ARDEN HILLS, Minn., Aug. 06, 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 second quarter ended June 30, 2019.
Recent Highlights:
Quarterly revenue of $29.3 million
Revenue from largest medical customer grew 3.7% year-over-year
Gross margin of 28%
Net loss per diluted share of $0.57 versus net income of $0.25 per diluted share in the 2018 second quarter
Signed four-year Supply Agreement with largest Medical customer
Repositioned hearing aid sales in the UK through new distribution agreement with Puretone Ltd. and sold accessory business assets of its UK Limited subsidiary
“Over the past several quarters, we have taken important steps towards best positioning our business for the growth opportunities we see emerging in Medical Biotelemetry and Hearing Health, including bolstering our leadership team, expanding our manufacturing facilities, and realigning certain areas of our hearing health business. Our recent restructuring efforts will have a substantial effect on our bottom line, while at the same time allowing us to focus resources on new growth opportunities,” said Mark Gorder, president and chief executive officer of IntriCon. “We remain confident in our ability to achieve our long-term goals and secure our position as the partner of choice in micro-miniature device production.”
Second Quarter 2019 Financial Results For the 2019 second quarter, the company reported net revenue of $29.3 million versus $29.4 million in the comparable prior-year period. Revenue excludes contributions from the discontinued operations of its UK Limited subsidiary.
Revenue in IntriCon’s Medical business in the second quarter of 2019 was $20.9 million, an increase from $20.2 million in the comparable prior-year period. Growth was driven primarily by sales to diabetes and medical coil customers.
Hearing Health revenue was $6.7 million in the second quarter of 2019 compared to $7.7 million in the prior-year second quarter. The revenue decline during the quarter was largely attributed to order delays associated with restructuring activity within a large insurance customer’s hearing health business that are expected to continue through the remainder of 2019.
Gross margin in the second quarter of 2019 was 28%, down from 33% in the prior-year second 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 our existing and future customers.
Operating expenses for the second quarter were $11.6 million, compared to $6.7 million in the comparable prior-year period. The increase stemmed from the $3.8 million write-off of Hearing Help Express goodwill and intangible assets, higher non-cash stock compensation expense, increased advertising investments in our Direct-to-End-Consumer business and support costs related to key new business development initiatives.
The company posted a net loss of approximately $5.0 million or $0.57 per diluted share in the second quarter of 2019, versus net income of approximately $2.0 million or $0.25 per diluted share, for the 2018 second quarter. The company reported a second-quarter net loss from continuing operations of $3.5 million, or $0.40 per diluted share, which includes the Hearing Help Express goodwill and intangible asset write-off of approximately $3.8 million, or $0.43 per diluted share.
2019 Guidance As previously announced, IntriCon revised its guidance for the full year 2019. The company anticipates revenue in the range of $115 million to $117.5 million and gross margins in the range of 27% to 28.5% for the full year 2019.
Conference Call IntriCon’s management team will hold a conference call today, Tuesday, August 6, 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: 5294699. 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.
INTRICON CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (In Thousands, Except Per Share Amounts)
Three Months Ended
Six Months Ended
June 30,
June 30,
June 30,
June 30,
2019
2018
2019
2018
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Revenue, net
$
29,336
$
29,448
$
58,906
$
54,026
Cost of goods sold
21,121
19,727
42,133
36,202
Gross profit
8,215
9,721
16,773
17,824
Operating expenses:
Sales and marketing
3,072
2,637
6,461
5,240
General and administrative
3,650
2,751
6,836
5,502
Research and development
1,097
1,316
2,062
2,475
Impairment loss
3,765
-
3,765
-
Total operating expenses
11,584
6,704
19,124
13,217
Operating income (loss)
(3,369
)
3,017
(2,351
)
4,606
Interest income (expense), net
248
(211
)
463
(405
)
Other expense, net
(272
)
(196
)
(406
)
(401
)
Income (loss) from continuing operations before income taxes and discontinued operations
(3,393
)
2,610
(2,294
)
3,800
Income tax expense
116
269
247
455
Income (loss) from continuing operations before discontinued operations
(3,509
)
2,341
(2,541
)
3,345
Loss on disposal of discontinued operations
(1,116
)
-
(1,116
)
-
Loss from discontinued operations, net of income taxes
(405
)
(333
)
(597
)
(570
)
Net income (loss)
$
(5,030
)
$
2,008
$
(4,254
)
$
2,775
Basic income (loss) per share attributable to IntriCon shareholders:
Continuing operations
$
(0.40
)
$
0.34
$
(0.29
)
$
0.48
Discontinued operations
(0.17
)
(0.05
)
(0.20
)
(0.08
)
Net income (loss) per share:
$
(0.57
)
$
0.29
$
(0.49
)
$
0.40
Diluted income (loss) per share attributable to IntriCon shareholders:
Continuing operations
$
(0.40
)
$
0.29
$
(0.29
)
$
0.42
Discontinued operations
(0.17
)
(0.04
)
(0.20
)
(0.07
)
Net income (loss) per share:
$
(0.57
)
$
0.25
$
(0.49
)
$
0.35
Average shares outstanding:
Basic
8,743
6,991
8,724
6,930
Diluted
8,743
8,118
8,724
8,021
INTRICON CORPORATION CONSOLIDATED CONDENSED BALANCE SHEET (In Thousands, Except Per Share Amounts)
June 30,
December 31,
2019
2018
(Unaudited)
(Unaudited)
Current assets:
Cash, cash equivalents and restricted cash
$
9,801
$
8,047
Short-term investments
19,688
38,093
Accounts receivable, less allowance for doubtful accounts of $308 at June 30, 2019 and $807 at December 31, 2018
9,746
11,266
Inventories
18,251
18,163
Contract assets
7,116
5,624
Other current assets
1,216
2,146
Current assets of discontinued operations
648
1,205
Total current assets
66,466
84,544
Machinery and equipment
39,155
36,725
Less: Accumulated depreciation
26,276
25,303
Net machinery and equipment
12,879
11,422
Goodwill
9,551
10,808
Intangible assets, net
-
2,585
Operating lease right of use asset
4,396
-
Investment in partnerships
1,445
2,091
Long-term investments
15,357
-
Other assets, net
6,234
3,427
Noncurrent assets of discontinued operations
-
371
Total assets
$
116,328
$
115,248
Current liabilities:
Current financing leases
$
102
$
-
Current operating leases
1,620
-
Accounts payable
12,000
12,871
Accrued salaries, wages and commissions
3,456
4,409
Other accrued liabilities
4,260
4,031
Liabilities of discontinued operations
606
336
Total current liabilities
22,044
21,647
Noncurrent financing leases
69
-
Noncurrent operating leases
2,971
-
Other postretirement benefit obligations
355
377
Accrued pension liabilities
737
706
Other long-term liabilities
1,224
544
Total liabilities
27,400
23,274
Commitments and contingencies
Shareholders’ equity:
Common stock, $1.00 par value per share; 20,000 shares authorized; 8,754 and 8,664 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively