Exactech, Inc. (
Q4 2011 Earnings Call
February 29, 2012 - 10:00 a.m. ET
William Petty – Chairman and Chief Executive Officer
Joel C. Phillips – Chief Financial Officer
David W. Petty – President
James Sidoti – Sidoti & Company, LLC
Christopher Sassouni – Eagle Asset Management, Inc.
William J. Plovanic – Canaccord Genuity, Inc.
Jason M. Bednar – Robert W. Baird & Company
James Terwilliger – Duncan-Williams, Inc.
Mark Landy – Summer Street Research Partners
Previous Statements by EXAC
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» Exactech CEO Discusses Q4 2010 - Earnings Call Transcript
Good day, ladies and gentlemen. Thank you for standing by and welcome to the Exactech fourth quarter and 2011 full year results conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. (Operator Instructions) This conference is being recorded today, Wednesday, February 29, 2012.
I would now like to turn the conference over to Mr. Bill Petty, Chief Executive Officer. Please go ahead.
Thank you and welcome to our conference call. I will begin with the SEC statement. The release contains various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. They may represent the company's expectations or beliefs concerning future events of the company's financial performance. These forward-looking statements are further qualified by important factors that could cause actual results to differ from those in the forward-looking statements.
These factors include the effect of competitive pricing, the company's dependence on the ability of third-party manufacturers to produce components on a basis which is cost-effective for the company, market acceptance of the company's products, and the effects of government regulation. Results actually achieved may differ substantially from the expected results included in these statements. I will first talk about Q4 2011.
For the fourth quarter of 2011, revenue was $53.1 million, which is an increase of 2% over $51.8 million for the fourth quarter last year. Net income for the fourth quarter was $1.8 million, compared to $2.7 million for Q4 of 2010. Diluted earnings per share was $0.14 for the fourth quarter in 2011 and $0.21 in the same quarter of 2010. If we exclude the DoJ cost of $0.9 million in Q4 2011, the resulting EPS is $0.18, and this compares to a cost of $0.5 million for DoJ in 2010 and the resultant $0.23 earnings per share for the fourth quarter of 2010.
I now want to summarize the entire year 2011. For the full year, our revenue increased 8% to $205.4 million from $190.5 million in 2010. Net income was $8.8 million with an earnings per share of $0.67 in 2011, compared with a net income of $10.5 million and $0.80 per share a year ago. Again, if we exclude the DoJ expenses in 2011 of $4.5 million, compared to $1.3 million in 2010, the 2011 net income was $11.7 million, or $0.89 earnings per share, compared with $11.3 million, or $0.86 per share, in 2010.
I now want to summarize the segment performance for the fourth quarter. Our knee implant revenue in Q4 was down 2% to $20.1 million. Extremity implant revenue increased 29% to $11 million, hip implant revenue was up 13% to $9.3 million, biologic and spine revenue decreased 21% to $5.9 million, and other revenues were down 4% to $6.7 million.
Now, for the segment performance for the entire year. Knee implant revenue was up 5% to $80.1 million, extremity implant revenue increased 33% to $39.9 million, hip implant revenue was up 17% to $33.7 million, and biologic and spine segment revenue was down 13% to $24.3 million, while other revenues increased less than 1% to $27.4 million. Obviously, our results in biologics and spine both for the quarter and the year hurt our overall performance.
We are looking for stronger results from these segments in 2012 from new product introductions, which include the first pedicle screw system developed in-house and our Gibralt Spinal System for posterior cervical fusion. We have experienced excellent surgeon acceptance in the early launch of these product lines. From the biologic side, we are positive about our autologous stem cell technology, which we think has some advantages over other stem cell technologies which we know are an important topic, especially in the area of spinal surgery.
Also on the biologic side, in the fourth quarter of 2011, we began a multicenter clinical trial on our cartilage regeneration technology that we have been working on in development for the past three years. On the major joint side, we are pleased with the strong surgeon acceptance in the early release of the Optetrak Logic knee system. We had a strong year in hip sales, primarily due to significant contributions from our direct operations in Spain and Japan, and we expect to continue the momentum there as well is in other parts of the world.
In the U.S. we launched a new Novation Crown Cup system featuring InteGrip porous metal technology and an advanced surgical technique for acetabular reconstruction. Our extremity segment continued to shine by substantially outpacing market growth, and we have strong momentum there moving into 2012. Overall, for 2011 Exactech outperformed the industry in revenue growth. From this solid base we are excited about our prospects to outperform the industry in 2012.