Intricon (IIN) 9 Nov 202020 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by and welcome to the IntriCon Corp's Third Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your first speaker today, Investor Relations' Ms. Salvo. Leigh you. Thank ahead. Please go

operator. you, Thank

the Before changes we with call preface remarks subject based like certain IntriCon's assumptions management and circumstances. I customary Safe would are on are the statements conference uncertainty statements. to estimates Harbor and forward-looking of and our to These begin, current in statement. contains Today's

today's materially reliance statements. Actual forward-looking these you from expectations Given the these uncertainties, should on not call. contained in may place vary undue results

company's the most risks XX-Q, please on conclusion of uncertainties like your and For associated Risk business, results. would that, a SEC. third introduce of With performance description and respectively, the list reports now to our At we'll Scott? and and refer Factors with and for Form his financial quarterly the XX-K Form call CEO, section open recent the the with to Scott remarks, of the our annual IntriCon's I quarter questions. Longval review to

Leigh. Good remaining safe Thank and my all day. for the to the I'm excited inspired CEO We healthy. new by colleagues are afternoon assume us. of and you you, commitment is you and IntriCon's hope and leadership thank role each joining

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our third highlights we targeting of call update an are quarter of some on I'd and of by each the performance, progress markets of to like on covering start medical today, in remainder including beyond. thoughts the On the key and XXXX our

included growth development able Medtronic impact reflected yet increased and access initiatives. while Services, revenues our the of our signs Group, quarter. over call of today. audiologists As CFO, business established note, against of quarter year financial despite IntriCon the our earlier somebody line, Diabetes million to in our At to Medical of on Total accomplishments that before the year. $XX.X continued also support acquisition impact hiring making I'll we a we identifying goal engagement experienced at for top our discuss in our fill exceeding the progress we my a results are growth quarter. the to And not proud still with longer the having conclusion color candidate X% additional open of health aspects the we we of approximately will the sequentially board resources On the revenues grew This increased the of XX% of outset we Encouragingly, Emerald the our COVID-XX questions. positive business. half priorities ship healthcare performance, to hearing reported sector, expectations of as the global all around prepared right first and business in supporting role, that towards year-over-year enter were are across of deliver I progress on year our with more to due continued third Starting end. I'm remarks, to this with up increasing the your to new of team good term and

place federal health our to all While chain employees modified protocols in and supply work customers. of a safety and recommended to in ensure are still with the environment, operating and safety we our local uninterrupted

of the In expect spite through least so team of the results. year. at these together do continue to has to come drive We to remainder adjustments, our

continued supply have customer chain meet operations manufacturing despite various demand challenges. to Our

We ways website showcase to to challenges virtual started the work as innovative customers, to also launch available implement through have access to in widely on addition to will which prospective capabilities our present of tours, facility December. such our new be set

dive the to year, significant approximately greater bottom-line in I'd quarter, core emphasis like a our restructuring with to over post to stability first focused. minutes half where currently of continue Starting sales take with cost the our Group control, actions, market, of represented Diabetes coupled with XXX,XXX XX% several during key Diabetes of in profit enabled few to of progress Medtronic on in Importantly, this the taken the business. markets continued us line sight of revenue the on are total the we to next third into detail some quarter. medical

healthcare a telehealth To on router integrated trainings. data me product hybrid glucose improvement the more their approval XXXG help continuous care to and beginning data diabetes, with reopen new system with with rebound pump in-app also closed loop MiniMed September, automatically and is proactive and increased, pump easier select starts can the transmitter that latest insulin The children quarter therapy system remotely sent connectivity. notices one range. see the smartphone system Medtronic by the In the driven benefits worldwide. the and caregivers and The user type enable because specifically, we for to of be access arbitrary shared and insulin visits to real-time smartphones systems. glucose CGM for it with partners effective we produce expands data. anticipated, share This sales of FDA quarter Medtronic to facilitate in makes As patient will levels over living systems More clinicians regions younger was to educators. saw pump attributed announced

excited supporting will better innovative be X of the to are type We such that technology lives diabetics.

and into as strong end remains product XXXX, well-prepared to ever are upgrades. as are their demands Group launches look to continue we support and and we Diabetes confident that and Medtronic as the with towards meet anticipated volume the year we relationship Our global of

a Emerald to interventional the market. with of net We third in following through Next, for especially leverage Services miniature The growth revenues and This anticipate of as opportunity income EMS. contribution with growth to we quarter. technologies up molding recent and continued and our the about see for surgical a the market the segment is electronics, existing tremendous to low progressing precision opportunities acquisition excited capabilities coil the medical of turning both as accretion opening we're micro opportunity new million from is of smoothly, to Medical as navigation well XXXX EMS X.X double-digit remainder the integration year.

providing that the and addressable PTA is Medtronic catheter predictable, of revenue on base, benefits vascular PTA largest As of designed regulatory Catheter. uniform. Vascular acquisition we Chocolate, calls customer, recently diversify Medtronic the for portfolio in immediately manufacturer We in controlled, trauma Balloon approval the Japan received and highlighted balloon seeing the clinically prior coming its group approval to Medtronic for Cardiac which us and sole months. expanding currently in key peripheral reduce Chocolate anticipate enables inflation chocolate to market. including product is the by it proven serves a for EMS Medtronic as our

can with opportunities secure IntriCon's within we other forward, reputation financial that group leverage Medtronic's business we Vascular confident EMS' stability Medtronic. strong are and to Going with Cardiac

to demand the results deliver quarter, Lastly, over driven business customer and from our strong Coil Medical prior during markets. the up interventional the XX% year continued pulmonology third period, over ongoing serving electrophysiology

from increased noted earlier, Hearing we saw upside, also the access Health market, I audiologist. as to Turning to

in In discussions retailers, we for initiatives, market, OTC and of our updates progress legislation, including potential with pending make end a number addition, branders, partners pharmacies. are because pursuing that customer continue healthcare hearing await to actively specifically solutions healthcare on and we

we of previously postpone clinical As year, self-fitting trial we health until trial the and our ensure elected time disclosed, participants. software this safety earlier can the such to

measures working adapt been our clinical COVID-safe. to We protocol have be to safety on

there a by goal our parts, of mid-XXXX. maintain While completing number trial are moving the of we

Coil worst horizon, XXXX, order milestones our including weathered the the particularly believe storm, business, cost across have quarter, our enter customer in strengthening and greater business environment. stability business. the as segment, IntriCon noted largest our provide of business with patterns our we we final Medical As I to last encouraging has the quarter uncertain with Furthermore, on in structure several adjusted the today's Medical Diabetes I of

our to Looking design better the we enhance way are structure and organizational working we to forward, shape our business. operate

that will best that sharpen As which confident our are our IntriCon will speed investment strategic resources structure growth. focus to we opportunities key this on the that evolves to our I successfully and long-term operate. at market enable increase am discipline

core Express the and versus the an business revenue largely in Hearing $XX.X Again, represented the third X.X% the of for to prior innovations Medical $XX.X quarter, this quarter over from quarter XX.X% revenue, advertising $X.X was as comparable Once quarter I Hearing company year third In were due period. was total revenues largely prior financial down from contribution third million, our By $XX.X May consistent results for XX% part high Turning Services, our quarter. no noted total was in million XXXX, as year-over-year, of was to a in Help million million with prior decrease was revenue Medical this and reduction acquired third our business which $X.X and segment, year again, the in efforts. our revenue Medical earlier, Coils the driven increase by Emerald business for net year. which the million, Health increase revenue health the restructuring XXXX. the segment, relatively business

$X.X $X million. upside end However, OEM access to Health our business a as More revenue some to was and due in in to and Help within through end audiologist Express earlier, Hearing did and million segment, from revenue to was orders solid $X.X the Hearing consumer indirect direct specifically, customers. I was our consumer segment, consumer see the indirect we our noted part renewed revenue million, legacy

net due XX.X% $X.X of and the million margins declining volumes. to approximately incurred impact due largely The reduction for period. the The primarily progress per quarter share a and diluted disrupting to and attributable for the charge also were to in initiatives. its shareholders diluted We $XXX,XXX higher or in company on gross shareholders of quarter. the loss inclusion to earn substantial the posted I Catheter a business, $XXX,XXX was out able swift the noted an The period. EMS. position we've million, specifically Third without expenses Medtronic Chocolate to related to level Encouragingly, Japan been in pandemic compared XX.X% EMS to earlier. share the year purchase profitability margin or XXXX net Operating $X.XX offset the partially of was response initiatives provision versus compared to strategic cost $X.X regulatory $X.XX quarter per prior approval expenses attributable were to income a higher a $XXX,XXX back PTA on third to comparable of by our company that of prior agreement, of third

at our to combined the as slightly months XXth, XXth, enter we cash was still from million, year. balance Lastly, September last approximately XXXX. investment XXXX guidance, much the uncertainty up there's Which brings us June of $XX.X few

However, our our to fourth believe third where will quarter revenues a quarter that stabilized has confident business we our we're degree revenue. with align

Our the reiterate risk confidence and quarter poses uncertainties want pandemic results. year, short, the trends, stems to Medtronic, of In COVID-XX results business stabilizing to optimistic of as our as momentum cautiously the we delivering operating a we we're EMS enter expected. from but that with final

regulation on next year, leveraging expanding now the I'd With and positioning medical and to out focus Hearing to innovation. customer in to Health our As the organizational be more diversify design continuous existing base call relationships our our competencies further like any on scale tier OEMs, market, to effectively questions. with markets, will drive to medical capitalize Operator? up open we core top that, and enhancing changing look for

question Your from of from Block Jon comes line [Operator the first Instructions] Stifel.

is line open. Your now

be higher the is the Hey, maybe number the Scott, just good in somewhere reps sustainable to OpEx that that earn forward that Day. is if there else the or lower just we lower OpEx and out, start that was Great One then thing Maybe out, the $XXX,XXX year-over-year call clear to thought quarter below afternoon. can line? start going was OpEx. for

OpEx the quarter, the in in -- operating So for expenses. was Jon of the that number

to about lowering You'll in repositioning and obviously, And significantly line asset, instead aggressively going we'll growth our support decision, as begin that expenses of advertising health the trend that desired thought increase more marketing that's and press said make broader sales the of a expense. the to engine, terms markets, development, inroads back the other our more release. some marketing, question a into to we the get the sales penetration continuing we end see operating in drive on going it look but product your probably see and as of of you're That CapEx, really on made hearing pulling markets. on to then more And thinking the street under forward. our those feet to we

I think marketing more that, again, over lower to historically So, selective do investments been going to support what it'll I do sales start than in end those But see running. think markets. be and time, you'll growth medical we've

or Okay, it. one two got And for maybe more me.

or see in If in hold? term throughout or bit time the behind opportunities investments resources and specific of incremental opportunities to spent business nature P&L materialize be those the take call little come more we can and You those some a some putting XXXX? could longer to alluding some Are the it. as into development may some when possible, you

question. Great

a I labor We're it's start to driving working opportunities over I you'll more are to to of longer mentioned, term continue, in combination. the going I materialized of see put think on we've nature. as months that that into fruits resources more think into the been do into XXXX. though, last some XX that

others combination and So, term I Jon we're beyond. come and will through opportunities XXXX have both a that that growth think you then working XXXX on longer in in support will that of

the haven't of And the last it the want maybe sounded you Hearing safety me Got I'm but mistaken, Health to trial; ensure for you it. participants. side, like the on one started

the level questioning, I at guess mid-year that that on a trial, Health? alluded that you still if standstill, level, do you sort when like need it higher in as there So, is to a going Hearing to And talk trial road? started, to? would industry start to complete branding partners? to Thanks in think Scott, to question everyone what just potential words, regulations? everything that of has of Maybe regards in is the by of one made a occurring some progress a that being time. a with not is bolt-on with call timeframe other at then can background awaits In the line down for to come it's higher just you Are order the or just the you your what's it

timing follow last of then I'll Jon. Thanks the and take question first our clinical. up on the

to legislation the we clearly, -- it's law of draft quite potential the still light. be and partners. happening still a push on, potential secure the to confident out am guidance, partner not retail are And working are there and are what the as activities with there's we brand we we able XXXX. So, comes I will as activity XXXX back XXXX. focus will a where new in enter brand there's be that a out draft FDA robust But And into and round new that partners, pandemic was when the going still say were I passed in as that lot would as

be We'll over anticipation COVID our first our what the we sometime In terms FDA was trial? with adapt to outline we first. a back. clinical from Obviously, to start as going we're more prior months had clinical. with to safety with We where engaging taken our feedback quarter, protocol get the look step FDA. did for put safe the coming our adjusted what we've the of to depending here FDA we've in pandemic see a like we the to trial clinical work the on tried the to to We've at

pandemic slightly. So, what's going guidance, But it and with activities delay draft with the on things the the again, obviously, slow could still in down moving. are those

Perfect. the Thanks color. for

next line comes Your Bauser the question from Kyle Colliers Securities. of from

line is now open. Your

nice stepping should sequentially about EMS, Thanks. evening. Japan, forward? for how in heard this we've this? just you second, I up correct think opportunity if mean, Good this Thanks see a now Great. going And should unlocked sales that just I we model seems should to $X.X Maybe say how we trying like the did pretty the think here, we this me wrong, quarter? were about updates. million

Yes, we the into had skilled very of when is senior was did Look, the great great Medtronic, a excited only with line, acquiring had relationship with great a this space. reasons this moving Not felt opportunity. acquisition, about were this business we one we that question. product -- team, one were very a the like we

approval that the excited through the likely, of beginning won't potentially we to it most but were XXXX. very that the of late start Japan some And market. so come Kyle, see really we'll this We to until begin benefit for in year, materialize think

as into and quarter, in that we with step to the we revenues would of consistent So, third quarter. support last coming to do QX saw enter the I But QX a we launch. at that what relatively we out as enter XXXX, into be look business anticipate up

in Got it was $X.X it QX? million and

Correct

the Or kind division, have Got you of Medtronic strong of you're through I'm you prioritized expand offerings partnering just more point at activities new obviously mixture through at that of this kind different acquisition, your the looking a it. just now kind have curious, partnerships, division at is at relationship that division. look you Vascular are going a a there? Medtronic? And opportunities in outside very have Diabetes you opportunities new as in in have curious of been how to

Obviously, us other both. within add of pursue go know groups there's Cardiovascular the with that within we could And that the with within with It's places really the leveraged type to core that a Yes, stronger coupled position our that largely the and We we've or combination value. come it we great Medtronic, competencies be just and other of other worked could reputation opportunities, Emerald really, question. Medtronic. value. when has built groups, group, it's a now it's references add and recommendations the puts relationship to group, two now whether within those in Diabetes getting strong in

ones will that of not pursue been I'm of also up those confident be So, very very topline lot on showing made, outside clearly and in and that to outside our all have we with inroads past a and the Medtronic, but be the What that continue the will XXXX there's and XXXX, there's necessarily opportunistic. they work be XXXX, as in areas that into certain technology able that throughout leverage we'll we've opportunity we've noted pulmonology to setting in done Medtronic table great that have hear interventional such of electrophysiology. the opportunity

And so XXXX. that be us will we priority for as into another again, enter high

help that. lastly, a now IPO. very you seems Appreciate then to about impacts saw bit like it. of kind IntriCon get I if And Got at this we HearGo IntriCon would just which step Thanks. gas talk should the love but just [ph] your how [ph] a thoughts. successful HearGo think on here, can Can all

that Yes, and maybe I'll back broadly. step just I'll and even more take

little is is We excited Obviously, longer that's excited. that drive But that partners is excuse lot timing, as going our in on and that's we're large very HearGo work is with be with really work long what's supply We're to FDA. see has potential IPO. which your raise their to potential. think bit with space, we And always can those, there think to has is. their those to we we were of to be and that the Emerald relationship on look and just this capital them what's volume me enabler over-the-counter a focus again out the why they continue the a term that with able the in and business have hard A get and excited today where them they you what think DSP to drive little [ph] with be [ph]. there to can able standing and a HearGo to to bit market. handle we're our a that on I the reinforces this reflected thought drug what consumer great holds today evaluation I the that

it for me. Okay, great. all for thanks updates. Scott the That's

Thanks a Kyle. great Have day.

the Securities. next Andrew from Your line comes from Riley B. of question D'Silva

Your line is open.

Thanks afternoon. questions. good Hey, taking for my

you start quick if sorry, bouncing And was But hit bookkeeping just I'll between couple with these calls. on questions. a I topics,

be comp, components me was or [ph]? If talk you case flow I quarter, still internals while cash useful. around you're previously, sole that provider? you depreciation, that kind your internal what partnership relationship then, HearGo stock-based you that, their from the And source CapEx could let just believe with evolved know of capacity? were pulling maybe components for and any just operations, amortization, the can in has Is -- that'd the

from question. CapEx jump go the was items, was I'll was Depreciation housekeeping operations I'll quarter, through the on $XXX,XXX. the million. amortization $X.X the for Stock-based and and quarter $XXX,XXX. and Cash then other was Andy $X.XXX million compensation for flow

Great. Thank you.

a now that HearGo that in supply them the terms long-term we've had relationship of with [ph] powers DSP I their as And the device. relationship it’s We them. mentioned chip with

nothing they're So, fast growth changed has looking supporting this forward relationship. that again, the to drive really into market. with is that to anticipating we're And

And on my viewing Perfect. any to new reimbursement Medtronic, progress there discuss you diabetes has how quick how the launches, you're CMS trending? been question can the And last they're and Okay. maybe non-injunctive I a would the or durable rule cadence payment equipment. all the and proposed expand had designation? medical for CGM classify, for obtaining it like TGMs, coverage, therapeutic versus did a see, CMS looks relates with them TGMs and like it

could two on you color I any give if was just topics? So, curious Medtronic those

stands. I'll has Maybe start I that Sure. on know where non-objective. I don't the know last progress one. there with some the currently been

and pursuing guess So, been speculate, like want something to Medtronic. I made. was was I that know they will that I had defer progress felt But don't to were I

systems, table. the the I'm bringing what excited In pump of about is integrated Medtronic look, terms to

the smartphone competitor solves maybe the with currently wants, but getting, of XXXG some of a they that the weren't think connectivity devices. consumer lot I they from were system getting

begin starts market or look share product, delight, as the think I over we generation think us. the I boxes with at calibration beginning when they slow with really a alarms, in time Zeus see fewer improved at the their So, correction auto which that algorithms that whether of of the won eroded it's to finger to XXX, enables that compatibility haven't bullets, to had terms of specifically, customer start sensor, lot check future and some whether the it's you'll of pricks

I'm to what we lives has of is very their So, innovative excited is about better Medtronic for going IntriCon to thrilled to and what diabetics. roadmap the technology laid continue support that's think out really many type X

Congrats All closing right. luck very you good Great. And out Thank much. snap back. XXXX. on the

Great. day. a Thank you, good Andy. Have

I time, I closing Longval question. don't over remarks. to will see any this At Scott our turn it CEO, for

thank We call you. joining and the you have please for the everybody everybody the Thank Excellent. forward meantime, to and results group a us safe in our updating on stay end healthy. on look Thank year you And today. night. great

gentlemen, call. participating. you and this Ladies concludes for Thank today's conference

You disconnect. may now