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IntriCon Reports First Quarter 2019 Results

ARDEN HILLS, Minn., April 29, 2019 (GLOBE NEWSWIRE) -- IntriCon Corporation (IIN), a designer, developer, manufacturer and distributor of miniature and micro-miniature body-worn devices, today announced financial results for its first quarter ended March 31, 2019.

Recent Highlights:

  • Quarterly revenue of $30.1 million, an 18.7% increase over the prior-year first quarter
  • Gross margin of 29.1%, compared to 33.2% in the prior-year period
  • Net income per share of $0.08 versus $0.10 in the 2018 first quarter
  • Revenue growth from largest medical customer of 26.6% compared to first quarter 2018
  • Announced changes to Board of Directors, effective May 1, 2019
    ○  Raymond Huggenberger, former Inogen CEO, appointed as a director
    ○  Michael McKenna retired from his position as Chairman of the Board
    ○  Philip Smith, a current director, elected Chairman of the Board
  • Announced leadership promotions
    ○  Chief Financial Officer Scott Longval assumed additional responsibilities as Chief Operating Officer
    ○  Michael Geraci named Senior Vice President, Sales and Marketing
    ○  Dennis Gonsior named Senior Vice President, Global Operations
    ○  Greg Gruenhagen named Senior Vice President, Quality and Regulatory Affairs

“We were pleased with our first quarter performance and execution, with progress made on each of the priorities we laid out at the start of the year,” said Mark Gorder, President and Chief Executive Officer of IntriCon. “In our Medical business, we continued to benefit from Medtronic’s on-going conversion to its MiniMed 670G system, and we were delighted to secure a new, large medical customer for our proprietary medical coils. In our Hearing Health business, we remain very encouraged by the expanding opportunity we see for our value-based hearing solutions and the relationships we maintain with our current partners. In addition, we are excited to pursue new opportunities for growth spurred by the 2017 legislation that will open a significant new over-the-counter market.

“As we look forward, we will continue to meet the volume demands of our key customers and partners, while pursuing new business opportunities that can best leverage our core competencies and global infrastructure in order to accelerate growth and diversify our revenue base,” concluded Gorder.

First Quarter 2019 Financial Results
For the 2019 first quarter, the company reported net revenue of $30.1 million, up 18.7% from $25.4 million in the comparable prior-year period. The increase was primarily due to year-over-year revenue gains from its diabetes and medical coil markets.

By business line, revenue in IntriCon’s Medical business increased 30.5% in the first quarter of 2019 versus the comparable prior-year period. The gain was primarily driven by the ongoing production of wireless continuous glucose monitoring systems as a result of its long-standing relationship with Medtronic’s Diabetes division. Revenue to this customer increased 26.6% in the first quarter over the comparable prior-year period.

Hearing Health revenue was relatively flat in the first quarter of 2019 compared to the prior-year first quarter. The modest revenue during the quarter was largely due to the impact of a customer’s product cycle in the company’s Indirect-to-End-Consumer channel and measured advertising spend in its Direct-to-End-Consumer channel.

Gross margin in the first quarter of 2019 was 29.1%, down from 33.2% in the prior-year first quarter. Gross margins were constrained by the ongoing validation and qualification expense as well as excess capacity related to the recent manufacturing expansion.

Operating expenses for the first quarter were $7.9 million, compared to $7.1 million in the comparable prior-year period. The increase stemmed from increased advertising investments in our Direct-to-End-Consumer and support costs related to key new business development initiatives.

The company posted net income of approximately $775,000 or $0.08 per diluted share, versus approximately $769,000 or $0.10 per diluted share, for the 2018 first quarter.  

2019 Guidance
IntriCon reiterated its previously stated guidance for the full year 2019, which includes revenue of $128 million to $133 million and gross margins of 30.0% to 31.5%. The company continues to anticipate year-over-year revenue growth and gross margin improvement for the full year 2019 with the timing of certain orders related to its largest customer’s on-going global commercial product launch now weighted towards the second half of the year.

Conference Call
IntriCon’s management team will hold a conference call today, Monday, April 29, 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: 2084667. A live and archived webcast will be available on the “Investors” sections of the company’s website at: www.IntriCon.com.

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, the United Kingdom 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.

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.

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

 
INTRICON CORPORATION
MARKET REVENUE
(Unaudited)
               
   FIRST QUARTER
($ in 000's) 2019   2018   Growth
               
Medical $   20,793   $   15,933   30.5 %
Diabetes   17,164     13,562   26.6 %
Other Medical   3,629     2,371   53.1 %
               
Hearing Health     7,549       7,601   -0.7 %
Value Based Direct-to-End-Consumer   1,630     1,785   -8.7 %
Value Based Indirect-to-End-Consumer   2,577     2,629   -2.0 %
Legacy OEM   3,342     3,187   4.9 %
               
Professional Audio Communications     1,767       1,829   -3.4 %
               
Total $   30,109   $   25,363   18.7 %
               


 
INTRICON CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
   
  Three Months Ended
  March 31, 2019   March 31, 2018
           
Revenue, net $ 30,109     $ 25,363  
Cost of goods sold   21,358       16,951  
Gross profit   8,751       8,412  
           
Operating expenses:          
Sales and marketing   3,536       2,840  
General and administrative   3,425       3,061  
Research and development   965       1,159  
Total operating expenses   7,926       7,060  
Operating income   825       1,352  
           
Interest income (expense), net   215       (188 )
Other expense, net   (134 )     (208 )
Income before income taxes   906       956  
Income tax expense   131       187  
Net income $ 775     $ 769  
           
Income per share of common stock:          
Net income per share, Basic: $ 0.09     $ 0.11  
Net income per share, Diluted: $ 0.08     $ 0.10  
           
Average shares outstanding:          
Basic   8,705       6,929  
Diluted   9,382       7,843  
           


 
INTRICON CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEET
(Unaudited)
           
    March 31,     December 31,
    2019       2018  
Current assets:          
Cash, cash equivalents and restricted cash $ 13,190     $ 8,047  
Short-term investments   16,008       38,093  
Accounts receivable, less allowance for doubtful accounts of $368 at March 31, 2019 and $807 at December 31, 2018   10,493       11,479  
Inventories   19,134       18,981  
Contract assets   6,320       5,624  
Other current assets   1,541       2,320  
Total current assets   66,686       84,544  
Machinery and equipment   38,202       37,161  
Less:  Accumulated depreciation   25,941       25,429  
Net machinery and equipment   12,261       11,732  
           
Goodwill   10,808       10,808  
Intangible assets, net   2,546       2,585  
Operating lease asset   5,518       -  
Investment in partnerships   1,324       2,091  
Long-term investments   15,228       -  
Other assets, net   6,525       3,488  
Total assets $ 120,896     $ 115,248  
           
Current liabilities:          
Current financing leases $ 104     $ -  
Current operating leases   1,700       -  
Accounts payable   12,237       13,191  
Accrued salaries, wages and commissions   2,572       4,409  
Other accrued liabilities   4,692       4,047  
Total current liabilities   21,305       21,647  
           
Noncurrent financing leases   95       -  
Noncurrent operating leases   4,030       -  
Other postretirement benefit obligations   366       377  
Accrued pension liabilities   733       706  
Other long-term liabilities   1,306       544  
Total liabilities   27,835       23,274  
Commitments and contingencies          
Shareholders’ equity:          
Common stock, $1.00 par value per share; 20,000 shares authorized; 8,714 and 8,664 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively   8,714       8,664  
Additional paid-in capital   85,131       84,999  
Retained earnings (accumulated deficit)   266       (509 )
Accumulated other comprehensive loss   (797 )     (927 )
Total shareholders' equity   93,314       92,227  
Non-controlling interest   (253 )     (253 )
Total equity   93,061       91,974  
Total liabilities and equity $ 120,896     $ 115,248