Full Press Release Details
Medical Products, Inc. Reports Financial Performance for First Quarter
City, Utah - In the first calendar quarter (1Q) of 2010, Utah Medical Products,
Inc. (Nasdaq:UTMD) achieved revenues and net cash provided by operations
virtually the same as in 1Q 2009. Profitability, however, was lower
due to two factors: 1) transition expenses associated with beginning the process
of consolidating its Oregon injection molding operations into its Utah molding
operations, and 2) a disproportionate amount of shipments during the quarter to
China. Profit margins for 1Q 2010 compared to the prior quarter (4Q
2009) and same quarter in the prior year (1Q 2009) follow:
| 1Q 2010 (JAN - MAR) | 4Q 2009 (OCT - DEC) | 1Q 2009 (JAN - MAR) | |||
| Gross Profit Margin (gross profits/ sales): | 51.6% | 53.2% | 54.3% | ||
| Operating Profit Margin (operating profits/ sales): | 35.6% | 36.6% | 38.1% | ||
| Net Profit Margin (profit after taxes/ sales): | 23.7% | 23.8% | 24.7% |
in income statement results compared to the same time period in the prior
calendar year were as follows:
| Sales: | N/C |
| Gross Profit: | (5%) |
| Operating Income: | (7%) |
| Net Income: | (4%) |
| Earnings Per Share: | (5%) |
1Q 2010 to 1Q 2009 global sales in product categories, blood pressure monitoring
device/ components (BPM) sales were up 8%, neonatal device sales were up 2%,
gynecology/ electrosurgery device sales were down 1% and obstetrics device sales
sales were up 14% and domestic sales were down 6%. Sales of BPM
devices by UTMD's Ireland subsidiary to UTMD's distributor in China were
$226,000 higher in 1Q 2010 than in 1Q 2009. As a result, UTMD Ireland
shipments were up 25%, allowing it to reduce inventories that had been
accumulated during slack demand periods in 2009.
to 1Q 2009, domestic direct sales of finished devices to U.S. end-users were 6%
lower in 1Q 2010, as hospital utilization rates of specialty devices seem to
have declined. Domestic direct sales of obstetric devices, the product category
most affected by restrictive GPO agreements, declined
$185,000. Domestic direct sales of Gesco neonatal devices decreased
$25,000. Domestic direct electrosurgery/gynecology device sales
decreased $38,000. Domestic sales of OEM components to other
companies were down 4%. Since OEM customers tend to purchase three to
six months of inventory at a time, the decline appears to be an oscillation in
order pattern rather than a change in demand.
Profit. Despite revenue about the same as in 1Q 2009, UTMD's
gross profit margin (GPM), gross profits divided by sales, was 2.7 percentage
points lower. Previously, UTMD announced it would consolidate its
Oregon subsidiary into Utah in early 2010. About 25% of the
difference in GPM was due to relocation costs of equipment, and employing extra
people during the training process of moving the operations to
Utah. UTMD expects to conclude the transition costs of relocation by
the end of 2Q 2010, with a similar dilutive impact on 2Q 2010 GPM, before
gaining a GPM benefit in the second half of 2010.
75% of the difference in gross profits was due to the unfavorable distribution
mix which resulted from an increase in international sales and a decrease in
Income. UTMD's operating profit margin (OPM), operating income
divided by sales, declined by 2.5 percentage points, as a result of about the
same percent decline in GPM. Operating expenses, comprised of
G&A, S&M and R&D expenses, were $1,034,000 in 1Q 2010 (16.1% of
sales), slightly lower than the $1,041,000 in 1Q 2009 (16.2% of
sales). R&D expenses were slightly higher, S&M expenses were
slightly lower and G&A expenses were about the same.
net profit margin, net income divided by sales, declined by 1.0 percentage
points. The decline was less than the decline in GPM because of a lower income
tax provision, 33.8% of earnings before taxes in 1Q 2010 compared to 35.5% in 1Q
2009. The lower tax rate was due primarily to a higher portion of
income generated in Ireland taxed at a much lower rate, and the benefit of a
higher manufacturing profit deduction in the U.S.
share. EPS declined in the same proportion as gross profits.
Diluted shares used to calculate EPS increased from 3,618,937 in 1Q 2009 to
3,644,795 in 1Q 2010, as a result of employee option exercises and a higher
average market price. The Company did not repurchase any of its shares in 1Q
2010. Although profitability slipped in 1Q 2010, UTMD continues to target EPS
about the same as in 2009 at $1.72.
March 31, 2010 balance sheet gained more strength. Key changes in the Company's
financial strength (balance sheet accounts) compared to one year earlier were as
| [Million $$] | |
| Cash & Investments: | +3.7 |
| Receivables & Inventory: | (0.5) |
| Total Assets: | +3.2 |
| Total Current Liabilities: | (0.2) |
| Ireland Note Payable: | (0.2) |
| Shareholders' Equity: | +3.4 |
investment balances, which increased as a result of profits from operations,
also funded $3.4 million in dividends to shareholders over the course of a year.
The principal balance on the note in Ireland, UTMD's only debt, is now down to
$1.5 million. 1Q 2010 new capital expenditures exceeded depreciation by $69,000,
as UTMD is taking advantage of the opportunity to expand its facility in Utah at
a favorable time for building costs. The future depreciation expense
associated with the expansion will be substantially less than the prior rental
cost of the Oregon facility.
Ratio (including the current portion of Ireland loan) = 8.8
in Receivables (based on 1Q sales activity) = 41
Average Inventory Turns (based on 1Q CGS) = 3.7
Year-to-Date ROE = 16%
from unexercised option shares added to actual weighted average outstanding
shares for purposes of calculating eps was 26,800 in 1Q 2010 compared to 12,500
in 1Q 2009. The actual number of outstanding shares at the end of 1Q
2010 was 3,631,500 which included 1Q employee option exercises of 21,600 shares
and no share repurchases. The total number of outstanding unexercised
options at March 31, 2010 was about 226,100 shares at an average exercise price
of $24.50/ share, including shares awarded but not vested. This compares to
257,600 option shares outstanding at the end of 1Q 2009.
factors that could cause results to differ materially in future quarters include
clinical acceptance of products, timing of regulatory approval of new products,
regulatory intervention in current operations, government intervention in the
healthcare marketplace, distribution restrictions by anticompetitive hospital
administrative agreements, the Company's ability to efficiently manufacture,
market, and sell its products, among other factors that have been outlined in
public disclosure filings with the SEC. The SEC Form 10-Q for 1Q 2010 will be
filed with the SEC by May 10.
Medical Products, Inc., with particular interest in health care for women and
their babies, develops, manufactures, assembles and markets a broad range of
disposable and reusable specialty medical devices designed for better health
outcomes for patients and their care-providers. For more information
about Utah Medical Products, Inc., visit UTMD=s website
Medical Products, Inc.
STATEMENT, First Quarter ended March 31 (in thousands except earnings per
| 1Q 2010 | 1Q 2009 | Percent Change | ||||||||||
| Net Sales | $ | 6,436 | $ | 6,445 | (0.1 | %) | ||||||
| Gross Profit | 3,323 | 3,500 | (5.1 | %) | ||||||||
| Operating Income | 2,289 | 2,459 | (6.9 | %) | ||||||||
| Income Before Tax | 2,308 | 2,468 | (6.5 | %) | ||||||||
| Net Income | 1,527 | 1,592 | (4.1 | %) | ||||||||
| Earnings Per Share | $ | 0.419 | $ | 0.440 | (4.8 | %) | ||||||
| Shares Outstanding (diluted) | 3,645 | 3,619 |