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Press release content from Globe Newswire. The AP news staff was not involved in its creation.

Intricon Reports Third Quarter 2019 Results

November 4, 2019

ARDEN HILLS, Minn., Nov. 04, 2019 (GLOBE NEWSWIRE) -- 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, 2019.

Third Quarter Highlights:

-- Revenue of $26.9 million o Revenue from largest medical customer declined 5.6% year-over-year -- Gross margin of 25.2% -- Net loss per diluted share of $0.03 versus net income of $0.22 per diluted share

“In the third quarter, we continued to make progress growing our addressable market in our two core businesses: Medical Biotelemetry and Hearing Health. We also made important strides forward in identifying new partners in markets where our core competencies can provide value and significantly expand our market opportunity,” said Mark Gorder, president and chief executive officer of IntriCon. “We anticipate our diabetes business to gradually ramp-up with further acceleration in 2020, following recent international regulatory approvals. We have also begun to focus our efforts pursuing exciting opportunities within interventional pulmonology and electrophysiology, as these markets have high growth rates and steep technology curves that harbor significant potential for IntriCon. We eagerly await the draft guidance for over-the-counter hearing aids and have taken steps to ensure we are well positioned to address the need for an alternative to medically prescribed hearing aids.”

Third Quarter 2019 Financial ResultsFor the 2019 third quarter, the company reported net revenue of $26.9 million versus $29.6 million in the comparable prior-year period.

Revenue in IntriCon’s Medical business in the third quarter of 2019 was $19.1 million, a decrease from $19.4 million in the comparable prior-year period. The year over year decline was driven primarily by continued slower than expected international rollout from a large medical device customer, partially offset by increased sales to its medical coil customers.

Hearing Health revenue was $6.4 million in the third quarter of 2019 compared to $8.2 million in the prior-year third quarter. Similar to the second quarter of 2019, revenue decline during the third quarter was largely attributed to restructuring activities within a large insurance customer’s hearing health business, as they pivot towards a more traditional “brick-and-mortar” approach that no longer aligns with IntriCon’s partnership strategy to reach the end customer. In addition, as anticipated the company experienced a decline in its legacy OEM business.

Gross margin in the third quarter of 2019 was 25.2%, down from 31.6% in the prior-year third quarter. Gross margins were constrained by ongoing validation and qualification expense and excess capacity related to the recent manufacturing expansion to meet the anticipated higher volume requirements of its existing and future customers.

Operating expenses for the third quarter were $7.2 million, compared to $7.0 million in the comparable prior-year period. The increase stemmed from higher non-cash stock compensation expense of $648,000 and severance expense, slightly offset by decreases in research and development expense and advertising expense in its Direct-to-End-Consumer business.

The company posted a net loss of approximately $290,000 or $0.03 per diluted share in the third quarter of 2019, versus net income of approximately $1.9 million or $0.22 per diluted share, for the 2018 third quarter.

2019 Guidance Due to lower than expected diabetes revenue, revenue loss from the company’s large insurance customer, and the result of conscious reduction in advertising spend at HHE, IntriCon now expects revenue in the range of $112 million to $113 million and gross margin in the range of 26.5% to 27.0% for the full year 2019. This compares to prior guidance of $115 million to $117.5 million and gross margins in the range of 27.0% to 28.5% for the full year 2019.

Conference Call IntriCon’s management team will hold a conference call today, Monday, November 4, 2019, 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: 7296587. A live and archived webcast will be available on the “Investors” sections of the company’s website at: www.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, including estimates of future results, 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, 2018. 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.

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, visit www.intricon.com.

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

INTRICON CORPORATION MARKET REVENUE (Unaudited) THIRD QUARTER YEAR TO DATE --------------------------- --------------------------- ($ in 000′s) 2019 2018 Change 2019 2018 Change -------- -------- ------- -------- -------- ------- Medical 19,099 19,356 60,784 55,487 $ $ -1.3 % $ $ 9.5 % 15,723 16,662 50,837 47,531 Diabetes -5.6 % 7.0 % 3,376 2,694 9,947 7,956 Other Medical 25.3 % 25.0 % Hearing Health 6,358 8,206 20,044 22,750 22.5 % -11.9 % 1,510 1,490 4,876 5,327 Value Based Direct-to-End-Consumer 1.3 % -8.5 % 2,443 3,660 7,419 8,923 Value Based Indirect-to-End-Consumer -33.3 % -16.9 % 2,405 3,056 7,749 8,500 Legacy OEM -21.3 % -8.8 % Professional Audio Communications 1,436 2,004 4,972 5,353 -7.1 % -28.3 % - ------ - ------ - ------ - ------ Total 26,893 29,566 85,800 83,590 $ $ -9.0 % $ $ 2.6 % - ------ - ------ - ------ - ------

INTRICON CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (In Thousands, Except Per Share Amounts) Three Months Ended Nine Months Ended September September September September 30, 30, 30, 30, 2019 2018 2019 2018 (Unaudite (Unaudite (Unaudite (Unaudite d) d) d) d) Revenue, net $ 26,893 $ 29,566 $ 85,800 $ 83,590 Cost of goods sold 20,120 20,236 62,253 56,435 - ------ - - ------ - ------ - - ------ - Gross profit 6,773 9,330 23,547 27,155 Operating expenses: Sales and marketing 2,609 2,784 9,071 8,023 General and administrative 3,715 2,921 10,551 8,429 Research and development 840 1,251 2,902 3,693 Impairment loss - - 3,765 - - - - Total operating expenses 7,164 6,956 26,289 20,145 - ------ - - ------ - ------ - - ------ - Operating income (loss) (391 ) 2,374 (2,742 ) 7,010 Interest income (expense), net 240 (48 ) 703 (453 ) Other expense, net (52 ) (221 ) (458 ) (650 ) - ------ - - ------ - ------ - - ------ - Income (loss) from continuing operations before income taxes (203 ) 2,105 (2,497 ) 5,907 and discontinued operations Income tax expense 87 (97 ) 334 358 - ------ - - ------ - ------ - - ------ - Income (loss) from continuing operations before discontinued (290 ) 2,202 (2,831 ) 5,549 operations Loss on disposal of discontinued operations - - (1,116 ) - Loss from discontinued operations, net of income taxes - (299 ) (597 ) (870 ) ------ - ------ - Net income (loss) $ (290 ) $ 1,903 $ (4,544 ) $ 4,679 - ------ - - ------ - - ------ - - ------ - Basic income (loss) per share attributable to IntriCon shareholders: Continuing operations $ (0.03 ) $ 0.28 $ (0.32 ) $ 0.77 Discontinued operations - (0.04 ) (0.20 ) (0.12 ) Net income (loss) per share: $ (0.03 ) $ 0.24 $ (0.52 ) $ 0.65 - ------ - - ------ - - ------ - - ------ - Diluted income (loss) per share attributable to IntriCon shareholders: Continuing operations $ (0.03 ) $ 0.25 $ (0.32 ) $ 0.66 Discontinued operations - (0.03 ) (0.20 ) (0.10 ) Net income (loss) per share: $ (0.03 ) $ 0.22 $ (0.52 ) $ 0.56 - ------ - - ------ - - ------ - - ------ - Average shares outstanding: Basic 8,764 7,825 8,738 7,249 Diluted 8,764 8,822 8,738 8,360

INTRICON CORPORATION CONSOLIDATED CONDENSED BALANCE SHEET (In Thousands, Except Per Share Amounts) September December 30, 31, 2019 2018 (Unaudited (Unaudited ) ) Current assets: Cash, cash equivalents and restricted cash $ 8,688 $ 8,047 Short-term investments 20,315 38,093 Accounts receivable, less allowance for doubtful accounts of $306 at 8,425 11,266 September 30, 2019 and $807 at December 31, 2018 Inventories 17,883 18,163 Contract assets 8,513 5,624 Other current assets 2,290 2,146 Current assets of discontinued operations 239 1,205 Total current assets 66,353 84,544 Machinery and equipment 40,525 36,725 Less: Accumulated depreciation 26,867 25,303 - ------- - - ------- - Net machinery and equipment 13,658 11,422 Goodwill 9,551 10,808 Intangible assets, net - 2,585 Operating lease right of use asset 4,749 - Investment in partnerships 1,409 2,091 Long-term investments 13,764 - Other assets, net 6,196 3,427 Noncurrent assets of discontinued operations - 371 Total assets $ 115,680 $ 115,248 - ------- - - ------- - Current liabilities: Current financing leases $ 108 $ - Current operating leases 1,790 - Accounts payable 11,407 12,871 Accrued salaries, wages and commissions 3,063 4,409 Other accrued liabilities 4,033 4,031 Liabilities of discontinued operations 393 336 Total current liabilities 20,794 21,647 Noncurrent financing leases 55 - Noncurrent operating leases 3,296 - Other postretirement benefit obligations 343 377 Accrued pension liabilities 725 706 Other long-term liabilities 1,162 544 - ------- - - ------- - Total liabilities 26,375 23,274 Commitments and contingencies Shareholders’ equity: Common stock, $1.00 par value per share; 20,000 shares authorized; 8,778 and 8,664 shares issued and outstanding at September 30, 2019 8,778 8,664 and December 31, 2018, respectively Additional paid-in capital 86,358 84,999 Accumulated deficit (5,054 ) (509 ) Accumulated other comprehensive loss (524 ) (927 ) - ------- - - ------- - Total shareholders’ equity 89,558 92,227 Non-controlling interest (253 ) (253 ) Total equity 89,305 91,974 - ------- - - ------- - Total liabilities and equity $ 115,680 $ 115,248 - ------- - - ------- -