,249  
Diluted   8,764       8,822       8,738       8,360  


 

INTRICON CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEET
(In Thousands, Except Per Share Amounts)
    September 30,     December 31,
    2019       2018  
    (Unaudited)     (Unaudited)
Current assets:          
Cash, cash equivalents and restricted cash $   8,688     $   8,047  
Short-term investments     20,315         38,093  
Accounts receivable, less allowance for doubtful accounts of $306 at
September 30, 2019 and $807 at December 31, 2018
    8,425         11,266  
Inventories     17,883         18,163  
Contract assets     8,513         5,624  
Other current assets     2,290         2,146  
Current assets of discontinued operations     239         1,205  
Total current assets     66,353         84,544  
           
  Machinery and equipment     40,525         36,725  
Less:  Accumulated depreciation     26,867         25,303  
Net machinery and equipment     13,658         11,422  
           
Goodwill     9,551         10,808  
Intangible assets, net     -         2,585  
Operating lease right of use asset     4,749         -  
Investment in partnerships     1,409         2,091  
Long-term investments     13,764         -  
Other assets, net     6,196         3,427  
Noncurrent assets of discontinued operations     -         371  
Total assets $   115,680     $   115,248  
           
Current liabilities:          
Current financing leases $   108     $   -  
Current operating leases     1,790         -  
Accounts payable     11,407         12,871  
Accrued salaries, wages and commissions     3,063         4,409  
Other accrued liabilities     4,033         4,031  
Liabilities of discontinued operations     393         336  
Total current liabilities     20,794         21,647  
           
Noncurrent financing leases     55         -  
Noncurrent operating leases     3,296         -  
Other postretirement benefit obligations     343         377  
Accrued pension liabilities     725         706  
Other long-term liabilities     1,162         544  
Total liabilities     26,375         23,274  
Commitments and contingencies          
Shareholders’ equity:          
Common stock, $1.00 par value per share; 20,000 shares authorized;
8,778 and 8,664 shares issued and outstanding at September 30, 2019
and December 31, 2018, respectively
    8,778         8,664  
Additional paid-in capital     86,358         84,999  
Accumulated deficit     (5,054 )       (509 )
Accumulated other comprehensive loss     (524 )       (927 )
Total shareholders' equity     89,558         92,227  
Non-controlling interest     (253 )       (253 )
Total equity     89,305         91,974  
Total liabilities and equity $   115,680     $   115,248  

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