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IntriCon Reports Second Quarter 2019 Results

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ARDEN HILLS, Minn., Aug. 06, 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 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