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IntriCon Reports Second Quarter 2019 Results
[August 06, 2019]

IntriCon Reports Second Quarter 2019 Results


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.

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


INTRICON CORPORATION
MARKET REVENUE
(Unaudited) 

  SECOND QUARTER   YEAR TO DATE
($ in 000's)2019 2018 Change 2019 2018 Change
                
Medical$ 20,892  $  20,198  3.4% $  41,685  $  36,131  15.4%
Diabetes 17,950  17,307 3.7%  35,114  30,869 13.8%
Other Medical 2,942  2,891 1.8%  6,571  5,262 24.9%
                
Hearing Health   6,675     7,730  -13.6%    13,685     14,546  -5.9%
Value Based Direct-to-End-Consumer 1,736  2,052 -15.4%  3,366  3,837 -12.3%
Value Based Indirect-to-End-Consumer 2,399  2,634 -8.9%  4,976  4,608 8.0%
Legacy OEM 2,540  3,044 -16.6%  5,343  6,101 -12.4%
                
Professional Audio Communications   1,769     1,520   16.4%    3,536     3,349   5.6%
                
Total $  29,336   $  29,448   -0.4%  $  58,906   $  54,026   9.0%


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, $1.00 par value per share; 20,000 shares authorized; 8,754 and 8,664 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively   8,754     8,664 
Additional paid-in capital   85,729     84,999 
Accumulated deficit   (4,764)    (509)
Accumulated other comprehensive loss   (538)    (927)
Total shareholders' equity   89,181     92,227 
Non-controlling interest   (253)    (253)
Total equity   88,928     91,974 
Total liabilities and equity$  116,328  $  115,248 

 

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