GlobeNewswire Inc | Nov 8, 2021 04:05PM EST

November 08, 2021

ARDEN HILLS, Minn., Nov. 08, 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 third quarter ended September 30, 2021.

Third Quarter 2021 Highlights:

-- Revenue of $31.1 million, a 13.5% increase compared to the prior year period -- Gross profit margin of 23.1%, compared to 26.3% in the prior year period -- GAAP net income of $337,000 versus net income of $644,000 in the prior year period -- Non-GAAP adjusted net income of $1.7 million versus $2.4 million in the prior year period -- Cash and investment securities of $33.1 million as of September 30, 2021 -- Completed Summative Usability Validation for self-fitting hearing aid technology clinical trial

Strong customer demand persisted in each of our core markets throughout the third quarter, leading to another period of year-over-year and sequential revenue growth. Our business continued to see increased order flow in our diabetes business, expansion in our hearing health pilot programs with a ramp up in activity ahead of the final OTC regulation, along with sustained growth in our interventional catheter business, said Scott Longval, President and Chief Executive Officer. While on-going impact from pandemic-related supply chain and labor shortages resulted in margin pressure, we view this as transitory and are actively implementing measures that we believe will mitigate these constraints to meet the demand of our customers.

As we enter the final quarter of the year, Im more encouraged than ever by several exciting catalysts on the horizon that we are tracking for accelerated growth, Longval concluded.

Third Quarter 2021 Financial ResultsRevenue

Net revenue for the third quarter 2021 increased 13.5% to $31.1 million versus $27.4 million in the comparable prior-year period. The increase was primarily driven by our Diabetes, Interventional Catheter and Surgical Navigation markets.

Diabetes revenue increased 24.2% to $18.0 million compared to $14.5 million in the prior-year third quarter. The growth was primarily attributable to the continued launch success of the Medtronic MiniMed 780G in certain international markets and the Medtronic MiniMed 770G in the U.S.

Interventional Catheter revenue increased 22.2% to $3.4 million from $2.8 million in the comparable prior-year period. The year-over-year increase was driven primarily by the continued expansion of Medtronics Chocolateballoon manufactured by Emerald Medical Systems (EMS).

Surgical Navigation revenue was $2.0 million an increase of 31% year-over-year and 18% sequentially from the second 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 decreased 14.3% to $4.7 million compared to $5.5 million in the prior-year third quarter. The primary driver in this market was supply chain input constraints, which we have mostly addressed in early Q4. As orders continue to remain strong, we anticipate Hearing Health to rebound in the 2021 4th quarter.

Gross Profit Margin and Operating Expenses

Gross profit margin in the third quarter of 2021 was 23.1%, compared to 26.3% in the prior-year third quarter. The lower margin was due, in part, to supply chain constraints,higherlabor costs and product mix.

Operating expenses were flat for the third quarter at $6.7 million dollars for both the current and prior-year periods. During the 2021 third quarter we reduced the EMS earnout liability by approximately $460,000, which was offset by increased business development and marketing investments.

GAAP Net Income

The company posted GAAP net income of $337,000 or $0.04 per diluted share in the third quarter of 2021, versus net income of $644,000 or $0.07 per diluted share, for the 2020 third quarter.

Non-GAAP Income

The company posted non-GAAP adjusted net income of $1.7 million or $0.17 per diluted share in the third quarter of 2021, versus net income of $2.4 million or $0.25 per diluted share, for the 2020 third quarter. See Reconciliation of Adjusted Net Income and Earnings Per Share in the tables that follow.

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

Conference Call Intricon will hold a conference call today, November 8, 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: 1489078. 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 orthat 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)

THIRD QUARTER YEAR TO DATE($ in 000's) 2021 2020 Change 2021 2020 Change Diabetes $ 18,025 $ 14,518 24.2 % $ 51,636 $ 41,569 24.2 %Interventional 3,439 2,815 22.2 % 11,439 3,961 188.8 %CathetersOther Medical 3,846 3,316 16.0 % 10,314 9,595 7.5 %Hearing HealthValue Based 800 953 -16.1 % 2,687 3,513 -23.5 %DTECHearing HealthValue Based 1,298 1,779 -27.0 % 5,853 3,888 50.5 %ITECHearing Health 2,610 2,759 -5.4 % 8,235 6,444 27.8 %Legacy OEMProfessionalAudio 1,032 1,227 -15.9 % 2,869 3,502 -18.1 %Communications Total $ 31,050 $ 27,367 13.5 % $ 93,033 $ 72,472 28.4 %

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

Three Months Ended Nine Months Ended(unaudited) September September September September 30, 30, 30, 30, 2021 2020 2021 2020 Revenue, net $ 31,050 $ 27,367 $ 93,033 $ 72,472 Cost of goods 23,865 20,169 69,766 54,096 soldGross profit 7,185 7,198 23,267 18,376 Operating expenses:Sales and 2,048 1,365 6,051 5,038 marketingGeneral and 3,943 3,654 11,992 11,673 administrativeResearch and 1,173 1,458 3,775 3,868 developmentOther operating(income) (457 ) 253 1,066 253 expensesRestructuring - - - 1,171 chargesAcquisition - - - 493 costsTotal operating 6,707 6,730 22,884 22,496 expensesOperating 478 468 383 (4,120 )income (loss) Interest(expense) (9 ) 41 (32 ) 322 income, netOther (expense) (93 ) 192 (261 ) 293 income, netIncome (loss)before income 376 701 90 (3,505 )taxesIncome tax 8 47 178 94 expenseNet income 368 654 (88 ) (3,599 )(loss)Less: Incomeallocated to 31 10 40 17 non-controllinginterestNet income(loss)attributable to $ 337 $ 644 $ (128 ) $ (3,616 )Intriconshareholders Income (loss)per shareattributable to Intriconshareholders:Basic $ 0.04 $ 0.07 $ (0.01 ) $ (0.41 )Diluted $ 0.04 $ 0.07 $ (0.01 ) $ (0.41 ) Average shares outstanding:Basic 9,104 8,936 9,059 8,877 Diluted 9,624 9,272 9,059 8,877

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

(unaudited) September December 30, 31, 2021 2020 Current assets: Cash and cash equivalents $ 13,020 $ 8,608 Restricted cash 647 672 Short-term investment securities 20,044 19,793 Accounts receivable, net of $71 and $210 of 9,676 10,115 reserves, respectivelyInventories 22,231 19,513 Contract assets 11,464 9,107 Other current assets 2,175 1,466 Total current assets 79,257 69,274 Property, plant and equipment 47,722 45,661 Less: Accumulated depreciation 33,838 31,484 Net property, plant and equipment 13,884 14,177 Goodwill 13,873 13,714 Intangible assets, net 9,515 10,785 Operating lease right-of-use assets, net 5,236 6,701 Investment in partnerships 538 570 Long-term investment securities - 5,085 Other assets, net 1,110 990 Total assets $ 123,413 $ 121,296 Current liabilities: Current financing leases $ 5 $ 21 Current operating leases 1,910 2,156 Accounts payable 10,321 8,670 Accrued salaries, wages and commissions 5,054 3,581 Other accrued liabilities 4,230 4,235 Total current liabilities 21,520 18,663 Noncurrent operating leases 3,446 4,726 Other postretirement benefit obligations 352 385 Accrued pension liabilities 776 907 Deferred tax liabilities, net 1,028 1,018 Other long-term liabilities 3,414 4,398 Total liabilities 30,536 30,097 Commitments and contingencies Shareholders? equity: Common stock, $1.00 par value per share; 20,000shares authorized; 9,114 and 8,951 shares issued 9,114 8,951 and outstanding, respectivelyAdditional paid-in capital 91,027 89,702 Accumulated deficit (6,938 ) (6,810 )Accumulated other comprehensive loss (419 ) (679 )Total shareholders' equity 92,784 91,164 Non-controlling interest 93 35 Total equity 92,877 91,199 Total liabilities and equity $ 123,413 $ 121,296

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

Three Months Ended Nine Months Ended September September September September 30, 30, 30, 30, 2021 2020 2021 2020 Net loss - GAAPattributable to $ 337 $ 644 $ (128 ) $ (3,616 )IntriconIdentifiedadjustments attributable toIntricon:Depreciation (1) 761 725 2,353 2,168 Amortization of 497 497 1,491 959 intangibles (2)Stock-based 470 332 1,489 1,644 compensation (3)Other 47 8 248 156 amortization (4)Legal settlementand related fees 22 128 1,455 301 (5)Fair value ofcontingent (479 ) 253 (389 ) 253 consideration (6)COVID-19Singapore - (230 ) (141 ) (586 )governmentsupport (7)EMS acquisition - - - 493 costs (8)Restructuring - - - 1,171 charges (9)CEO Retirement - - - 823 costs (10)Non-GAAP adjustednet income $ 1,655 $ 2,357 $ 6,378 $ 3,766 attributable toIntricon (11) Average basicshares 9,104 8,936 9,059 8,877 outstandingAverage dilutedshares 9,624 9,272 9,624 9,266 outstandingNon-GAAP adjustednet incomeattributable to $ 0.17 $ 0.25 $ 0.66 $ 0.41 Intricon perdiluted 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 2022 first 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.