RTI Biologics Announces 2012 Fourth Quarter, Full Year Results, 2013 Financial Guidance Company Will Hold Conference Call at 8:30 a.m. ET Business Wire ALACHUA, Fla. -- February 7, 2013 RTI Biologics Inc. (RTI) (Nasdaq:RTIX), a leading provider of orthopedic and other biologic implants, reported operating results for the fourth quarter and full year of 2012 as follows: Quarterly Highlights: *Achieved quarterly revenues of $44.6 million, a 4 percent increase over the fourth quarter of 2011. *Achieved quarterly net income of $2.3 million, or $0.04 per fully diluted share *Achieved quarterly revenues of $5.8 million in the dental business, a 21 percent increase over the fourth quarter of 2011. *Achieved quarterly revenues of $10.3 million in the spine business, a 19 percent increase over the fourth quarter of 2011. *Achieved quarterly revenues of $7.4 million in the bone graft substitutes and general orthopedic (BGS/GO) business, a 6 percent increase over the fourth quarter of 2011. 2012 Full Year Highlights: *Achieved record annual revenues of $178.1 million, a 5 percent increase over 2011. *Achieved annual net income of $8.4 million, or $0.15 per fully diluted share. Excluding a pre-tax litigation settlement charge of $2.4 million, or $0.03 per fully diluted share, taken in the second quarter, the company achieved annual net income per fully diluted share of $0.18. *Achieved annual revenues of $54.6 million in the U.S. direct distribution organization, a 6 percent increase over 2011. *Achieved annual revenue growth in every business with the exception of the spine business. *Launched or released for distribution 18 new implants or implant enhancements, which accounted for more than $2 million of revenue for the year. *Achieved operating cash flow of $20.8 million. Fourth Quarter 2012 Worldwide revenues of $44.6 million for the fourth quarter of 2012 increased 4 percent compared to the fourth quarter of 2011. Domestic revenues of $40.1 million for the fourth quarter of 2012 grew by 6 percent compared to the fourth quarter of 2011, primarily based on the strength of the dental, spine and BGS/GO businesses and were offset by weakness in the surgical specialties and sports medicine businesses. International revenues of $4.5 million for the fourth quarter of 2012 decreased 12 percent as compared to the fourth quarter of 2011. On a constant currency basis, international revenues decreased 9 percent as compared to the fourth quarter of 2011. For the fourth quarter of 2012, the company reported net income of $2.3 million and net income per fully diluted share of $0.04, based on 56.3 million fully diluted shares outstanding, compared to net income of $2.4 million or $0.04 per fully diluted share for the fourth quarter of 2011, based on 55.7 million fully diluted shares outstanding. “Revenues in the fourth quarter met expectations and were driven primarily by continued growth in our dental, spine and BGS/GO businesses,” said Brian K. Hutchison, president and chief executive officer of RTI. “Overall, we are pleased with our growth for the quarter, despite the unanticipated impact on direct distribution revenue due to customer reaction to the FDA warning letter in the U.S. that was received in October 2012. International revenues were negatively impacted by inaccuracies in European media coverage about the company and the tissue industry. We continue to work through these issues and will bring them to resolution.” Full Year 2012 Worldwide revenues of $178.1 million for the full year of 2012 were up 5 percent compared to 2011. Domestic revenues of $156.8 million for the full year of 2012 were up 6 percent compared to 2011 primarily based on the strength of the dental, BGS/GO, and sports medicine businesses. International revenues of $21.3 million for the full year of 2012 increased 1 percent compared to 2011 primarily based on the strength of the sports medicine and BGS/GO businesses. On a constant currency basis, international revenues increased 8 percent for the full year of 2012 compared to 2011. For the full year of 2012, the company reported net income of $8.4 million and net income per fully diluted share of $0.15, based on 56.1 million fully diluted shares outstanding, compared to a net income of $8.4 million and net income per fully diluted share of $0.15, based on 55.4 million fully diluted shares outstanding. Excluding a pre-tax litigation charge of $2.4 million, or $0.03 cents per fully diluted share, taken in the second quarter, net income per fully diluted share for the full year 2012 was $0.18. Fiscal 2013 and First Quarter Outlook The company expects full year revenues for 2013 to be between $178 million and $182 million. Full year net income per fully diluted share is expected to be in the range of $0.17 to $0.19, based on 56.7 million fully diluted shares outstanding. In 2013, the company will make investments in distribution, marketing and development activities to support the launch of its direct surgical specialties business and expand its presence in general orthopedics. For the first quarter of 2013, the company expects revenues to be between $38 million and $39 million, and net income per fully diluted share to be approximately $0.02. “Due to customer reaction to the FDA warning letter and inaccuracies in media coverage in 2012, we expect a weaker first half of the year. Following the anticipated closure of the warning letter, expansion of our direct distribution business and the launch of several new implants, we expect the second half of the year to be strong,” said Hutchison. “We also expect that the investments we are making in new products and direct distribution, combined with our active business development efforts, will accelerate our future revenue growth.” Conference Call RTI will host a conference call and simultaneous audio webcast to discuss the fourth quarter and full year results at 8:30 a.m. ET today. The conference call can be accessed by dialing (877) 383-7419. The webcast can be accessed through the investor section of RTI’s website at www.rtix.com. A replay of the conference call will be available on the RTI website following the call. About RTI Biologics Inc. RTI Biologics Inc. is a leading provider of sterile biologic implants for surgeries around the world with a commitment to advancing science, safety and innovation. RTI prepares human donated tissue and animal tissue for transplantation through extensive testing and screening and using proprietary processes. These allograft and xenograft implants are used in orthopedic, dental and other specialty surgeries. RTI’s innovations continuously raise the bar of science and safety for biologics – from being the first company to offer precision-tooled bone implants and assembled technology to maximize each gift of donation, to inventing validated sterilization processes that include viral inactivation steps. The BioCleanse® Tissue Sterilization Process, the Tutoplast® Tissue Sterilization Process and the Cancelle™ SP Demineralization Process have a combined record of more than four million implants distributed with zero incidence of implant-associated infection. These processes have been validated by tissue type to inactivate or remove viruses, bacteria, fungi and spores from the tissue while maintaining biocompatibility and functionality. RTI’s worldwide corporate headquarters are located in Alachua, Fla., with international locations in Germany and France. The company is accredited by the American Association of Tissue Banks in the United States and is a member of AdvaMed. Forward-Looking Statement This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s current expectations, estimates and projections about our industry, our management's beliefs and certain assumptions made by our management. Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, except for historical information, any statements made in this communication about anticipated financial results, growth rates, new product introductions, future operational improvements and results or regulatory actions or approvals or changes to agreements with distributors also are forward-looking statements. These statements are not guarantees of future performance and are subject to risks and uncertainties, including the risks described in public filings with the U.S. Securities and Exchange Commission (SEC). Our actual results may differ materially from the anticipated results reflected in these forward-looking statements. Copies of the company's SEC filings may be obtained by contacting the company or the SEC or by visiting RTI's website at www.rtix.com or the SEC's website at www.sec.gov. RTI BIOLOGICS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (In thousands, except share and per share data) (Unaudited) Three Months Ended Twelve Months Ended December 31, December 31, 2012 2011 2012 2011 Revenues: Tissue $ 42,837 $ 41,342 $ 171,703 $ 162,855 distribution Other revenues 1,770 1,589 6,410 6,461 Total revenues 44,607 42,931 178,113 169,316 Costs of processing and 22,859 23,096 92,896 92,102 distribution Gross profit 21,748 19,835 85,217 77,214 Expenses: Marketing, general and 15,209 13,817 58,376 55,576 administrative Research and 2,952 2,399 12,231 9,806 development Litigation - - 2,350 - settlement Asset 2 3 20 61 abandonments Total expenses 18,163 16,219 72,977 65,443 Operating 3,585 3,616 12,240 11,771 income Total other income 66 1 204 (167 ) (expense) - net Income before income tax 3,651 3,617 12,444 11,604 provision Income tax (1,380 ) (1,247 ) (4,042 ) (3,226 ) provision Net income $ 2,271 $ 2,370 $ 8,402 $ 8,378 Net income per common share - $ 0.04 $ 0.04 $ 0.15 $ 0.15 basic Net income per common share - $ 0.04 $ 0.04 $ 0.15 $ 0.15 diluted Weighted average shares 55,968,910 55,388,262 55,861,957 55,150,886 outstanding - basic Weighted average shares 56,268,839 55,708,396 56,068,795 55,354,675 outstanding - diluted RTI BIOLOGICS, INC. AND SUBSIDIARIES Reconciliation of Net Income and Net Income Per Diluted Share to Adjusted Net Income and Adjusted Net Income Per Diluted Share (In thousands except per share data) (Unaudited) Twelve Months Ended December 31, 2012 December 31, 2011 Amount Amount Net per Diluted Net per Diluted Income Share Income Share As reported $ 8,402 $ 0.15 $ 8,378 $ 0.15 Litigation settlement charge, net of tax effect (1) 1,444 0.03 - - Adjusted $ 9,846 $ 0.18 $ 8,378 $ 0.15 (1) Litigation settlement charge, net of tax effect, as follows: Litigation settlement $ 2,350 charge Tax effect on litigation (906 ) settlement charge Litigation settlement charge, net of tax $ 1,444 effect Use of Non-GAAP Financial Measures To supplement RTI Biologic’s condensed consolidated financial statements presented on a GAAP basis, the company discloses certain non-GAAP financial measures that exclude certain amounts, including non-GAAP net income and non-GAAP net income per fully diluted share. These non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles in the United States. Reconciliations of each of these non-GAAP financial measures to the corresponding GAAP measures are included in the reconciliation above. The following is an explanation of the adjustment that management excluded as part of the non-GAAP measures for the year ended December 31, 2012 as well as the reasons for excluding the individual item: Litigation settlement – This adjustment represents a charge and relates to a litigation settlement of certain BTS related lawsuits. Management removes the amount of the litigation settlement charge from the Company’s operating results to assist in assessing its operating performance in the current period and to supplement a comparison to the Company’s past operating performance. Material Limitations Associated with the Use of Non-GAAP Financial Measures Non-GAAP net income and non-GAAP net income per fully diluted share should not be considered in isolation, or as a replacement for GAAP measures. Usefulness of Non-GAAP Financial Measures to Investors The Company believes that presenting non-GAAP net income and non-GAAP net income per fully diluted share in addition to the related GAAP measures provide investors greater transparency to the information used by management in its financial decision-making which excludes the litigation settlement charge. The Company further believes that providing this information better enables RTI Biologic’s investors to understand the Company’s overall core performance and to evaluate the methodology used by management to assess and measure such performance. RTI BIOLOGICS, INC. AND SUBSIDIARIES Condensed Consolidated Revenues (In thousands) (Unaudited) Three Months Ended Twelve Months Ended December 31, December 31, 2012 2011 2012 2011 Revenues from tissue distribution: Sports medicine $ 12,624 $ 13,241 $ 51,197 $ 48,122 Spine 10,334 8,662 38,866 39,722 Surgical specialties 6,761 7,745 30,897 30,328 Bone graft substitutes and 7,361 6,917 29,308 26,291 general orthopedic Dental 5,757 4,777 21,435 18,392 Other revenues 1,770 1,589 6,410 6,461 Total revenues $ 44,607 $ 42,931 $ 178,113 $ 169,316 Domestic revenues 40,096 37,808 156,803 148,315 International revenues 4,511 5,123 21,310 21,001 Total revenues $ 44,607 $ 42,931 $ 178,113 $ 169,316 RTI BIOLOGICS, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands) (Unaudited) December 31, December 31, 2012 2011 Assets Cash and cash equivalents $ 49,696 $ 46,178 Accounts receivable - net 21,694 20,674 Inventories - net 76,509 76,598 Prepaid and other assets 18,673 16,231 Total current assets 166,572 159,681 Property, plant and equipment - net 49,644 44,532 Goodwill 2,062 - Other assets - net 23,131 25,814 Total assets $ 241,409 $ 230,027 Liabilities and Stockholders' Equity Accounts payable $ 11,949 $ 11,141 Accrued expenses and other current 25,397 24,028 liabilities Current portion of long-term obligations 116 448 Total current liabilities 37,462 35,617 Deferred revenue 18,780 20,589 Long-term liabilities 1,175 1,402 Total liabilities 57,417 57,608 Stockholders' equity: Common stock and additional paid-in capital 414,504 411,741 Accumulated other comprehensive loss (1,776 ) (2,184 ) Accumulated deficit (228,736 ) (237,138 ) Total stockholders' equity 183,992 172,419 Total liabilities and stockholders' equity $ 241,409 $ 230,027 RTI BIOLOGICS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) Three Months Twelve Months Ended December 31, Ended December 31, 2012 2011 2012 2011 Cash flows from operating activities: Net income $ 2,271 $ 2,370 $ 8,402 $ 8,378 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and 2,079 2,024 7,993 8,026 amortization expense Stock-based 504 479 2,078 1,973 compensation Amortization of (1,165 ) (1,166 ) (4,656 ) (4,353 ) deferred revenue Other items to reconcile to net cash provided by operating (185 ) 1,646 6,986 13,743 activities Net cash provided by 3,504 5,353 20,803 27,767 operating activities Cash flows from investing activities: Purchases of property, (4,245 ) (3,862 ) (11,089 ) (6,345 ) plant and equipment Patent and acquired (5,381 ) (1,010 ) (6,772 ) (2,139 ) intangible asset costs Other investing - - 49 - activities Net cash used in (9,626 ) (4,872 ) (17,812 ) (8,484 ) investing activities Cash flows from financing activities: Proceeds from exercise 124 876 514 1,122 of common stock options Payments on long-term (82 ) (127 ) (471 ) (2,600 ) obligations Other financing 494 282 474 282 activities Net cash provided by (used in) financing 536 1,031 517 (1,196 ) activities Effect of exchange rate changes on cash and 40 (34 ) 10 (121 ) cash equivalents Net (decrease) increase in cash and cash (5,546 ) 1,478 3,518 17,966 equivalents Cash and cash equivalents, beginning 55,242 44,700 46,178 28,212 of period Cash and cash equivalents, end of $ 49,696 $ 46,178 $ 49,696 $ 46,178 period Contact: RTI Biologics Inc. Robert Jordheim Chief Financial Officer email@example.com or Jenny Highlander, APR, 386-418-8888 Corporate Communications firstname.lastname@example.org
RTI Biologics Announces 2012 Fourth Quarter, Full Year Results, 2013 Financial Guidance
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