Utah Medical Products(UTMD)

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Utah Medical Products(UTMD) - 2021 Q1 - Quarterly Report
2021-05-11 15:45
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 001-12575 UTAH MEDICAL PRODUCTS INC (Exact name of Registrant as specified in its charter) Utah 87-0342734 (State or other jurisdiction of incorpo ...
Utah Medical Products(UTMD) - 2020 Q4 - Annual Report
2021-03-26 15:50
Part I [Business](index=4&type=section&id=Item%201) The company designs, manufactures, and distributes specialized medical devices for critical care, neonatal, and women's health markets globally - UTMD specializes in medical devices for NICU, L&D, and women's health, focusing on safety and improved patient outcomes[12](index=12&type=chunk) - The company sells directly in the US, Canada, UK, France, Ireland, Australia, and New Zealand, and uses over 230 distributors in other countries[14](index=14&type=chunk) - Products from four key acquisitions accounted for **55% of consolidated sales in 2020**[16](index=16&type=chunk) [Products](index=5&type=section&id=Item%201%20-%20Products) UTMD offers a diverse portfolio of devices for obstetrics, neonatal care, gynecology/urology, and blood pressure monitoring - The Filshie® Clip System, a female surgical contraception device, is a major product, representing **31% of UTMD's total U.S. Dollar denominated sales in 2020**[46](index=46&type=chunk) - The company offers a comprehensive range of neonatal products under the GESCO® brand, including specialized catheters and feeding systems for critically-ill infants[27](index=27&type=chunk)[28](index=28&type=chunk)[31](index=31&type=chunk) - The LETZ® System is a key product for treating cervical intraepithelial neoplasia (CIN) in a physician's office setting, offering an economical alternative to hospital procedures[40](index=40&type=chunk) - The DELTRAN® Disposable Pressure Transducer (DPT) is a foundational product for blood pressure monitoring, sold as a standalone device and in kits[64](index=64&type=chunk) [Marketing, Competition, and Distribution](index=12&type=section&id=Item%201%20-%20Marketing%2C%20Competition%2C%20and%20Distribution) The marketing strategy emphasizes clinical differentiation against competitors and GPOs, with international sales comprising 39% of 2020 revenue - The primary marketing challenge is communicating the clinical benefits of its differentiated products to clinicians, as hospital purchasing is increasingly driven by unit price[70](index=70&type=chunk) - Outside the U.S. (OUS) sales accounted for **39% of consolidated total sales in 2020**, down from 41% in 2019, partly due to COVID-19 restrictions[74](index=74&type=chunk) - The company utilizes a direct sales force of inside representatives and independent consultants, focusing on one-on-one contact with clinical practitioners[79](index=79&type=chunk) [Regulation, Manufacturing, and Other Business Aspects](index=14&type=section&id=Item%201%20-%20Regulation%2C%20Manufacturing%2C%20and%20Other%20Business%20Aspects) The company's operations adhere to extensive global regulations, with a stable workforce and a self-insured product liability strategy - The company's manufacturing facilities in the U.S., UK, and Ireland are certified under **ISO 13485:2016 and the Medical Device Single Audit Program (MDSAP)**[94](index=94&type=chunk)[95](index=95&type=chunk) - As of December 31, 2020, the company had 181 employees, with an **average tenure of fifteen years** for those in the U.S. and Ireland[85](index=85&type=chunk) - UTMD is self-insured for product liability and has **never had a product liability judgment against it** in its 42-year history[106](index=106&type=chunk) Order Backlog | Date | Backlog (Shippable < 90 days) | | :--- | :--- | | Jan 1, 2021 | $3,008 thousand | | Jan 1, 2020 | $1,627 thousand | | Jan 1, 2019 | $3,164 thousand | [Risk Factors](index=18&type=section&id=Item%201A) The company faces risks from healthcare market unpredictability, regulatory burdens, GPO pricing pressure, and foreign currency fluctuations - Legislative interference in U.S. healthcare and restrictions on nonessential medical procedures during pandemics create market unpredictability and can reduce demand[112](index=112&type=chunk) - **Group Purchasing Organizations (GPOs)** are a significant risk, as they restrict market access and focus on unit price, turning differentiated products into commodities[114](index=114&type=chunk) - Fluctuations in foreign currencies relative to the USD can significantly impact financial results, as a strong USD can reduce reported revenue[121](index=121&type=chunk) - The COVID-19 pandemic poses a risk of disrupting the supply chain or interfering with business operations due to loss of employee availability[122](index=122&type=chunk) [Unresolved Staff Comments](index=20&type=section&id=Item%201B) The company reports that there are no unresolved staff comments from the SEC - None[124](index=124&type=chunk) [Properties](index=20&type=section&id=Item%202) UTMD is a vertically-integrated manufacturer that owns its primary production and office facilities in the U.S, Ireland, and England - The company owns its primary facilities, totaling over 220,000 square feet across the U.S., Ireland, and England, with smaller owned facilities in Australia and Canada[126](index=126&type=chunk) [Legal Proceedings](index=20&type=section&id=Item%203) The company reports that there is currently no litigation or threatened litigation - Presently, there is no litigation or threatened litigation[128](index=128&type=chunk) [Reserved](index=20&type=section&id=Item%204) This item is reserved and contains no information Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=21&type=section&id=Item%205) The company's stock trades on NASDAQ, and in 2020, it paid dividends and repurchased approximately $7.0 million of its common stock 2020 Quarterly Stock Price Range (NASDAQ: UTMD) | Quarter | High | Low | | :--- | :--- | :--- | | 1st Quarter | $109.99 | $75.33 | | 2nd Quarter | $109.00 | $77.27 | | 3rd Quarter | $93.82 | $77.22 | | 4th Quarter | $94.87 | $78.90 | Cash Dividends Paid Per Share | Year | Total Dividends Per Share | | :--- | :--- | | 2020 | $1.120 | | 2019 | $1.100 | - In 2020, UTMD purchased 87,000 shares of its common stock for approximately **$7.0 million** ($6,426k in March and $551k in September)[134](index=134&type=chunk) [Selected Financial Data](index=22&type=section&id=Item%206) The company's five-year data shows decreased sales and net income in 2020, while maintaining zero long-term debt and increasing dividends Selected Financial Data (in thousands, except per share data) | | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Net Sales | $42,178 | $46,904 | $41,998 | | Net Income | $10,798 | $14,727 | $18,555 | | Earnings Per Share (Diluted) | $2.94 | $3.94 | $4.95 | | Total Assets | $111,745 | $109,787 | $99,768 | | Long-term Debt | $0 | $0 | $0 | | Cash Dividends Per Share | $1.120 | $1.100 | $1.085 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%207) Management attributes a 10.1% revenue decline in 2020 to the COVID-19 pandemic, while highlighting strong liquidity and zero debt 2020 vs. 2019 Financial Performance | Metric | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $42,178 | $46,904 | (10.1%) | | Gross Profit (GP) | $25,548 | $29,466 | (13.3%) | | Operating Income | $13,708 | $17,632 | (22.3%) | | Net Income (US GAAP) | $10,798 | $14,727 | (26.7%) | - The financial results were significantly impacted by government restrictions on nonessential medical procedures due to the **COVID-19 pandemic**, particularly in Q2 2020[141](index=141&type=chunk) - The company's cash balance increased by **$8.8 million to $51.6 million** at year-end 2020, and it remained debt-free[151](index=151&type=chunk) [Results of Operations](index=27&type=section&id=Item%207%20-%20Results%20of%20Operations) Consolidated sales fell 10.1% in 2020 due to the pandemic, with OUS sales declining more sharply and gross margin decreasing to 60.6% Global Revenues by Product Category (in thousands) | Category | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | Obstetrics | $4,523 | $5,000 | (9.5%) | | Gynecology/ Electrosurgery/ Urology | $20,552 | $25,354 | (18.9%) | | Neonatal | $5,870 | $6,066 | (3.2%) | | Blood Pressure Monitoring & Acc. | $11,233 | $10,484 | +7.1% | - Direct-to-end-user sales, which drive profitability, were **down 14.3%** for the year, with the UK and France experiencing the sharpest declines[142](index=142&type=chunk)[170](index=170&type=chunk) - Gross Profit Margin (GPM) declined to **60.6% from 62.8%** in 2019, attributed to lower absorption of fixed manufacturing overhead and pandemic costs[189](index=189&type=chunk)[191](index=191&type=chunk) - Operating expenses included **$6.5 million in non-cash amortization** of Identifiable Intangible Assets (IIA) from acquisitions, significantly impacting operating income[194](index=194&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Item%207%20-%20Liquidity%20and%20Capital%20Resources) Net cash from operations increased to $20.1 million due to working capital management, funding share repurchases and dividends Cash Flow Summary (in thousands) | Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net cash from operating activities | $20,137 | $17,056 | | Net cash from investing activities | ($860) | ($21,540) | | Net cash from financing activities | ($10,734) | ($4,227) | | **Net increase (decrease) in cash** | **$8,803** | **($8,325)** | - The company repurchased **87,000 shares for $7.0 million** and paid **$4.1 million in dividends** in 2020[233](index=233&type=chunk)[236](index=236&type=chunk) - Management believes future income and strong working capital management will provide sufficient liquidity for internal growth and capital expenditures[237](index=237&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%207A) The company's primary market risk stems from foreign currency exchange rate fluctuations, which it manages without using hedging instruments - The company's primary market risk is foreign currency exchange rate fluctuations involving the **USD, EUR, GBP, AUD, and CAD**[250](index=250&type=chunk) [Financial Statements and Supplementary Data](index=42&type=section&id=Item%208) This section includes audited consolidated financial statements, management's report on internal controls, and independent auditor reports - Management concluded that the company maintained **effective internal control** over financial reporting as of December 31, 2020[256](index=256&type=chunk) - The independent auditors, Haynie & Company and Nortons Assurance Limited, issued **unqualified opinions** on the consolidated financial statements[260](index=260&type=chunk)[271](index=271&type=chunk) - The financial statements include the Consolidated Balance Sheets, Statements of Income, Statements of Cash Flow, Statements of Stockholders' Equity, and detailed Notes[253](index=253&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=67&type=section&id=Item%209) The company reports no disagreements with its accountants on accounting principles, practices, or financial statement disclosure - None[355](index=355&type=chunk) [Controls and Procedures](index=67&type=section&id=Item%209A) Management concluded that the company's disclosure controls and procedures were effective as of year-end 2020 - The CEO and Principal Financial Officer concluded that disclosure controls and procedures were **effective** as of December 31, 2020[357](index=357&type=chunk) - **No material changes** to internal control over financial reporting occurred in Q4 2020[359](index=359&type=chunk) [Other Information](index=67&type=section&id=Item%209B) The company reports no other information for this item - None[360](index=360&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=68&type=section&id=Item%2010) Information regarding directors, officers, and corporate governance is incorporated by reference from the 2021 proxy statement - Required information is incorporated by reference from the 2021 definitive proxy statement[363](index=363&type=chunk) [Executive Compensation](index=68&type=section&id=Item%2011) Information regarding executive compensation is incorporated by reference from the 2021 proxy statement - Required information is incorporated by reference from the 2021 definitive proxy statement[365](index=365&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=68&type=section&id=Item%2012) Information regarding security ownership is incorporated by reference from the 2021 proxy statement - Required information is incorporated by reference from the 2021 definitive proxy statement[366](index=366&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=68&type=section&id=Item%2013) Information regarding related transactions and director independence is incorporated by reference from the 2021 proxy statement - Required information is incorporated by reference from the 2021 definitive proxy statement[367](index=367&type=chunk) [Principal Accounting Fees and Services](index=68&type=section&id=Item%2014) Information regarding principal accounting fees and services is incorporated by reference from the 2021 proxy statement - Required information is incorporated by reference from the 2021 definitive proxy statement[369](index=369&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=69&type=section&id=Item%2015) This section lists all documents filed with the Form 10-K, including exhibits and required Sarbanes-Oxley certifications - This section contains a list of all exhibits filed with the report, including corporate governance documents, management contracts, and required certifications[374](index=374&type=chunk) - Financial Statement Schedules are omitted because the required information is included within the main financial statements and notes[373](index=373&type=chunk)
Utah Medical Products(UTMD) - 2020 Q3 - Quarterly Report
2020-11-06 20:46
PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited consolidated condensed financial statements for Q3 and 9M 2020, showing decreased assets, equity, sales, and net income compared to 2019 [Consolidated Condensed Balance Sheets](index=4&type=section&id=Consolidated%20Condensed%20Balance%20Sheets) Total assets decreased to **$107.1 million** by September 30, 2020, from **$109.8 million** at year-end 2019, primarily due to reduced net intangible assets, while cash and investments increased Consolidated Condensed Balance Sheet Highlights (in thousands) | Account | Sep 30, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | **Total Assets** | **$107,072** | **$109,787** | | Cash & investments | $46,294 | $42,787 | | Inventories | $6,304 | $6,913 | | Other intangible assets, net | $24,993 | $30,212 | | **Total Liabilities** | **$8,657** | **$8,694** | | **Total Stockholders' Equity** | **$98,415** | **$101,093** | [Consolidated Condensed Statements of Income](index=5&type=section&id=Consolidated%20Condensed%20Statements%20of%20Income) Q3 2020 net sales decreased to **$10.5 million** and net income to **$2.9 million**, with similar declines for the nine-month period compared to 2019 Q3 Performance Comparison (in thousands, except per share) | Metric | Q3 2020 | Q3 2019 | | :--- | :--- | :--- | | Sales, net | $10,479 | $12,494 | | Gross profit | $6,497 | $7,379 | | Operating income | $3,587 | $4,371 | | Net income | $2,933 | $3,705 | | Earnings per share (diluted) | $0.80 | $0.99 | Nine-Month Performance Comparison (in thousands, except per share) | Metric | 9M 2020 | 9M 2019 | | :--- | :--- | :--- | | Sales, net | $30,168 | $35,073 | | Gross profit | $18,283 | $21,652 | | Operating income | $9,428 | $12,954 | | Net income | $7,386 | $10,369 | | Earnings per share (diluted) | $2.01 | $2.77 | [Consolidated Condensed Statements of Cash Flows](index=6&type=section&id=Consolidated%20Condensed%20Statements%20of%20Cash%20Flows) Net cash from operating activities increased to **$14.4 million** for 9M 2020, while financing activities included **$7.0 million** in stock repurchases and **$3.1 million** in dividends Cash Flow Summary for Nine Months Ended Sep 30 (in thousands) | Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $14,359 | $11,415 | | Net cash used in investing activities | ($806) | ($21,252) | | Net cash used in financing activities | ($9,792) | ($3,258) | | **Net increase (decrease) in cash** | **$3,507** | **($13,719)** | - Financing activities in the first nine months of 2020 included **$7.0 million** for stock repurchases and **$3.1 million** for dividend payments[13](index=13&type=chunk) [Notes to Consolidated Condensed Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Condensed%20Financial%20Statements) Financial statement notes detail inventory, disaggregated revenue by product category, operating leases, and amortization of the Filshie Clip System distribution rights Global 9M 2020 Revenues by Product Category (in thousands) | Product Category | Domestic | Outside US | Total | | :--- | :--- | :--- | :--- | | Obstetrics | $2,739 | $612 | $3,351 | | Gynecology/Electrosurgery/Urology | $7,686 | $6,945 | $14,631 | | Neonatal | $3,266 | $1,169 | $4,435 | | Blood Pressure Monitoring & Accessories | $5,215 | $2,536 | $7,751 | | **Total** | **$18,906** | **$11,262** | **$30,168** | - In February 2019, the company purchased exclusive U.S. distribution rights for the Filshie Clip System for **$21 million**, with this intangible asset being amortized over a remaining life of **3.08 years** as of September 30, 2020[26](index=26&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=14&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the **COVID-19 pandemic's** significant negative impact on Q3 and 9M 2020 sales, particularly in OUS and gynecology, while maintaining profitability and a strong balance sheet [Overview](index=14&type=section&id=Overview) The company experienced a significant financial downturn in Q3 and 9M 2020 due to **COVID-19**, with double-digit declines in sales and income, yet maintained a strong, debt-free balance sheet Financial Performance vs. Prior Year | Metric | 3Q 2020 vs 3Q 2019 | 9M 2020 vs 9M 2019 | | :--- | :--- | :--- | | Net Sales | (16.1%) | (14.0%) | | Gross Profit | (12.0%) | (15.6%) | | Operating Income | (17.9%) | (27.2%) | | Net Income (NI) | (20.8%) | (28.8%) | | EPS (Diluted) | (19.0%) | (27.6%) | - The company's balance sheet remained strong with no debt, as cash and investments grew to **$46.3 million** at the end of Q3 2020 from **$42.8 million** at year-end 2019, even after paying **$3.1 million** in dividends and repurchasing **$7.0 million** in stock[37](index=37&type=chunk) [Revenues](index=17&type=section&id=Revenues) Q3 2020 consolidated sales decreased **16.1%** to **$10.5 million**, with OUS sales down **28%** and gynecology/electrosurgery sales down **21%**, though Filshie device sales showed Q3 recovery - In Q3 2020, U.S. domestic sales were **8% lower** and OUS sales were **28% lower** compared to Q3 2019, with nine-month U.S. domestic sales **7% lower** and OUS sales **23% lower**[41](index=41&type=chunk) - The gynecology/electrosurgery device category, largely deemed "nonessential" during the pandemic, saw a **21% worldwide sales decline** in Q3 2020 compared to Q3 2019[49](index=49&type=chunk) Filshie Device Sequential Quarterly USD Domestic Sales (in thousands) | Year | 1Q | 2Q | 3Q | 9M | | :--- | :--- | :--- | :--- | :--- | | 2020 | $1,689 | $1,135 | $1,733 | $4,557 | | 2019 | $925 | $1,979 | $2,008 | $4,912 | [Gross Profit](index=20&type=section&id=Gross%20Profit) Q3 2020 gross profit decreased **12.0%** to **$6.5 million**, but gross profit margin improved to **62.0%** due to a favorable sales mix, despite a slight 9M GPM decline - The Q3 2020 Gross Profit Margin (GPM) improved to **62.0%** from **59.1%** in Q3 2019, mainly due to a favorable sales mix, as lower-margin sales to international distributors constituted a smaller portion of total sales[53](index=53&type=chunk) - For the first nine months of 2020, the GPM was **60.6%**, meeting management's long-term objective despite a slight decline from **61.7%** in the same period of 2019[53](index=53&type=chunk) [Operating Income](index=20&type=section&id=Operating%20Income) Q3 2020 operating income decreased to **$3.6 million**, with the operating margin falling to **34.2%**, primarily due to lower gross profits and increased intangible asset amortization - Operating expenses were **27.8% of sales** in Q3 2020, up from **24.1%** in Q3 2019, as management maintained resources for long-term growth despite the short-term sales reduction[54](index=54&type=chunk) Identifiable Intangible Asset (IIA) Amortization Expense (in thousands) | Expense Category | 3Q 2020 | 3Q 2019 | 9M 2020 | 9M 2019 | | :--- | :--- | :--- | :--- | :--- | | IIA amortization expense | $1,621 | $1,597 | $4,839 | $4,471 | | All other G&A expense | $811 | $860 | $2,445 | $2,566 | | **Total G&A Expenses** | **$2,432** | **$2,457** | **$7,284** | **$7,037** | [Net Income and Earnings Per Share (EPS)](index=22&type=section&id=Net%20Income%20and%20EPS) Q3 2020 net income decreased to **$2.9 million** and diluted EPS to **$0.803**, with share repurchases partially mitigating the EPS decline - The average consolidated income tax provision was **higher in 2020** (**18.3% in Q3**, **22.7% in 9M**) compared to 2019 (**16.7% in Q3**, **21.1% in 9M**), partly due to a **$225k tax provision increase** in Q2 2020 related to a UK tax law change[69](index=69&type=chunk)[70](index=70&type=chunk) - Share repurchases helped mitigate the decline in EPS, with diluted shares outstanding at **3.65 million** in Q3 2020, down from **3.74 million** in Q3 2019[72](index=72&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained strong liquidity, with net cash from operations increasing to **$14.4 million** in 9M 2020, while allocating **$7.0 million** to share repurchases and **$3.1 million** to dividends - Net cash from operations **increased by $2.9 million** in 9M 2020 compared to 9M 2019, largely due to a **$3.8 million positive change** from decreased receivables and inventories[76](index=76&type=chunk) - In the first nine months of 2020, the company repurchased **87,000 shares** for **$7.0 million** and paid **$3.1 million** in dividends[78](index=78&type=chunk) [Assets and Liabilities](index=24&type=section&id=Assets%20and%20Liabilities) Total assets decreased to **$107.1 million** due to a **$5.4 million** decline in net intangible assets, while working capital improved to **$53.6 million** and the debt ratio remained low - Working capital **increased to $53.6 million** at September 30, 2020, from **$51.4 million** at December 31, 2019, as a **$3.5 million increase in cash** more than offset a decrease in receivables and inventories[83](index=83&type=chunk) - Net intangible assets, including goodwill, **declined to 36% of total assets** at the end of Q3 2020, down from **40%** at year-end 2019[84](index=84&type=chunk) [Management's Outlook](index=24&type=section&id=Management's%20Outlook) Management's 2020 outlook focuses on integrating operations, marketing the Filshie Clip System, new product development, and returning cash to shareholders while seeking acquisitions - The company's 2020 plan focuses on integrating operations, direct marketing of the Filshie Clip System, new product development, and maintaining financial performance[86](index=86&type=chunk)[87](index=87&type=chunk) - UTMD will continue to use cash for dividends and share repurchases, while also seeking potential acquisitions[86](index=86&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces foreign currency exchange rate risk from international operations and manages it through operational strategies rather than hedging transactions - The company has operations denominated in USD, EUR, GBP, AUD, and CAD, making it subject to foreign exchange rate risk[89](index=89&type=chunk) - UTMD manages currency risk without using hedging instruments, instead relying on operational strategies like invoicing in local currencies and optimizing liquidity management[89](index=89&type=chunk) [Controls and Procedures](index=25&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2020, with no material changes to internal controls over financial reporting - As of September 30, 2020, the CEO and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective[90](index=90&type=chunk) - No material changes were made to internal controls over financial reporting during the nine months ended September 30, 2020[91](index=91&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=26&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any litigation, though it may participate in incidental legal proceedings as part of normal business - As of the filing date, the company is not involved in any litigation[94](index=94&type=chunk) [Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) Key risks include healthcare reform unpredictability, government-mandated procedure shutdowns, increasing regulatory burdens, GPO dominance, reliance on distributors, and foreign currency fluctuations - Government-mandated shutdowns of "nonessential" medical procedures, as seen during the pandemic, have the potential to substantially reduce demand for the company's devices[96](index=96&type=chunk) - Increasing regulatory burdens and the dominance of Group Purchasing Organizations (GPOs) add costs, weaken marketing efforts, and create competitive disadvantages for smaller companies like UTMD[97](index=97&type=chunk)[98](index=98&type=chunk)[100](index=100&type=chunk) - A significant portion of sales are invoiced in foreign currencies, exposing the company to financial risk from fluctuations in exchange rates relative to the USD[104](index=104&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=27&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In 9M 2020, the company repurchased **87,000 shares** for **$6.977 million**, significantly more than the **5,000 shares** for **$398,000** in 9M 2019 Share Repurchase Activity | Period | Shares Purchased | Cost (in thousands) | | :--- | :--- | :--- | | 9M 2020 | 87,000 | $6,977 | | 9M 2019 | 5,000 | $398 | [Exhibits](index=27&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and iXBRL financial statements - Exhibits filed include CEO and CFO certifications (31.1, 31.2, 32.1, 32.2) and iXBRL financial data (101, 104)[106](index=106&type=chunk) SIGNATURES [Signatures](index=28&type=section&id=Signatures) The report was signed and authorized by CEO Kevin L. Cornwell and Principal Financial Officer Brian L. Koopman on November 6, 2020 - The Form 10-Q was signed on November 6, 2020, by CEO Kevin L. Cornwell and Principal Financial Officer Brian L. Koopman[108](index=108&type=chunk)
Utah Medical Products(UTMD) - 2020 Q2 - Quarterly Report
2020-08-07 18:52
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 001-12575 UTAH MEDICAL PRODUCTS INC Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required ...
Utah Medical Products(UTMD) - 2020 Q1 - Quarterly Report
2020-05-08 19:00
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 001-12575 UTAH MEDICAL PRODUCTS INC (Exact name of Registrant as specified in its charter) UTAH 87-0342734 (State or other jurisdiction of incorpo ...
Utah Medical Products(UTMD) - 2019 Q4 - Annual Report
2020-03-16 21:17
Sales and Revenue - UTMD's consolidated sales from acquisitions comprised 59% of total sales in 2019[16] - The company has returned $117.872 million in share repurchases and $58.8 million in cash dividends to public stockholders since 1992[15] - In 2019, OUS sales represented 41% of total consolidated USD sales, down from 50% in 2018, attributed to higher U.S. sales and a stronger USD[70] - In 2019, UTMD sold components and finished devices to 147 other companies in the U.S., leveraging its manufacturing capabilities for OEM sales[68] - Total 2019 trade revenues from customers outside the U.S. were $19,411 million, accounting for 41% of total sales, down from 50% in 2018[97] - U.S. exports represented 22% of total OUS trade sales in 2019, down from 26% in 2018[97] Product Development and Innovation - The company continues to investigate new tools to enhance fetal monitoring techniques, indicating ongoing product development[21] - UTMD plans to continue expanding its neonatal product line to reinforce its reputation for reliable and developmentally-friendly specialty devices[38] - UTMD's current product and process development projects include neonatal intensive care and specialized procedures for cervical/uterine disease[80] - The company has established a strong reputation in the market, leveraging relationships with clinicians to drive product innovation[13] Product Offerings - The DISPOSA-HOOD is designed to maintain a neutral thermal environment for neonates while administering oxygen, preventing cross-contamination[24] - The DELTRAN® PLUS blood pressure monitoring system is tailored for NICU use, eliminating needles and reducing infection risk[25] - UTMD's VAD Systems include the CMI® soft silicone birthing cups, which are preferred for over 90% of vacuum-assisted deliveries[22] - The NUTRI-LOK® extension set addresses safety risks in NICUs by preventing inadvertent connections with IV lines[32] - The DELTRAN® Disposable Pressure Transducer remains the standard for accuracy and reliability in pressure monitoring since its introduction in 1998[61] - The LIBERTY® System offers a cost-effective treatment for urinary incontinence, providing a lower risk alternative to surgery[55] - The EndoCurette™ was developed in cooperation with Mayo Clinic for uterine endometrial tissue sampling, aimed at ruling out precancerous conditions[56] - The Add-a-Cath introducer facilitates safe suprapubic catheterization, introduced in 2013 and now distributed under the trade name "Supra-Foley"[54] Market Strategy and Distribution - UTMD's products are marketed through over 260 distributors globally, with 120 distributors purchasing at least $5,000 in medical devices during 2019[14] - The company operates through over 260 distributors globally, with 120 purchasing at least $5,000 in medical devices during 2019[14] - The company has established direct sales channels and relationships with other medical companies for effective product distribution[17] - UTMD's marketing strategy focuses on clinicians for optimal patient care outcomes, primarily through clinical meetings and trade shows[64] Financial Performance and Legal Matters - UTMD has received $6 million in royalty income during 2019, a decrease from $76 million in 2018[86] - The average annual cost of product liability lawsuits since 2011 for the Filshie Clip System was $8 per year[104] - The Company has been named as a defendant in a total of nine lawsuits over the last twenty-seven years, with no material impact on performance from legal costs[104] - There have been no product liability lawsuits during the last eight years, other than the Filshie Clip System claims[104] Manufacturing and Compliance - UTMD's manufacturing facilities in Utah and Ireland are certified under the ISO13485:2016 standard[92] - The average tenure of UTMD's employees is fifteen years, contributing to high-quality medical device production[81] - The company operates four facilities outside the U.S. to enhance market response and regulatory compliance[96] Product Safety and Efficacy - UTMD completed the replacement of all DEHP plasticizer PVC materials in its Gesco product line in 2006, addressing safety concerns for neonatal patients[33] - The EPITOME® electrosurgical scalpel offers significant improvements in wound healing and minimizes thermal side effects compared to other devices[43] - Filshie Clips have a reported migration rate of 6%, with Dr. Marcus Filshie estimating over 25% of patients may experience migration of one or more clips[50] - The U.S. FDA approved Filshie Clips in 1996 after a clinical trial involving 5,454 women, and the Sterishot applicator was approved in late 2016[52] Backlog and Future Outlook - Backlog shippable in less than 90 days was $1,627 million as of January 1, 2020, compared to $3,164 million as of January 1, 2019[100] - Internal product development expenses are expected to remain in the range of 1-2% of sales[80] - The Company anticipates that actual results may differ materially from forward-looking statements due to various risks and uncertainties[106]
Utah Medical Products(UTMD) - 2019 Q3 - Quarterly Report
2019-11-07 21:44
[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited consolidated condensed financial statements for the nine months ended September 30, 2019, covering balance sheet, income, cash flow, and equity, with notes on policies and the FILSHIE Clip System acquisition [Consolidated Condensed Balance Sheets](index=3&type=section&id=Consolidated%20Condensed%20Balance%20Sheets) Compares financial position as of September 30, 2019, to December 31, 2018, showing decreased cash and investments, increased intangible assets due to acquisition, and overall growth in total assets with reduced liabilities Consolidated Condensed Balance Sheet Highlights (in thousands) | Account | Sep 30, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | Cash & investments | $37,393 | $51,112 | | Total current assets | $49,513 | $60,903 | | Other intangible assets, net | $30,847 | $14,803 | | **Total assets** | **$104,094** | **$99,768** | | Total current liabilities | $3,686 | $5,260 | | **Total liabilities** | **$9,108** | **$10,776** | | **Total stockholders' equity** | **$94,986** | **$88,992** | [Consolidated Condensed Statements of Income](index=4&type=section&id=Consolidated%20Condensed%20Statements%20of%20Income) Details revenues, costs, and profits for the three and nine-month periods ended September 30, 2019, showing increased net sales but decreased operating and net income, largely due to a 2018 one-time tax benefit Nine Months Ended September 30, (in thousands, except per share amounts) | Metric | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | Sales, net | $35,073 | $32,242 | +8.8% | | Gross profit | $21,652 | $20,200 | +7.2% | | Operating income | $12,954 | $14,429 | -10.2% | | Net income | $10,369 | $15,162 | -31.6% | | Earnings per common share (diluted) | $2.77 | $4.04 | -31.4% | [Consolidated Condensed Statements of Cash Flows](index=5&type=section&id=Consolidated%20Condensed%20Statements%20of%20Cash%20Flows) Outlines cash flows for the nine months ended September 30, 2019, detailing cash from operations, significant outflows for intangible asset purchases and dividends, resulting in a net decrease in cash - Net cash provided by operating activities decreased to **$11.4 million** in 9M 2019 from **$12.4 million** in 9M 2018[10](index=10&type=chunk) - Investing activities used **$21.3 million** in cash, driven by a **$21.0 million** purchase of intangible assets[10](index=10&type=chunk) - Financing activities used **$3.3 million**, including **$3.1 million** for dividend payments and **$398 thousand** for stock repurchases[10](index=10&type=chunk) [Notes to Consolidated Condensed Financial Statements](index=7&type=section&id=Notes%20to%20Consolidated%20Condensed%20Financial%20Statements) Provides supplementary details on accounting policies, inventory, stock-based compensation, and revenue breakdown, highlighting the $21 million FILSHIE Clip System distribution rights acquisition and the adoption of the new lease accounting standard - On February 1, 2019, UTMD purchased exclusive U.S. distribution rights for the FILSHIE Clip System from CooperSurgical, Inc. (CSI) for **$21,000k**. This intangible asset will be amortized over **4.75 years**[24](index=24&type=chunk) Global 9M 2019 Revenues by Product Category (in thousands) | Product Category | Domestic | Outside US | Total | | :--- | :--- | :--- | :--- | | Obstetrics | $3,137 | $710 | $3,847 | | Gynecology/Electrosurgery/Urology | $8,503 | $10,237 | $18,740 | | Neonatal | $3,545 | $988 | $4,533 | | Blood Pressure Monitoring and Accessories | $5,181 | $2,772 | $7,953 | | **Total** | **$20,366** | **$14,707** | **$35,073** | - The company adopted the new lease standard (ASU 2016-02) on January 1, 2019, which resulted in the addition of right-of-use assets and lease liabilities of **$452k** to the balance sheet[14](index=14&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=12&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance for Q3 and 9M 2019, highlighting the impact of a 2018 one-time tax benefit, foreign exchange rates, the FILSHIE Clip System acquisition, and product mix shifts on gross margins, while affirming a strong, debt-free financial position - Financial comparisons to 2018 are masked by a favorable **$3.23 million** adjustment to the company's repatriation (REPAT) tax liability recorded in Q3 2018[29](index=29&type=chunk) - The acquisition of FILSHIE Clip System U.S. distribution rights from CSI in February 2019 increased sales but also added **$2,947k** in new amortization expense for the first nine months of 2019[37](index=37&type=chunk)[40](index=40&type=chunk) - A stronger U.S. dollar negatively impacted sales, reducing reported USD revenues by **$576k** in the first nine months of 2019 compared to the same period in 2018[36](index=36&type=chunk) [Analysis of Results of Operations](index=12&type=section&id=Analysis%20of%20Results%20of%20Operations) Provides detailed financial results for Q3 and 9M 2019, noting domestic sales growth driven by Filshie and OEM, a decline in OUS sales due to currency and exports, gross margin dilution from product mix, and increased operating expenses from amortization Non-GAAP Financial Comparison (9M 2019 vs 9M 2018) | Metric | 9M 2019 | 9M 2018 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $35,073 | $32,242 | +8.8% | | Operating Income | $12,954 | $14,429 | -10.2% | | NI Before REPAT Tax Adjust | $10,369 | $11,982 | -13.5% | | EPS Before REPAT Tax Adjust | $2.774 | $3.194 | -13.1% | - Gross Profit Margin (GPM) dilution in 2019 was caused by a product mix shift, with faster growth in lower-margin U.S. OEM sales and higher sales of low-GPM pressure transducer kits to the China distributor[38](index=38&type=chunk)[59](index=59&type=chunk) - Operating Expenses in 9M 2019 increased by **$2,927k** year-over-year, almost entirely due to the new **$2,947k** amortization expense from the CSI distribution rights acquisition[61](index=61&type=chunk)[62](index=62&type=chunk) [Liquidity and Capital Resources](index=21&type=section&id=Liquidity%20and%20Capital%20Resources) Details cash flow and balance sheet changes, noting a decrease in cash and investments due to significant outflows for FILSHIE distribution rights, inventory, dividends, and stock repurchases, while maintaining a strong, debt-free financial position with sufficient working capital - Cash and investments decreased by **$13.7 million** to **$37.4 million** at September 30, 2019, after investing **$23.1 million** in the CSI Filshie distribution rights and inventory, paying **$3.1 million** in dividends, and repurchasing **$0.4 million** in stock[45](index=45&type=chunk) - Net cash from operating activities was **$11.4 million** in 9M 2019, a decrease from **$12.4 million** in 9M 2018[86](index=86&type=chunk) - The company's total debt ratio was **9%** as of September 30, 2019, which includes the remaining **$2.4 million** REPAT tax liability payable over six years[93](index=93&type=chunk) [Management's Outlook](index=22&type=section&id=Management%27s%20Outlook) Management reaffirms its 2019 strategic plan, focusing on multinational integration, direct U.S. marketing of the FILSHIE Clip System, internal product development, and maintaining strong financial performance, alongside continued cash returns to shareholders - The company's strategic plan includes exploiting distribution synergies, focusing on direct U.S. marketing of the FILSHIE Clip System, and introducing new products[94](index=94&type=chunk) - UTMD will continue to return cash to stockholders via dividends and share repurchases if the stock price seems undervalued and no better strategic uses for cash are identified[89](index=89&type=chunk)[94](index=94&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=23&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Addresses the company's exposure to market risks, primarily foreign currency exchange rate fluctuations across multiple currencies, managed by invoicing in local currencies and optimizing global account structures without formal hedging instruments - The company is exposed to foreign currency risk from its operations in Ireland (EUR), England (GBP), Australia (AUD), and Canada (CAD)[97](index=97&type=chunk) - UTMD manages foreign currency risk without using separate hedging transactions, instead invoicing in local currencies and optimizing global liquidity management[97](index=97&type=chunk) [Controls and Procedures](index=23&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and Principal Financial Officer, concluded that the company's disclosure controls and procedures were effective as of September 30, 2019, with no material changes to internal controls over financial reporting identified - Based on an evaluation as of September 30, 2019, the CEO and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective[98](index=98&type=chunk) - No changes occurred during the nine months ended September 30, 2019, that materially affected, or are reasonably likely to materially affect, the company's internal controls over financial reporting[99](index=99&type=chunk) [PART II – OTHER INFORMATION](index=24&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Legal Proceedings](index=24&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no pending litigation expected to have a material impact on its financial results, despite potential incidental litigation - There is no current litigation whose outcome is expected to be material to the company's financial results[100](index=100&type=chunk) [Risk Factors](index=24&type=section&id=Item%201A.%20Risk%20Factors) Highlights key business risks, including the scheduled return of the medical device excise tax, increasing regulatory burdens, GPO market power, reliance on third-party distributors, and foreign currency fluctuations, referencing the 2018 Form 10-K for more detail - The medical device excise tax (MDET), suspended through 2019, is scheduled to be reinstated in 2020, posing a risk to future financial results[102](index=102&type=chunk) - Increasing regulatory burdens, such as premarketing approval delays, and the influence of Group Purchasing Organizations (GPOs) could result in lost revenue and unpredictable costs[103](index=103&type=chunk)[106](index=106&type=chunk) - Reliance on third-party distributors in some markets and fluctuations in foreign currencies relative to the USD are identified as significant risks[111](index=111&type=chunk)[113](index=113&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=25&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **5,000** of its own shares in the open market for **$398,000** during the first nine months of 2019, including commissions and fees - During the first nine months of 2019, UTMD purchased **5,000** of its shares in the open market for **$398,000**[114](index=114&type=chunk) [Exhibits](index=26&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the 10-Q report, primarily consisting of CEO and Principal Financial Officer certifications required by the Sarbanes-Oxley Act, and the company's financial data in XBRL format - The exhibits filed include CEO and CFO certifications pursuant to the Sarbanes-Oxley Act of 2002 and XBRL data files[116](index=116&type=chunk) [Signatures](index=27&type=section&id=SIGNATURES) Contains the formal signatures of the company's CEO, Kevin L. Cornwell, and Principal Financial Officer, Brian L. Koopman, dated November 7, 2019, authorizing the report filing - The report was duly signed and authorized on November 7, 2019, by Kevin L. Cornwell, CEO, and Brian L. Koopman, Principal Financial Officer[120](index=120&type=chunk)
Utah Medical Products(UTMD) - 2019 Q2 - Quarterly Report
2019-08-08 23:00
PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated condensed financial statements for Utah Medical Products, Inc. and its subsidiaries, including balance sheets, income statements, cash flow statements, and statements of stockholders' equity, along with explanatory notes covering accounting policies, inventory, stock-based compensation, warranty, revenue breakdown, leases, and the acquisition of distribution rights [Consolidated Condensed Balance Sheets](index=3&type=section&id=Consolidated%20Condensed%20Balance%20Sheets) Consolidated Condensed Balance Sheets (in thousands) | Metric (in thousands) | June 30, 2019 | December 31, 2018 | | :-------------------- | :------------ | :---------------- | | Cash & investments | $32,880 | $51,112 | | Total current assets | $46,225 | $60,903 | | Total assets | $103,361 | $99,768 | | Total current liabilities | $3,821 | $5,260 | | Total liabilities | $9,449 | $10,776 | | Total stockholders' equity | $93,912 | $88,992 | - Total assets increased by **$3,593 thousand** from December 31, 2018, to June 30, 2019, primarily due to an increase in intangible assets and inventories, offset by a decrease in cash and investments[8](index=8&type=chunk)[85](index=85&type=chunk) - Other intangible assets, net, significantly increased from **$14,803 thousand** at December 31, 2018, to **$32,890 thousand** at June 30, 2019, largely due to the acquisition of Filshie Clip System distribution rights[8](index=8&type=chunk)[85](index=85&type=chunk) [Consolidated Condensed Statements of Income](index=4&type=section&id=Consolidated%20Condensed%20Statements%20of%20Income) Consolidated Condensed Statements of Income (in thousands, except per share) | Metric (in thousands, except per share) | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Sales, net | $11,846 | $10,965 | $22,579 | $21,852 | | Gross profit | $7,500 | $6,984 | $14,273 | $13,906 | | Operating income | $4,481 | $5,056 | $8,582 | $10,027 | | Net income | $3,525 | $4,308 | $6,664 | $8,400 | | Earnings per common share (diluted) | $0.94 | $1.15 | $1.78 | $2.24 | - Net sales increased by **8.0%** for the three months ended June 30, 2019, and by **3.3%** for the six months ended June 30, 2019, compared to the same periods in 2018[10](index=10&type=chunk)[30](index=30&type=chunk) - Net income decreased by **18.2%** for the three months and **20.7%** for the six months ended June 30, 2019, primarily due to increased operating expenses (amortization of new intangible assets) and a higher income tax provision rate[10](index=10&type=chunk)[30](index=30&type=chunk)[72](index=72&type=chunk)[73](index=73&type=chunk) [Consolidated Condensed Statements of Cash Flows](index=5&type=section&id=Consolidated%20Condensed%20Statements%20of%20Cash%20Flows) Consolidated Condensed Statements of Cash Flows (in thousands) | Metric (in thousands) | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :-------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $5,043 | $7,747 | | Net cash provided by (used in) investing activities | $(21,130) | $735 | | Net cash provided by (used in) financing activities | $(2,282) | $(1,664) | | Net increase (decrease) in cash and cash equivalents | $(18,232) | $5,998 | | Cash at end of period | $32,880 | $45,873 | - Net cash used in investing activities significantly increased to **$(21,130) thousand** in 1H 2019, primarily due to a **$21,000 thousand** investment in intangible assets (Filshie Clip distribution rights)[12](index=12&type=chunk)[25](index=25&type=chunk)[80](index=80&type=chunk) - Net cash provided by operating activities decreased by **$2,704 thousand** in 1H 2019 compared to 1H 2018, mainly due to lower net income, increased amortization expense, and higher inventory investment[12](index=12&type=chunk)[80](index=80&type=chunk) [Consolidated Statement of Stockholders' Equity](index=6&type=section&id=Consolidated%20Statement%20of%20Stockholders%27%20Equity) Consolidated Statement of Stockholders' Equity (in thousands) | Metric (in thousands) | Balance at Dec 31, 2018 | Balance at Jun 30, 2019 | | :-------------------- | :---------------------- | :---------------------- | | Common Stock | $37 | $37 | | Additional Paid-in Capital | $121 | $0 | | Accumulated Other Comprehensive Income | $(11,290) | $(10,807) | | Retained Earnings | $100,123 | $104,682 | | Total Stockholders' Equity | $88,991 | $93,912 | - Total stockholders' equity increased by **$4,921 thousand** from December 31, 2018, to June 30, 2019, driven by net income and foreign currency translation adjustments, partially offset by common stock dividends and repurchases[14](index=14&type=chunk)[37](index=37&type=chunk) - The company paid **$2,055 thousand** in common stock dividends and repurchased **$398 thousand** of common stock during the six months ended June 30, 2019[14](index=14&type=chunk)[77](index=77&type=chunk)[110](index=110&type=chunk) [Notes to Consolidated Condensed Financial Statements](index=7&type=section&id=Notes%20to%20Consolidated%20Condensed%20Financial%20Statements) - The company adopted new accounting guidance for leases (ASU 2016-02, Topic 842) on January 1, 2019, resulting in the addition of **$452 thousand** in right-of-use assets and lease liabilities to the balance sheet, with no effect on the income statement[17](index=17&type=chunk) Inventories (in thousands) | Category | June 30, 2019 | December 31, 2018 | | :-------------- | :------------ | :---------------- | | Finished goods | $3,145 | $1,615 | | Work-in-process | $1,217 | $1,103 | | Raw materials | $3,350 | $2,694 | | **Total** | **$7,712** | **$5,412** | - UTMD completed the purchase of exclusive U.S. distribution rights for the FILSHIE Clip System from CooperSurgical, Inc. (CSI) on February 1, 2019, for **$21,000 thousand**, which is recognized as an identifiable intangible asset amortized over **4.75 years**[25](index=25&type=chunk) Global Revenues by Product Category (in thousands) | Product Category | 2Q 2019 | 2Q 2018 | 1H 2019 | 1H 2018 | | :-------------------------------- | :------- | :------- | :------- | :------- | | Obstetrics | $1,232 | $1,095 | $2,571 | $2,181 | | Gynecology/Electrosurgery/Urology | $6,763 | $6,073 | $12,345 | $12,275 | | Neonatal | $1,436 | $1,806 | $2,947 | $3,603 | | Blood Pressure Monitoring and Accessories | $2,415 | $1,991 | $4,716 | $3,793 | | **Total** | **$11,846**| **$10,965**| **$22,579**| **$21,852**| [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=10&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance for the second quarter and first half of 2019, discussing key drivers of revenue, profitability, and cash flows. It highlights the impact of foreign exchange rates, the acquisition of Filshie Clip distribution rights, and changes in operating expenses and tax rates. The section also covers liquidity, capital resources, and management's outlook for the remainder of 2019 [General](index=10&type=section&id=General) - UTMD manufactures and markets a range of specialty medical devices, with its 2018 Form 10-K providing detailed business descriptions[28](index=28&type=chunk) - Financial results for short periods may not indicate full-year comparative results, and currency amounts are in thousands, except per share amounts[28](index=28&type=chunk) [Analysis of Results of Operations](index=10&type=section&id=Analysis%20of%20Results%20of%20Operations) [Overview](index=10&type=section&id=Overview) Income Statement Results (in thousands, except per share) | Metric | 2Q 2019 | 2Q 2018 | Change | 1H 2019 | 1H 2018 | Change | | :---------------------- | :------- | :------- | :------- | :------- | :------- | :------- | | Net Sales | $11,846 | $10,965 | +8.0% | $22,578 | $21,852 | +3.3% | | Gross Profit | $7,500 | $6,984 | +7.4% | $14,273 | $13,906 | +2.6% | | Operating Income | $4,481 | $5,056 | (11.4%) | $8,582 | $10,027 | (14.4%) | | Net Income | $3,525 | $4,308 | (18.2%) | $6,664 | $8,400 | (20.7%) | | Earnings per Diluted Share | $0.944 | $1.148 | (17.8%) | $1.783 | $2.239 | (20.4%) | - Financial results were negatively impacted by a stronger USD, new intangible asset amortization from the Filshie Clip System acquisition, and a higher consolidated income tax provision rate[30](index=30&type=chunk) - Foreign currency exchange rates had a weighted average negative impact of **5.6%** on foreign currency sales in 2Q 2019 and **6.1%** in 1H 2019, reducing reported USD sales by **$194 thousand** and **$431 thousand**, respectively[31](index=31&type=chunk) Profit Margins | Margin Metric | 2Q 2019 | 2Q 2018 | 1H 2019 | 1H 2018 | | :------------------------ | :------ | :------ | :------ | :------ | | Gross Profit Margin | 63.3% | 63.7% | 63.2% | 63.6% | | Operating Income Margin | 37.8% | 46.1% | 38.0% | 45.9% | | Net Income Margin | 29.8% | 39.3% | 29.5% | 38.4% | [Revenues](index=12&type=section&id=Revenues) - Total consolidated sales increased by **8.0%** in 2Q 2019 and **3.3%** in 1H 2019, with constant currency sales up **9.8%** and **5.3%** respectively[41](index=41&type=chunk) - Domestic sales increased by **28%** in 2Q 2019 and **19%** in 1H 2019, while OUS sales decreased by **12%** in both periods, partly due to a stronger USD and a pause in U.S. neonatal device exports[42](index=42&type=chunk)[43](index=43&type=chunk)[45](index=45&type=chunk) - Filshie device sales direct to U.S. domestic end-user facilities increased by **64%** in 2Q 2019 and **24%** in 1H 2019 compared to sales to CSI in the prior year[43](index=43&type=chunk) OUS Revenues by Product Category (in thousands) | Product Category | 2Q 2019 | 2Q 2018 | 1H 2019 | 1H 2018 | | :-------------------------------- | :------- | :------- | :------- | :------- | | Obstetrics | $194 | $204 | $507 | $413 | | Gynecology/Electrosurgery/Urology | $3,534 | $3,695 | $7,038 | $7,602 | | Neonatal | $287 | $707 | $627 | $1,455 | | Blood Pressure Monitoring and Accessories | $835 | $878 | $1,616 | $1,646 | | **Total** | **$4,850** | **$5,484** | **$9,788** | **$11,116**| [Gross Profit (GP)](index=14&type=section&id=Gross%20Profit%20%28GP%29) - Gross profit increased by **7.4%** in 2Q 2019 and **2.6%** in 1H 2019, roughly consistent with revenue growth[53](index=53&type=chunk) - Gross Profit Margin did not increase from the Filshie device sales direct to U.S. end-users in 2019 because UTMD was selling repurchased CSI inventory, with significant improvement not expected until 2020[33](index=33&type=chunk)[53](index=53&type=chunk) [Operating Income (OI)](index=14&type=section&id=Operating%20Income%20%28OI%29) - Operating expenses increased significantly to **$3,019 thousand (25.5% of sales)** in 2Q 2019 and **$5,691 thousand (25.2% of sales)** in 1H 2019, up from **$1,928 thousand (17.6% of sales)** and **$3,880 thousand (17.8% of sales)** in the prior year periods[53](index=53&type=chunk) - The increase in operating expenses was primarily due to a new **$1,105 thousand (2Q 2019)** and **$1,842 thousand (1H 2019)** identifiable intangible asset (IIA) amortization expense from the Filshie device distribution rights acquisition[34](index=34&type=chunk)[56](index=56&type=chunk)[58](index=58&type=chunk) - Excluding Filshie-related IIA amortization, G&A expenses decreased slightly in 2Q and 1H 2019, while S&M expenses increased due to direct marketing of Filshie devices[56](index=56&type=chunk)[59](index=59&type=chunk)[63](index=63&type=chunk) Consolidated Operating Expenses (in thousands) | Expense Category | 2Q 2019 | 2Q 2018 | 1H 2019 | 1H 2018 | | :---------------------- | :------ | :------ | :------ | :------ | | S&M Expense | $466 | $430 | $883 | $839 | | R&D Expense | $113 | $117 | $228 | $230 | | G&A Expense | $2,440 | $1,382 | $4,580 | $2,810 | | **Total Operating Expenses** | **$3,019**| **$1,928**| **$5,691**| **$3,880**| [Non-operating expense (NOE)/ Non-operating income (NOI)](index=16&type=section&id=Non-operating%20expense%20%28NOE%29%2F%20Non-operating%20income%20%28NOI%29) - Net non-operating income (NOI) was **$85 thousand** in 2Q 2019 and **$120 thousand** in 1H 2019, significantly lower than **$501 thousand** and **$538 thousand** in the same periods of 2018[66](index=66&type=chunk)[69](index=69&type=chunk) - The decrease in NOI was primarily due to a one-time **$418 thousand** gain on the sale of an unneeded storage facility in 2Q 2018 that did not recur in 2019[30](index=30&type=chunk)[35](index=35&type=chunk)[66](index=66&type=chunk)[69](index=69&type=chunk) [Income Before Income Taxes (EBT)](index=16&type=section&id=Income%20Before%20Income%20Taxes%20%28EBT%29) - Consolidated EBT decreased to **$4,565 thousand (38.5% of sales)** in 2Q 2019 and **$8,702 thousand (38.5% of sales)** in 1H 2019, from **$5,556 thousand (50.7% of sales)** and **$10,565 thousand (48.3% of sales)** in the prior year periods[68](index=68&type=chunk) - Adjusted consolidated EBITDA (excluding noncash effects, currency gain/loss, and interest expense) was **$6,397 thousand** in 2Q 2019 and **$12,062 thousand** in 1H 2019, indicating consistent operating performance despite the non-recurring gain in 2018[71](index=71&type=chunk) [Net Income (NI)](index=16&type=section&id=Net%20Income%20%28NI%29) - Net income decreased by **18.2%** to **$3,525 thousand** in 2Q 2019 and by **20.7%** to **$6,664 thousand** in 1H 2019[72](index=72&type=chunk)[73](index=73&type=chunk) - Net Income Margin (NIM) was **29.8%** in 2Q 2019 and **29.5%** in 1H 2019, down from **39.3%** and **38.4%** respectively in the prior year periods[72](index=72&type=chunk)[73](index=73&type=chunk) - The average consolidated income tax provision rate increased to **22.8%** in 2Q 2019 (from 22.5% in 2Q 2018) and **23.4%** in 1H 2019 (from 20.5% in 1H 2018), partly due to the new GILTI tax and a shift of Filshie-related EBT to the U.S.[36](index=36&type=chunk)[72](index=72&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk) [Earnings Per Share (EPS)](index=17&type=section&id=Earnings%20Per%20Share%20%28EPS%29) - Diluted EPS decreased by **17.8%** to **$0.944** in 2Q 2019 and by **20.4%** to **$1.783** in 1H 2019, consistent with the decline in net income[74](index=74&type=chunk) - The company paid **$0.275 per share** in dividends in 2Q 2019 and 1H 2019, representing **29%** and **31%** of net income, respectively[77](index=77&type=chunk) - UTMD repurchased **5,000 shares** at an average price of **$79.52 per share** during 1H 2019, following **15,000 shares** repurchased in 4Q 2018[78](index=78&type=chunk)[110](index=110&type=chunk) [Return on Equity (ROE)](index=18&type=section&id=Return%20on%20Equity%20%28ROE%29) - Annualized ROE (before stockholder dividends) in 1H 2019 was **15%**, down from **21%** in 1H 2018, primarily due to lower net income resulting from the new IIA amortization expense[79](index=79&type=chunk) - Targeting a high ROE of **20%** remains a key financial objective for management[79](index=79&type=chunk) [Liquidity and Capital Resources](index=18&type=section&id=Liquidity%20and%20Capital%20Resources) [Cash flows](index=18&type=section&id=Cash%20flows) - Net cash provided by operating activities decreased to **$5,043 thousand** in 1H 2019 from **$7,747 thousand** in 1H 2018, mainly due to lower net income, no gain from asset sales, and increased investment in inventories[80](index=80&type=chunk) - Capital expenditures for property and equipment were **$130 thousand** in 1H 2019, down from **$201 thousand** in 1H 2018[81](index=81&type=chunk) - Management believes current cash balances, operating income, and working capital management will provide sufficient liquidity for internal growth, with excess cash potentially used for investments, acquisitions, dividends, or share repurchases[83](index=83&type=chunk) [Assets and Liabilities](index=19&type=section&id=Assets%20and%20Liabilities) - Total consolidated assets increased by **$3,593 thousand** to **$103,361 thousand** at June 30, 2019, from December 31, 2018[85](index=85&type=chunk) - Working capital decreased to **$42,405 thousand** at June 30, 2019, from **$55,643 thousand** at December 31, 2018, primarily due to an **$18,232 thousand** decrease in cash and investments related to the Filshie device distribution rights and inventory purchase[86](index=86&type=chunk) - Net intangible assets, including goodwill, increased by **$18,063 thousand** to **45%** of total consolidated assets at June 30, 2019, compared to **29%** at year-end 2018[87](index=87&type=chunk) - UTMD's total debt ratio (total liabilities/total assets) improved to **9%** at June 30, 2019, from **11%** at the end of 2018[89](index=89&type=chunk) [Management's Outlook](index=19&type=section&id=Management%27s%20Outlook) - Management expects to substantially achieve its 2019 financial objectives, including exploiting distribution synergies, focusing on direct marketing of the Filshie Tubal Ligation System in the U.S., introducing new products, maintaining strong financial performance, returning cash to stockholders, and seeking accretive acquisition opportunities[89](index=89&type=chunk) [Accounting Policy Changes](index=19&type=section&id=Accounting%20Policy%20Changes) - UTMD adopted ASU 2014-09 (Revenue from Contracts with Customers) on January 1, 2018, and ASC Update No. 2016-02 (Leases) on January 1, 2019[89](index=89&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=20&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to market risks, primarily foreign currency exchange rate fluctuations, given its multinational operations in USD, EUR, GBP, AUD, and CAD. UTMD manages this risk through invoicing strategies and liquidity management, rather than separate hedging transactions - UTMD is exposed to foreign currency exchange rate fluctuations due to manufacturing and trading operations in the U.S. (USD), Ireland (EUR), England (GBP), Australia (AUD), and Canada (CAD)[91](index=91&type=chunk) - The company manages foreign currency risk by invoicing customers in local currency where costs are incurred, converting currencies as transactions occur, and optimizing global account structures, without using separate hedging transactions[91](index=91&type=chunk) [Item 4. Controls and Procedures](index=21&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and Principal Financial Officer, evaluated the effectiveness of the company's disclosure controls and procedures as of June 30, 2019, concluding they were effective. No material changes to internal controls over financial reporting occurred during the six months ended June 30, 2019 - The CEO and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2019[93](index=93&type=chunk) - There were no material changes in the company's internal controls over financial reporting during the six months ended June 30, 2019[94](index=94&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=22&type=section&id=Item%201.%20Legal%20Proceedings) The company may be involved in litigation incidental to its business, but currently, there is no litigation expected to have a material impact on financial results - Currently, there is no litigation whose outcome is expected to be material to UTMD's financial results[96](index=96&type=chunk) [Item 1A. Risk Factors](index=22&type=section&id=Item%201A.%20Risk%20Factors) This section refers investors to the detailed risk factors in the company's 2018 Form 10-K and highlights additional risks, including legislative healthcare reform (e.g., MDET), increasing regulatory burdens and premarketing approval delays, the impact of Group Purchasing Organizations (GPOs), challenges to business strategy, competitive disadvantages for smaller companies in a bureaucratic healthcare industry, product liability lawsuits, reliance on third-party distributors, loss of key employees, and fluctuations in foreign currencies - Investors should consider risk factors from the 2018 Form 10-K, as well as additional risks not currently known or deemed immaterial[97](index=97&type=chunk) - Key risks include the unpredictable U.S. medical device marketplace due to healthcare reform (e.g., suspended MDET), increasing regulatory burdens leading to potential revenue loss and management distraction, and the negative impact of Group Purchasing Organizations (GPOs) on marketing and sales efforts[98](index=98&type=chunk)[99](index=99&type=chunk)[102](index=102&type=chunk) - Other risks involve the potential for an unsuccessful business strategy, competitive disadvantages for smaller companies in a bureaucratic healthcare industry, significant legal expenses from product liability lawsuits, less predictable revenues due to reliance on third-party distributors, the loss of key employees, and significant financial differences from foreign currency fluctuations[104](index=104&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=23&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the first half of 2019, UTMD repurchased 5,000 shares of its common stock in the open market for $398 thousand, including commissions and fees - UTMD purchased **5,000 shares** of its common stock in the open market for **$398 thousand** during 1H 2019[110](index=110&type=chunk) - No shares were purchased in 1H 2018[110](index=110&type=chunk) [Item 6. Exhibits](index=24&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications from the CEO and Principal Financial Officer as required by the Sarbanes-Oxley Act, and various XBRL-related documents - Exhibits include certifications from the CEO and Principal Financial Officer (pursuant to Rules 13a-14(a) and 18 U.S.C. §1350) and various XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation)[111](index=111&type=chunk) [SIGNATURES](index=24&type=section&id=SIGNATURES) The report is duly signed on behalf of Utah Medical Products, Inc. by Kevin L. Cornwell, CEO, and Brian L. Koopman, Principal Financial Officer, on August 7, 2019 - The report was signed by Kevin L. Cornwell (CEO) and Brian L. Koopman (Principal Financial Officer) on August 7, 2019[115](index=115&type=chunk)
Utah Medical Products(UTMD) - 2019 Q1 - Quarterly Report
2019-05-08 21:46
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10‑Q Quarterly Report Under Section 13 or 15(d) of The Securities Exchange Act of 1934 For quarter ended: March 31, 2019 Commission File No. 001-12575 UTAH MEDICAL PRODUCTS, INC. (Exact name of Registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) UTAH 87‑0342734 7043 South 300 West Midvale, Utah 84047 Address of principal executive offices Regist ...
Utah Medical Products(UTMD) - 2018 Q4 - Annual Report
2019-03-14 20:26
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 Commission File Number: 001-12575 UTAH MEDICAL PRODUCTS, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 7043 S 300 W, Midvale Utah 84047 (Address of principal executive offices) (Zip Code) ...