Exhibit 99.1
INTRICON REPORTS 2015 THIRD-QUARTER RESULTS
Company Delivers Continued Profitability, Launches Key Value Hearing Health Initiatives
ARDEN HILLS, Minn. — November 9, 2015 — 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, 2015.
Highlights:
- Net sales of $17.3 million increased sequentially and over the prior-year period;
- The company continued to deliver profitability with net income of $628,000, or $0.10 per diluted share;
- IntriCon’s Medtronic business posted record quarterly revenue, rising 30 percent over the 2014 third quarter;
- The company launched several key partnerships, including, a joint venture with the Academy of Doctors of Audiology (ADA), earVenture LLC (earVenture) and a strategic supplier agreement with AudioNova; and,
- IntriCon recently acquired the assets of PC Werth Limited, a leading supplier of hearing healthcare products and equipment to the United Kingdom’s National Health Service (NHS).
Financial Results
For the 2015 third quarter, the company reported net sales of $17.3 million, compared to $17.0 million in the prior-year period. IntriCon posted net income of $628,000, or $0.10 per diluted share, versus net income of $558,000, or $0.09 per diluted share, for the 2014 third quarter.
“We are pleased with our third-quarter performance as we continue to deliver profitability while concentrating resources on building the infrastructure required to secure high-potential growth opportunities, especially in the value hearing health space,” said Mark S. Gorder, president and chief executive officer of IntriCon. “We made significant strides in this area during the quarter, most notably by launching earVenture. This joint venture is further evidence that the hearing health market is changing and opportunities exist in various emerging value channels, which we are well-positioned to address."
IntriCon Corporation 2015 Third-Quarter Results
November 9, 2015
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Gross profit margins were 26.7 percent compared to 26.3 percent in the prior-year third quarter. The increase was primarily due to higher overall sales volumes.
Nine-Month Results
For the 2015 nine-month period, IntriCon reported net sales of $51.1 million and net income of $1.4 million, or $0.23 per diluted share. This compares to 2014 nine-month net sales of $51.8 million and net income of $1.9 million, or $0.31 per diluted share. Included in 2014 nine-month results was a net loss from discontinued operations of $270,000, or $0.04 per diluted share.
Gross profit margins decreased to 26.5 percent from 27.1 percent for the prior-year, nine-month period. The slight decline was primarily due to product mix and lower overall sales volumes.
Business Update
Hearing health sales declined 17 percent during the third quarter from the prior-year quarter, primarily due to decreases in the conventional channel. As previously noted, the conventional channel has experienced a trend of continuing market consolidation. As a result, the six large manufacturers now control approximately 98 percent of the global market. However, during this time market penetration has stagnated as end-consumer prices have drastically increased. While conventional hearing health sales are down from the prior year, IntriCon remains focused on building the infrastructure required to secure other notable partners who can benefit from the company’s outcomes-based hearing health model offering. “We anticipate these initiatives will drive robust hearing health growth in future quarters,” according to Gorder.
Continued Gorder, “earVenture is a testament to the emerging value channels that we believe have significant growth potential. It capitalizes on IntriCon's established reputation as a leading provider of high-quality, low-cost hearing aids and the ADA's respected position as the only national membership association focused on ownership of the audiology profession through autonomous practice and clinical excellence. Initial earVenture product offerings will help audiologists compete in any market and help underserved or never-served populations who can benefit from hearing aids.
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November 9, 2015
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“In addition, with our recently announced acquisition of PC Werth Limited, IntriCon gained direct access to the NHS and greater control over our efforts to accelerate new market penetration to serve the United Kingdom’s sizable hearing health needs.”
According to Gorder, the transaction will require various NHS contracts to be novated, which the company anticipates completing in 2015. The NHS is widely seen as the most efficient hearing aid delivery system in the world, supplying an estimated 1.4 million hearing aids annually.
Sales in IntriCon’s medical business increased 28 percent in the 2015 third quarter from the prior-year quarter, primarily driven by IntriCon’s largest customer, Medtronic. For the second consecutive quarter, sales to Medtronic were at record levels. The gains stemmed from MiniLink REAL-Time Transmitter and related accessories sales, which are incorporated in Medtronic’s MiniMed 530G insulin pump and continuous glucose monitoring system. IntriCon anticipates continued Medtronic revenue strength going forward.
Third-quarter 2015 professional audio communication sales declined 42 percent from the prior-year period. The anticipated decrease was due to the conclusion of the company's Singapore Government contract in 2014.IntriCon will continue to leverage its core technologies in professional audio communication to support existing customers, as well as seek related hearing health and medical product opportunities.
Looking Ahead
Concluded Gorder, “We have made significant progress in building our value hearing health infrastructure, securing new channel partners and advancing our technology portfolio. With clear evidence of an emerging value hearing health market opportunity and new partnerships coming on board, coupled with our strong Medtronic business, we are poised for future growth. We expect our momentum to build through year-end, and we are on track to achieve sequential revenue growth in the fourth quarter and higher sales year-over-year for 2015.”
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IntriCon Corporation 2015 Third-Quarter Results
November 9, 2015
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Conference Call Today
As previously announced, the company will hold an investment community conference call today, Monday, November 9, 2015, beginning at 4 p.m. CT. Mark Gorder, president and chief executive officer, and Scott Longval, chief financial officer, will review third-quarter performance and discuss the company’s strategies. To join the conference call, dial: 1-888-364-3109 and provide the conference ID number 8184709 to the operator.
A replay of the conference call will be available three hours after the call ends through 7:00 p.m. CT on Monday, November 23, 2015. To access the replay, dial 1-888-203-1112 and enter passcode: 8184709.
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, visitwww.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 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, 2014. 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.
Contacts
| At IntriCon: | At PadillaCRT: |
| Scott Longval, CFO | Matt Sullivan |
| 651-604-9526 | 612-455-1709 |
| slongval@intricon.com | matt.sullivan@padillacrt.com |
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IntriCon Corporation 2015 Third-Quarter Results
November 9, 2015
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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, | |
| | | 2015 | | | 2014 | | | 2015 | | | 2014 | |
| | | (Unaudited) | | | (Unaudited) | | | (Unaudited) | | | (Unaudited) | |
| Sales, net | | $ | 17,341 | | | $ | 17,005 | | | $ | 51,063 | | | $ | 51,822 | |
| Cost of sales | | | 12,706 | | | | 12,529 | | | | 37,515 | | | | 37,801 | |
| Gross profit | | | 4,635 | | | | 4,476 | | | | 13,548 | | | | 14,021 | |
| | | | | | | | | | | | | | | | | |
| Operating expenses: | | | | | | | | | | | | | | | | |
| Sales and marketing | | | 854 | | | | 917 | | | | 2,739 | | | | 2,815 | |
| General and administrative | | | 1,708 | | | | 1,647 | | | | 5,150 | | | | 4,887 | |
| Research and development | | | 1,344 | | | | 1,214 | | | | 3,864 | | | | 3,530 | |
| Restructuring charges | | | — | | | | — | | | | — | | | | 83 | |
| Total operating expenses | | | 3,906 | | | | 3,778 | | | | 11,753 | | | | 11,315 | |
| Operating income | | | 729 | | | | 698 | | | | 1,795 | | | | 2,706 | |
| | | | | | | | | | | | | | | | | |
| Interest expense | | | (95 | ) | | | (99 | ) | | | (287 | ) | | | (362 | ) |
| Other income (expense) | | | (131 | ) | | | 27 | | | | 17 | | | | (35 | ) |
| Income from continuing operations before income taxes and discontinued operations | | | 503 | | | | 626 | | | | 1,525 | | | | 2,309 | |
| | | | | | | | | | | | | | | | | |
| Income tax (benefit) expense | | | (125 | ) | | | 68 | | | | 107 | | | | 151 | |
| Income before discontinued operations | | | 628 | | | | 558 | | | | 1,418 | | | | 2,158 | |
| Loss on sale of discontinued operations | | | — | | | | — | | | | — | | | | (120 | ) |
| Loss from discontinued operations, net of income taxes | | | — | | | | — | | | | — | | | | (150 | ) |
| Net income | | $ | 628 | | | $ | 558 | | | $ | 1,418 | | | $ | 1,888 | |
| | | | | | | | | | | | | | | | | |
| Basic income (loss) per share: | | | | | | | | | | | | | | | | |
| Continuing operations | | $ | 0.11 | | | $ | 0.10 | | | $ | 0.24 | | | $ | 0.37 | |
| Discontinued operations | | | — | | | | — | | | | — | | | | (0.05 | ) |
| Net income per share: | | $ | 0.11 | | | $ | 0.10 | | | $ | 0.24 | | | $ | 0.33 | |
| | | | | | | | | | | | | | | | | |
| Diluted income (loss) per share: | | | | | | | | | | | | | | | | |
| Continuing operations | | $ | 0.10 | | | $ | 0.09 | | | $ | 0.23 | | | $ | 0.36 | |
| Discontinued operations | | | — | | | | — | | | | — | | | | (0.04 | ) |
| Net income per share: | | $ | 0.10 | | | $ | 0.09 | | | $ | 0.23 | | | $ | 0.31 | |
| | | | | | | | | | | | | | | | | |
| Average shares outstanding: | | | | | | | | | | | | | | | | |
| Basic | | | 5,943 | | | | 5,820 | | | | 5,873 | | | | 5,777 | |
| Diluted | | | 6,210 | | | | 6,148 | | | | 6,214 | | | | 6,037 | |
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IntriCon Corporation 2015 Third-Quarter Results
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INTRICON CORPORATION
Consolidated Condensed Balance Sheets
(In Thousands, Except Per Share Amounts)
| | | September 30,
2015
(Unaudited) | | | December 31,
2014 | |
| Current assets: | | | | | | | | |
| Cash | | $ | 397 | | | $ | 328 | |
| Restricted cash | | | 592 | | | | 640 | |
| | | | | | | | | |
| Accounts receivable, less allowance for doubtful accounts of $113 at September 30, 2015 and $120 at December 31, 2014 | | | 7,492 | | | | 7,673 | |
| Inventories | | | 13,137 | | | | 9,983 | |
| Other current assets | | | 1,028 | | | | 1,013 | |
| Total current assets | | | 22,646 | | | | 19,637 | |
| | | | | | | | | |
| Machinery and equipment | | | 37,963 | | | | 35,104 | |
| Less: Accumulated depreciation | | | 31,936 | | | | 30,859 | |
| Net machinery and equipment | | | 6,027 | | | | 4,245 | |
| | | | | | | | | |
| Goodwill | | | 9,194 | | | | 9,194 | |
| Investment in partnerships | | | 278 | | | | 387 | |
| Other assets, net | | | 408 | | | | 498 | |
| Total assets | | $ | 38,553 | | | $ | 33,961 | |
| | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Checks written in excess of cash | | $ | 1,057 | | | $ | 516 | |
| Current maturities of long-term debt | | | 1,929 | | | | 1,886 | |
| Accounts payable | | | 6,634 | | | | 5,438 | |
| Accrued salaries, wages and commissions | | | 2,908 | | | | 2,519 | |
| Deferred gain | | | 83 | | | | 110 | |
| Other accrued liabilities | | | 1,391 | | | | 1,364 | |
| Total current liabilities | | | 14,002 | | | | 11,833 | |
| | | | | | | | | |
| Long-term debt, less current maturities | | | 5,121 | | | | 4,627 | |
| Other postretirement benefit obligations | | | 481 | | | | 485 | |
| Accrued pension liabilities | | | 686 | | | | 741 | |
| Deferred gain | | | — | | | | 55 | |
| Other long-term liabilities | | | 94 | | | | 113 | |
| Total liabilities | | | 20,384 | | | | 17,854 | |
| Commitments and contingencies | | | | | | | | |
| Shareholders’ equity: | | | | | | | | |
| Common stock, $1.00 par value per share; 20,000 shares authorized; 5,977 and 5,844 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively | | | 5,977 | | | | 5,844 | |
| Additional paid-in capital | | | 17,565 | | | | 16,939 | |
| Accumulated deficit | | | (4,856 | ) | | | (6,274 | ) |
| Accumulated other comprehensive loss | | | (517 | ) | | | (402 | ) |
| Total shareholders' equity | | | 18,169 | | | | 16,107 | |
| Total liabilities and shareholders’ equity | | $ | 38,553 | | | $ | 33,961 | |
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