FITCHBURG, Mass., March 22, 2017 (GLOBE NEWSWIRE) — Arrhythmia Research Technology, Inc. (NYSE MKT:HRT) (the “Company”), through its wholly-owned subsidiary, Micron Products, Inc., a diversified contract manufacturing organization that produces highly-engineered, innovative medical device components requiring precision machining and injection molding, announced results for its fourth quarter and year ended December 31, 2016.
“In 2016, the Company fell short of its sales and profit goals largely due to lower demand from one large orthopedic customer and continued price competition in sensor products,” commented Salvatore Emma Jr., President and CEO.
“However, in early 2016 the Company began to realize the results of our increased sales efforts by acquiring several new medical device and orthopedic customers requiring components used in Total Knee Arthroscopy (TKA), surgical instruments, and other implantable fixation devices. This increase in new medical device business required multiple and simultaneous process validation efforts to ensure quality and process capability. Process validation for these new medical components will be substantially complete in the first quarter of 2017. We expect that our margins will begin to improve during the second quarter of 2017 as we move from validation to production of these new components.”
Fourth Quarter 2016 Review
| $ In thousands | Q4 2016 |
Q4 2015 |
$ Change |
% Change |
||||||||||
| Net sales | $ | 4,813 | $ | 4,752 | $ | 61 | 1.3% | |||||||
| Gross profit | $ | 458 | $ | 617 | $ | (159) | -25.8% | |||||||
| Gross margin | 9.5% | 13.0% | ||||||||||||
| Net loss from continuing operations | $ | (322) | $ | (386) | $ | 64 | ||||||||
| Diluted loss per share from continuing operations | $ | (0.11) | $ | (0.14) | $ | 0.03 | ||||||||
Net sales for the fourth quarter 2016 increased $61 thousand when compared to the same period last year. The increase was due to net sales of thermoplastic injection molding as well as net sales of tooling, net of deferred revenue. The increase was largely offset by a decline in net sales of orthopedic implant components and instrumentation, as well as in sensors.
In the fourth quarter 2016, net sales of thermoplastic injection molding increased 27.9% when compared to the same period in 2015, due primarily to increased volume from customers in the medical, automotive and military and law enforcement industries. Additionally, net sales of tooling increased 27.5%, net of deferred revenue, due primarily to the sale of a large tool to the Company’s largest customer.
The increase in net sales was partially offset by a 44.5% decrease in net sales of orthopedic implant components and instrumentation. The decrease was due in part to decreased demand from two customers, partly offset by shipments to a new large customer. Additionally, net sales of sensors decreased 5.2% due in part to price reductions, a 3.6% decrease in sales volume, and the timing of shipments versus the recognition of revenue related to supply agreements with certain foreign customers in the third and fourth quarters of 2016.
Gross profit in the fourth quarter 2016 decreased by $159 thousand and gross profit as a percentage of sales decreased 3.5 points to 9.5% when compared to fourth quarter 2015. The decrease in gross profit was due largely to a 91.5% decrease in gross profit from orthopedic implant components and instrumentation as a result of lower net sales and increased validations efforts for new parts. Additionally, gross profit from sensors decreased 20.5% due largely to price reductions. The decreases were partly offset by a 10.7% increase in thermoplastic injection molding due to increased net sales.
Total operating expenses decreased $152 thousand to $762 thousand or 15.8% of sales in the fourth quarter 2016 as compared to $914 thousand or 19.2% in the same period last year. The decrease in operating expenses is due largely to a 41.1% decrease in sales and marketing expense due to lower commissions and no agency fees in 2016 when compared to the fourth quarter 2015.
Net loss from continuing operations was $322 thousand, or $0.11 per diluted share, compared with net loss of $386 thousand, or $0.14 per diluted share, in the 2015 fourth quarter.
EBITDA(1) (income from continuing operations adjusted for income taxes, other income and expense, interest, depreciation and amortization, and share-based compensation expense) for the fourth quarter of 2016 was $97 thousand, or 2.0% of net sales, compared with $189 thousand, or 4.0% of net sales, for the same period in 2015. (1)See attached table for additional important disclosures regarding the Company’s use of EBITDA, as well as a reconciliation of net income (loss) from continuing operations to EBITDA.
Source: GlobeNewswire
