GlobeNewswire Inc | Aug 9, 2021 04:06PM EDT

August 09, 2021

ARDEN HILLS, Minn., Aug. 09, 2021 (GLOBE NEWSWIRE) -- Intricon Corporation (NASDAQ: IIN), an international joint development manufacturer engaged in designing, developing, engineering, manufacturing, and packaging miniature interventional, implantable and body-worn medical devices, today announced financial results for its second quarter ended June 30, 2021.

Second Quarter Highlights:

-- Revenue of $30.2 million, a 28% increase compared to the prior year period -- Gross profit margin of 26.1%, compared to 28.0% in the prior year period -- GAAP net loss of $1.2 million versus net loss of $2.3 million in the prior year period -- Non-GAAP adjusted net income of $2.1 million versus $2.1 million in the prior year period -- Cash and investment securities of $32.9 million as of June 30, 2021 -- Hired David Liebl as Vice President of R&D on August 9, 2021

Our second quarter results were driven by outperformance across our business, as we saw a strong resurgence in demand, particularly in our diabetes and hearing health markets. We were pleased to see the initial success and subsequent expansion of the pilot program with HearX, a partnership that places our hardware and firmware in hearing aids sold over-the-counter (OTC) in select Walgreen's stores, said Scott Longval, President and Chief Executive Officer.

Despite a challenging environment, we have made significant progress in the transformation and expansion of our business in the markets we serve, while at the same time, taking steps to build our pipeline and diversify our customer base. Weve also made great progress in adding to our leadership team, giving me the confidence that we are in the best position to date to leverage our core competencies in high growth markets, Longval concluded.

Second Quarter 2021 Financial ResultsRevenue

Net revenue for the second quarter 2021 increased 28% to $30.2 million versus $23.6 million in the comparable prior-year period. Each key business line, including Diabetes, Hearing Health, Interventional Catheter, and Surgical Navigation posted double digit growth year-over-year.

Diabetes revenue increased 13% to $15.2 million compared to $13.5 million in the prior-year second quarter. The growth was primarily attributable to the continued launch success of the Medtronic MiniMed 780G in certain international markets and the MiniMed 770G in the U.S.

Interventional Catheter revenue increased 266% to $4.2 million from $1.1 million in the comparable prior-year period. The year-over-year increase was driven primarily by the expansion of Medtronics Chocolate Balloon manufactured by Emerald Medical Systems (EMS) and full quarter impact of EMS, which the company acquired in May 2020.

Surgical Navigation revenue was $1.7 million an increase of 54% second quarter year-over-year and 56% sequentially from the first quarter of 2021. This increase was driven by added production capacity as the company worked through specific labor challenges faced earlier in the year.

Hearing Health revenue increased 32% to $7.3 million compared to $5.5 million in the prior-year second quarter. The primary growth driver in this market was the Indirect to End Consumer business related to volumes required to support the OTC pilot program.

Gross Profit Margin and Operating Expenses

Gross profit margin in the second quarter of 2021 was 26.1%, compared to 28.0% in the prior-year second quarter. The lower margin was due to both an increase in direct labor costs and temporary Q2 2020 cost reductions as part of the companys COVID response.

Operating expenses for the second quarter were $8.8 million, compared to $9.2 million in the prior-year period. The decrease was primarily due to an overall lower cost structure post the 2020 restructuring of Hearing Health Direct to End Consumer operations and timing of certain one-time events impacting both the current and prior periods.

GAAP Net Income

The company posted GAAP net loss of $1.2 million or $0.13 per diluted share in the second quarter of 2021, versus a net loss of $2.3 million or $0.26 per diluted share, for the 2020 second quarter.

Non-GAAP Income

The company posted non-GAAP adjusted net income of $2.1 million or $0.23 per diluted share in the second quarter of 2021, versus net income of $2.1 million or $0.23 per diluted share, for the 2020 second quarter. See Reconciliation of Adjusted Net Income and Earnings Per Share in the tables that follow.

GuidanceIntricon now expects 2021 revenue to range between $121 million to $125 million, representing year-over-year growth of 18-22%. This compares to the previous range of $119 million to $123 million, or 16-20% year-over-year growth.

Conference Call Intricon will hold a conference call today, August 9, 2021, 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: 6328219. A live and archived webcast will be available on the Investors sections of the companys website at: www.Intricon.com.

Use of non-GAAP Adjusted Financial Measures

This press release contains financial measures that have not been calculated in accordance with accounting principles generally accepted in the U.S. (GAAP). These non-GAAP measures include:

-- Adjusted net income -- Adjusted net income per diluted share

These non-GAAP financial measures reflect adjustments for expenses and gains that the company believes do not reflect the companys core operating performance. The company has presented these non-GAAP financial measures because the company believes this presentation, when reconciled to the corresponding GAAP measures, provides useful information to investors in evaluating the companys operational performance. Management uses these non-GAAP measures internally to evaluate our performance and in making financial, operational and planning decisions, including with respect to incentive compensation. The company believes that the presentation of these measures provides investors with greater transparency with respect to the companys results of operations and that these measures are useful for period-to-period comparison of results and trends. The company further believes that the use of these non-GAAP financial measures provides an additional tool for investors in comparing the companys financial results with the financial results of other companies.

The company periodically reassesses the components of non-GAAP adjustments for changes in how the company evaluates Intricons performance, changes in how the company makes financial and operational decisions, and considers the use of these measures by Intricons competitors and peers to ensure the adjustments are still relevant and meaningful.

Non-GAAP financial measures should not be used as a substitute for GAAP measures, or considered in isolation, for the purpose of analyzing our operating performance. The presentation of these non-GAAP financial measures should not be construed as an inference that future results will not be affected by similar items.

Forward-Looking StatementsStatements made in this release and in Intricons 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 Private Securities Litigation Reform Act of 1995. These forward-looking statements may be affected by known and unknown risks, uncertainties and other factors that are beyond Intricons control, including without limitation, the impacts of the COVID-19 pandemic and measures taken in response, and may cause Intricons 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 companys filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the year ended December 31, 2020. 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.

AboutIntricon CorporationIntricon is a Joint Development Manufacturer that integrates components and assemblies to advance micro-medical technology across a range of device platforms for global customers. Intricon approaches each engagement with an all-in commitment, working with customers every step of the way- from the earliest idea stages to ongoing production - in order to advance program performance and deliver results. With a focus on key device platforms, Intricon helps advance clinical outcomes by always looking ahead with proactive support and resources through integration of its core competencies. 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.

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

INTRICON CORPORATIONMARKET REVENUE(Unaudited)

SECOND QUARTER YEAR TO DATE($ in 000's) 2021 2020 Change 2021 2020 Change Diabetes $ 15,247 $ 13,521 12.8 % 33,611 27,051 24.3 % Interventional 4,198 1,146 266.3 % 8,000 1,146 598.1 % CathetersOther Medical 3,510 3,451 1.7 % 6,468 6,279 3.0 % Hearing HealthValue Based 950 1,387 -31.5 % 1,887 2,560 -26.3 % DTECHearing HealthValue Based 2,570 1,365 88.3 % 4,555 2,109 116.0 % ITECHearing Health 2,888 1,721 67.8 % 5,625 3,685 52.6 % Legacy OEMProfessionalAudio 852 1,011 -15.7 % 1,837 2,275 -19.3 % Communications Total $ 30,215 $ 23,602 28.0 % $ 61,983 $ 45,105 37.4 %

INTRICON CORPORATIONCONSOLIDATED STATEMENT OF OPERATIONS(In Thousands, Except Per Share Amounts)

Three Months Ended Six Months Ended(unaudited) June 30, June 30, June 30, June 30, 2021 2020 2021 2020 Revenue, net $ 30,215 $ 23,602 $ 61,983 $ 45,105 Cost of goods sold 22,343 16,996 45,901 33,927 Gross profit 7,872 6,606 16,082 11,178 Operating expenses:Sales and 2,021 1,680 4,003 3,673 marketingGeneral and 4,070 4,603 8,049 8,019 administrativeResearch and 1,309 1,209 2,602 2,410 developmentOther operating 1,415 - 1,523 - expensesRestructuring - 1,171 - 1,171 chargesAcquisition costs - 493 - 493 Total operating 8,815 9,156 16,177 15,766 expensesOperating loss (943 ) (2,550 ) (95 ) (4,588 ) Interest (expense) (14 ) 97 (23 ) 281 income, netOther (expense) (91 ) 208 (168 ) 101 income, netIncome (loss)before income (1,048 ) (2,245 ) (286 ) (4,206 )taxesIncome tax expense 80 29 170 47 Net loss (1,128 ) (2,274 ) (456 ) (4,253 )Less: Incomeallocated to 51 7 9 7 non-controllinginterestNet lossattributable to $ (1,179 ) $ (2,281 ) $ (465 ) $ (4,260 )Intriconshareholders Loss per shareattributable to Intriconshareholders:Basic $ (0.13 ) $ (0.26 ) $ (0.05 ) $ (0.48 )Diluted $ (0.13 ) $ (0.26 ) $ (0.05 ) $ (0.48 ) Average shares outstanding:Basic 9,074 8,881 9,034 8,847 Diluted 9,074 8,881 9,034 8,847

INTRICON CORPORATIONCONSOLIDATED BALANCE SHEET(In Thousands, Except Per Share Amounts)

(unaudited) June 30, December 31, 2021 2020Current assets: Cash and cash equivalents $ 6,077 $ 8,608 Restricted cash 658 672 Short-term investment securities 23,022 19,793 Accounts receivable, net of $80 and $210 of reserves, 9,592 10,115 respectivelyInventories 22,189 19,513 Contract assets 11,618 9,107 Other current assets 1,872 1,466 Total current assets 75,028 69,274 Property, plant and equipment 47,320 45,661 Less: Accumulated depreciation 33,080 31,484 Net property, plant and equipment 14,240 14,177 Goodwill 13,873 13,714 Intangible assets, net 9,791 10,785 Operating lease right-of-use assets, net 5,782 6,701 Investment in partnerships 592 570 Long-term investment securities 3,794 5,085 Other assets, net 987 990 Total assets $ 124,087 $ 121,296 Current liabilities: Current financing leases $ 7 $ 21 Current operating leases 2,027 2,156 Accounts payable 10,102 8,670 Accrued salaries, wages and commissions 4,438 3,581 Other accrued liabilities 6,059 4,235 Total current liabilities 22,633 18,663 Noncurrent operating leases 3,896 4,726 Other postretirement benefit obligations 363 385 Accrued pension liabilities 809 907 Deferred tax liabilities, net 1,028 1,018 Other long-term liabilities 3,403 4,398 Total liabilities 32,132 30,097 Commitments and contingencies Shareholders? equity: Common stock, $1.00 par value per share; 20,000shares authorized; 9,082 and 8,951 shares issued and 9,082 8,951 outstanding, respectivelyAdditional paid-in capital 90,532 89,702 Accumulated deficit (7,275 ) (6,810 )Accumulated other comprehensive loss (446 ) (679 )Total shareholders' equity 91,893 91,164 Non-controlling interest 62 35 Total equity 91,955 91,199 Total liabilities and equity $ 124,087 $ 121,296

INTRICON CORPORATIONReconciliation of Adjusted Net Income and Earnings Per Share(Unaudited)

Three Months Ended Six Months Ended June 30, June 30, June June 30, 30, 2021 2020 2021 2020Net loss - GAAP attributable $ (1,179 ) $ (2,281 ) $ (465 ) $ (4,260 )to IntriconIdentified adjustments attributable to Intricon:Depreciation (1) 751 757 1,592 1,443 Amortization of intangibles 497 364 994 462 (2)Stock-based compensation (3) 566 936 1,019 1,312 Other amortization (4) 99 11 201 148 Legal settlement and related 1,360 142 1,433 173 Fees (5)Fair value of contingent 55 - 90 - consideration (6)COVID-19 Singapore government (20 ) (356 ) (141 ) (356 )support (7)EMS acquisition costs (8) - 493 - 493 Restructuring charges (9) - 1,171 - 1,171 CEO Retirement costs (10) - 823 - 823 Non-GAAP adjusted net income $ 2,129 $ 2,060 $ 4,723 $ 1,409 attributable to Intricon (11) Non-GAAP adjusted net incomeattributable to Intricon per $ 0.23 $ 0.23 $ 0.52 $ 0.16 diluted share (1) Depreciation represents the expense of property, plant and equipment.(2) These expenses represent amortization expenses of intangible assets.(3) Stock-based compensation represents expenses related to awards under theCompany's equity incentive plans.(4) These expenses represent amortization of other assets.(5) The Company's subsidiary, Hearing Help Express, Inc., settled its TelephoneConsumer Protection Act litigation in the second quarter of 2021 for $1,300.The settlement will be paid during the 2021 third quarter. Additional feesincluded herein relate to the legal fees associated with the TCPA defense.(6) These expenses represent changes in the fair value of contingentconsideration in the period for the purchase of EMS.(7) Singapore Government provided COVID-19 financial assistance to ourSingapore subsidiaries during the periods.(8) In May of 2020, the Company acquired EMS and recorded $493 in acquisitionrelated costs in the 2020 second quarter.(9) On May 20, 2020, the Company announced a strategic restructuring plandesigned to accelerate the Company?s future growth by focusing resources on thehighest potential growth areas. Total restructuring charges for the three andsix months ended June 30, 2020 were $1,171, including $732 related to one-timeemployee termination benefits, $326 for lease modification costs at HearingHelp Express and $113 for losses on disposal of assets.(10) The CEO Transition Agreement signed in June 2020 included payment of $443(equal to one year?s salary) and $400 of RSUs issuable to our retired CEO MarkGorder.(11) None of these adjustments have a material income tax impact.