Exactech (EXAC:NASDAQ) Reports Solid 2Q:04 - 15% Increase in Revenues & Earnings
BY JOHN CHOPACK, JULY 26, 2004
EXAC reported revenues of $20.4 million which was a 15% increase over revenues of $17.8 million during the 2Q:04. The Company also reported net income of $1.6 million or $0.16 per diluted share, which represented a 15% increase over the 2Q:03. Analysts were expecting revenues of $21.5 million and $0.16 in diluted EPS. The slight miss in revenues compared to analyst expectations caused a moderate sell off of approximately 7% on Thursday.
- Knee revenues for the quarter totaled $12.4 million. That is an 18% increase in revenues and now represent 61% of revenues. Growth was driven both by its traditional Optetrak product line with 'moderate contribution' from its recently launched asymmetrical Optetrak knee system. The Company is expected to launch a unicompartmental knee and MIS knee instrumentation during the 2H:04 which should continue to help support revenue growth.
- Hip sales totaled $3.73 million during the 2Q:04 which is down from the $3.85 million reported during the 2Q:03. Management is anticipating flat growth in hips for the rest of the year. When questioned about the stronger growth in hip sales during the 1Q:04, they commented that this was driven by unusually higher sales from hip procedures which are more violatile and harder to predict than primary procedures. The Company is anticipating that a ceramic-on-ceramic system could be launched as soon as the 2H:05, based on current discussions with the FDA. Remember that EXAC previously announced it would be utilizing Ceramtec's previously filed PMA to speed the regulatory process.
- Tissue Services' revenues totaled $2.7 million which was an 18% increase over the 2Q:03.
Exactech has struggled to leverage its revenue growth into additional earnings growth, i.e. taking advantage of any economies of scale. While Jody Phillips, CFO of Exactech, expects 2004 gross margins to improve by approximately 50 to 100 basis points over 2003, he is also anticipating an increase in overall operating expenses as a percentage of sales during the year.
The Company is anticipating revenues to total $83-86 million during 2004 which is a 16.5% to 20.0% increase over 2003. EPS per diluted share is expected to total $0.65 to $0.67 which represents a 16% to 20% increase.
