Intricon (IIN) 10 Aug 212021 Q2 Earnings call transcript

Good afternoon. Thank you for standing by. And welcome to the IntriCon Corp.’s Second Quarter 2021 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 call is being recorded. now today, hand Leigh would to conference I speaker your Salvo. Instructions] like the to over [Operator Thank you. Please go ahead.

Thank you, Cherry.

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

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

With For and IntriCon’s annual detail. Scott a the Factors call open business, to that company’s CFO the the a with review on introduce list that, quarter section and Ellen financial description to the SEC. And and questions. quarterly for Risk more cover and uncertainties your for please CEO, I results Scipta, of of performance. Longval, in at risks XX-q would will the recent the our associated XX-K Form Scott? first with company’s now we’ll most reports of like point, our Form refer the then

capabilities the goals, another rapidly joint operating Thank a quarter, on operational the delivered joining team you, we’ve with our We expanding environment micromedical market as us our changing of in the against Good leadership today. leading Despite advancing across IntriCon results and over months, Leigh. the XX development executed last everyone technology. call and multiple manufacturer our have growing business. afternoon. appreciate opportunity underscore aspects vibrant we solid our

Interventional XX% was due primary and these saw each Surgical double-digit execution. with continued of businesses solid saw million. to strength Health, posting financial including This Total Navigation, year-over-year. Catheters our outperformance results, and largely to Turning quarter growth $XX.X our of lines, revenues Hearing approximately increased to second Diabetes, each operational we business in year-over-year we performance

recognized pent-up in saw that chain XXXX, of constraints the of relating the as slight persisted COVID-XX decline challenges first well supply demand quarter. to sequential the impact As and anticipated, due as quarter into a we related staffing to second

we’ve to retention staff. quarter, made levels. back successful We constraint inputs normal the During in direct hiring in inventory of returning were revenue labor progress our also and

landscape, chain However, any of changes to monitor business our into current our in we in could impact the continue the light for XXXX. supply that later year

of quarter, Turning attributed each second the in Diabetes XXXG with certain revenue and to business Sales total second Diabetes starting in the sales represented to to grew in XXXX. over Diabetes, MiniMed the of the a XX% dive U.S. XX% primarily second of the long deeper of lines, Group Medtronic Medtronic markets our international on in MiniMed quarter, the quarter XXXG the our success business line continued in

the recently remainder to from We of expect line the launched for for this sales with driven coupled strengthen by these Medtronic growth products. from systems business year, coming

Surgical Interventional to continue differentiation. are Catheter and capabilities we see of catheters coils enterprise the to drive potential opportunities, well Turning Navigation collaborative to we’re micro suited and complex innovation and business lines,

the long-term, over EMS May Recall in improvement second XXXX. quarter the neurovascular the year-over-year XXX% such vascular. in interventional electrophysiology, EMS million, Emerald business XX% We XXXX. as a in including increase from pulmonology, growth QX or was expect peripheral over totaled Services growth to lines Revenue these Medical of high future $X.X drive markets and and acquired

in challenges Coil sequentially Vascular Medtronic’s our Cardiac faced as and XX% was the second we This line, Chocolate $X.X saw this increase business term the XX% for core and revenue added capacity driven secure the international continued specific Catheter second was up Longer Medtronic quarter leverage Medical IntriCon’s financial EMS’ in by In significantly. we strong with production rebounded Balloon product reputation business adoption the year-over-year technology early quarter, by other to EMS. labor Medical with quarter, intend we year. million, group and to During from which second we Surgical Navigation quarter manufactured opportunities market. stability our in first XXXX. work include Coil within the through of

Turning Health to July, to proposal In aids brought of over business sold for that addressed again the to prior the directed the FDA over were we the and the door second legislative to and to we Human to in in for XXX to order. hearing the hearing period year fourth counter we Health expect proposal be rules the consider Hearing approximately the the of delivered of to forefront the new first proposed XX%, see XXXX. we aids within the sold counter line, regulation quarter growth during The quarter over compared in first see encouraged XXXX. place once the opens XX% early final days. the allowing Department quarter, Services of to issuing Accordingly, was executive be quarter

firmware, with on marketing, the remain who providing And focused IntriCon has are share discussions support. many drive the OTC of partners distribution, made sales support relevant a to and opportunities resources year More the Health business IntriCon our decision seeking this hearing recall market. the target selling mentioned saw emerging back Consumer competencies, advertising operation may and to team, of spend of consumer partner majority Indirect the you core ago Hearing including OTC ongoing and specifically, intent enabled products. previously, partnerships support end our on Meanwhile, software the End we restructure and hardware, in as the the potential customer As with a restructuring the of channel. aid us we’ll we’ve advertising will staff drug eliminating to our focus

pair aids pilot audiology of in for per month benefit per increasing the service. successful, with to $XX payment and Our both subscription volumes been from continues Consumer green has given hearing compares markets hearX. in Indirect pilot strategy hearX customer OTC to providing to been $X,XXX within available and This required the as Walgreens End average setup a the and states our firmware the additional meaningful This or $XXX support channel pilot now stores This select IntriCon partnership offers online pair learnings the to and pair to per one-time has the of hardware month. channels. fitting light as device respect model, support. the in from with to pilot expand per execution Thus hearing well the several this test, beginning traditional far, an

on the other our Additionally, this launched Health in OTC to and support software trial of products, self-fitting that are clinical we both focused April we Hearing year.

of still the During patient completion expect the of the by we quarter and end enrollment trial the completed year.

the spike. has business post-COVID backlog following Health Hearing legacy our Lastly, leveled

is the planning of growth meaningful partnership portion West laser refined, background with regulatory of build a President over of for today, the I our Dave M&A. am announced Operations with are President technology, pipeline with the to exceptionally at of market. Most to market. over progress team was past markets results will of expect base. company’s XX device pursue leadership Dave Development. product our now the and turn while the enter business we’ve to to coming we new we the an together, technologies experience and both Vice in of medical Ellen? that we we highlight with through brings the NLE markets as making call in see Earlier responsibility to Health more our Biomerics the recently, and same on we best the execution months, second in to steps legacy time Dave our capabilities, IntriCon business of by serve, the operational our for taking the in our the growth that, quarter and and made Ellen sales further opportunities team I the of our solid support development, am first quarter welcome in processing position confident diversify that further will defined revenue for affairs advancements and Hearing combined building the diverse provide model great detail XXXX. he Research With to-date long-term our can interventional our become leadership continued Liebl transformation target and and excited financial team are progress -- in we I As our our business. these smaller overall expansion the

Thank Scott. you,

adapted growth and our for our in to the press comparable last of financial results. turning financial of today, entire XXXX. the a directly comparable GAAP provided issued we data Reconciliations most Recall we use non-GAAP the to reporting year quarter Now transformation. picture including to tables the clear release are of measures accompanying provide

production increased XX% second quarter in GAAP international period. share and a million The key continued we quarter million quarter in the of revenue $X.X diluted in prior the Non-GAAP versus XXXX year an MiniMed market. year the business the pilot related the the XXXX, income in revenues including our revenues prior legacy Indirect Medtronic in primarily prior over volumes has This support Catheter and launch For sequentially. XX-Q. business XX% growth The year $X.XX each versus total a Consumer program. loss the diluted as markets Health Navigation, to million a $XXX,XXX diluted net was quarter Interventional Surgical to to comparable was the include Value End net to revenue XXXX. the Hearing MiniMed of required our driven In the impact expansion million Catheters success revenue of -- Hearing company million the Balloon period adjusted for increase by increase share acquired with income $X.XX was to $X.X the added XXXX of and EMS, or challenges first increases year increase of an the worked by period. full company EMS $X.X period, was of $X.X the $X.X first through of of of XXX% to XX% Medtronic’s growth the increased per diluted as quarter year Health. move a from year-over-year or year. this reported End or in market Chocolate $XX.X million, to in $X.X loss in per Navigation for the or earlier was Hearing over net in certain of the million This Diabetes, manufactured in as was Scott in net Health million, and Surgical business. per year-to-date attributable specific OTC to our labor prior XXXG of million primary QX the quarter prior second share in driver in class resulted to XX% The quarter period. $X.X XX% the OEM business, of of million, XXXG May noted Diabetes in Do note prior driven second by in million, noted, share Interventional Consumer from increase over prior-year net U.S. which our quarter. was $X.XX primarily and of $XX.X sequentially XX% the compared faced the to capacity revenue the lines, per our $XX.X was second quarter. the business revenue Indirect $X.X second $X.XX ITEC

Operating settlement gross comparable was margins prior million, August period. of periods. the quarter of attorney company litigation with lower due $X.X XXXX an one-time recognized post the labor resolve primarily margin to decrease were a business impacted cost The prior XX% lower temporary $XX.X and The in increase year the quarter XXXX. of structure the relation XXXX million disclosed prior the were was and the Hearing Second COVID compared XXXX as and both to one-time within part current X-K costs In to and cost overall current in to Direct X, $X.X the timing to certain reductions issued restructuring in million expenses Health associated due with response. $XXX,XXX for our that TCPA an QX direct compared fees period, was Consumer second operations the company’s of to events Hearing the Express the lawsuits in charge a Health on $X.X period.

Scott prior earlier to The current marketing. one-time company costs the to by a EMS engages of by As within $X.X outbound million EMS. this consumer relation no and the also comparable were call, related the ownership These offset XXXX in for period by operating any in expenses quarter full part impacted totaling in of $XXX,XXX. mentioned acquisition were period a restructuring, expenses restructuring $XXX,XXX longer year

expected $XX.X to our in collections the had $XX.X of of As compared is of and and June of cash million XX, half company the the investments, as XXXX, rebound second December customer largest million cash was XXXX. XX, receivable of driven The of in flow by to year. timing decrease the

represents year, first XXXX in million our see we strong our of to performance throughout full the half our growth representing impact This raising of the direct the ongoing full we the in have year-over-year managing pandemic, second challenges. our a XX%. XX% strong million, and for Turning $XXX markets, past while given labor guidance of Recall confidence to operations the year, of are half end outlook months. XXXX revenue manufacturing $XXX for the we despite to XX outlook guidance for the to maintained

continue guidance We site to plan. and the our as to we monitor CDC variant Delta return finalize

While our excited further organizational site, culture. boosting are to enterprise we the and cultivating remains timing on fluid, reunite collaboration

high will core With committed and best we questions. continue enable and open in to organic execute level that the to that, expand us confident capacities identified best markets base, our a Scott now end leverage to and strategy add We’re remain would will micromedical our that allow partners closing, will remote drive maintaining further a valuable to that call Cherry? practices inorganic diversify for us from into like technologies customer additional to of In the both I to growth work. growth. flexibility

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

open. Your is now line

is expectations, above to questions. starting the of This our the and a been for work on program Hi. Jon. the Hearing, ahead nicely the with Tom expansion then, maybe moving was baseline of million of to hearX tracking off Thanks is ITEC And the has your Stephan schedule forward? above estimate, number for maybe then the for maybe due good $X.X success? ITEC Scott, pilot

not contributor, first take with question we’ve the considered devices a taking not second started for into And from I actually pilot I’ll this major that that’s the for like be second no feedback ask been the doing. you’re to outlet. expand light I volumes here pilot only outlets can drive That do by year. getting to Excellent. was that said, we’re has there and of In hearX the pleasantly the we through half in will because this maybe really a that [inaudible] that surprised pilot we’re to the with question able we retail think green the been retail the test. as primarily blueprint market, highlighted

remain to then being pilot for So, in with looking later that’s to is consider, add come. Clearly, of off overall, I of very and anticipate And half what this blueprint XXXX. optimistic for think, a future look a we’re that the as build the and and year about terms kicked pleased be of the will in the generator we baseline, fair baseline ultimately we to revenue very for the of how ITEC additional pilots half we at be into major the could to OTC. a years that level second into IntriCon that of

Does to from said to how Diabetes strengthen baked sales revenue then progression? which XQ that was being stand, should so U.S. in think Got Does and think you about about due XQ it’s expectation it. the but back a you XQ, down are products. And think I revenue -- little XXXX million. remarks, quarter, the of last with guidance, we and that prepared cadence XQ above maybe XXXG in revenue likely I shifting talked I in new guidance, think might your step helpful. that you $XX half? in? think sticking to imply under expect Zeus Xq to That’s Scott, as we a the And Scott, about the then, in XQ, mean

first question. part the take of will I that Sure.

will address have flat of expectations and Scott based that then some about I when you think the growth And and QX, So into pilot Diabetes back in QX. the on we I of think, you ramp little think the [ph]. growth can

Yeah.

based recent in following we and on suit. both As the Zeus with products about Medtronic later they’re those comments, year, both XXX launched most comments, we’re in for those of consistent high the think product and

we like on see to those the going the within Diabetes we business. based year communications, our feel round strengthening So we’re out as

last now one EMS. helpful. then That’s for me Great. And just Okay. on

rate just of should $X.X but another $X revenue. range? of that normalized million million think for You about around guys. run the are think can then, Again, that above question, rate we kind a remainder the And of growth what’s plus did in that year estimates, for business that Thanks, kind about? we

Yeah.

a will by suspect Chocolate I to the think international Catheter. maybe number kind half potentially we’re we down that’s say, XXXX. there, half a we on think slightly -- working the enter of driven half of the demand programs different That the the even the in back for that I would clearly as into I the I there baseline lift said, had that But slightly relatively be year, second of we flat year, big there, even second that provide of the in of down. some launch think year.

Got again. Thanks it.

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

Your line now open. is

questions congrats Good Hey. taking afternoon. for and the progress. Thanks my on

I new curious, I curious just to give Just for these, you the the $X.XX little MiniMed Europe and can Diabetes relates what in side, answered adjusted you count as around start was and business, was if approved a any bookkeeping dynamic. ones bit utilized quick I of me, on a believe share that’s it jumping XXXG XXXG, being sensor for of while between just pulled, XXXG EPS this was your context calls. was the sorry, and couple Really recently. To

this approval? where the to -- dynamics out with and maybe growth of there is with U.S. where and I coming could be now So want just the a understand

Yeah.

great a question. So

comment count. So Ellen I’ll share on will take that and then

the great both -- that So, and reviews. getting the XXX XXX are that X obviously, the

back down calibrations as they a they lot just they’re and daily fingerprinting potentially last platform share of U.S. commented which of be Europe, is excitement So the combine and use and to customers’ the away. drive of know able the going to onset with climbed something the XXX in a Eliminating over believe we that XXXG actually one-time the sensor at is sensor, in is market you the market. combine to here the that quarter Medtronic big it or Zeus

launch And strengthening and U.S. those that, market Zeus products anticipating launches the also the in as internationally. a with we’re so seeing here as

lot they that a research we’re on especially tell can discussions the those integrated into get of you as center. the I So platforms, there’s of both that excitement having, around based

X.X million share.

about for Medtronic, is there intent, I professional of Thank sort any you or should Perfect. thought And standalone the possibility believe, process iPro X, that. we CGM And how there that well. as think on? offerings, ancillary Guardian about with and CGM their the has Connect then attachment layering CGM how

Yeah. products portfolio, we of products provide side. those Well, the sensor in are all the on Medtronic suite the that for

multi-daily MDI, And as the the as release so about because is more about technology into required. the the believe standalone And they into and offering products we that them [ph], daily their going significantly higher is to believe that opportunities there’s of that think with of think the as we states. customer again we move Zeus injections of be earlier lack disease transmitters similarly with we for calibrations of entree with sell nPIN satisfaction the part to

I think and exist as XXXX. can into XXXX provide all we that the enter risk can

we far with that you manufacturing a automated I to the just services Minnesota all on the being sensor ancillary, with were and see group where as new more Also, too are nearing new One there in side, Diabetes you Yes. as couple facility believe we are the the are assembly where implemented. Yes. Medtronic getting general? where

question. Yeah. Very good

we still think we needle a automated running automated of little the hybrid it’s needle now of about the where are the as bit a assembly. So production assembly,

assembly and do We some and processes to have approved going also where that kind haven’t. things regions manual been of where with they really have has geographic and

of side to kind And But services those labeling major trending the that then that process. terms the the number on Medtronic that ancillary for all in that’s So to the to of hybrid automated right now. for site. packaging of to do definitely Medtronic and a started doing we’re a send products distribution providing We’ve the doing package and we’re products transmitters we the today. sensor assembly

as of into systems supplier confidence I all do systems Medtronic that quality So been required management has further putting vision think significant IntriCon that a ecosystem. and in integrates But the this has a and the their effort. illustrates to enough

to that again start we’ll of activity XXXX. and see more more exit XXXX So as into move and we

to Thank order. the everything any End think that you. how should since Last executive within we going on Hearing next the dynamics quarters, opportunity Health in Have last couple you over time question for about or me, right cadence that’s changes it’s market seen a given related Consumer month now? department Indirect just the the

think, and in of the there that this discussions people the have with I is discussions of business they’re and brought confidence in those like less getting regulation. healthcare distribution. more significant to the But will the say, to have think, couple top for and was keeping thought begin seen executive that important this executive and really And the the -- the what build did course of order that things, development haven’t we’ve President an further, the last gave that the mainstream, We the alternative to on side, market movement obviously, on the talk they scenes. find a it regulatory started was them that months fact of I talking together, result about nothing hearing move the we’re be those need behind it over insight in order, the several And mind, of really on and there started to into forward. excited to about to having I side to I comments would some bringing importance more partners and

luck progress on Perfect. the Thank you going and very much. forward. Congrats on good

a Thank day. great have you and

You too.

like questions no to Scott I Longval. would time. I to am further now showing this the turn back at conference

look half healthy, the night. safe as to of everybody good we a stays the us joining look to updating today. in for everybody forward back call. XXXX, and Have the and Thank enter group I next Okay. if forward

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