United-Guardian(UG) - 2021 Q3 - Quarterly Report

Financial Performance - Net sales for the three months ended September 30, 2021, were $3,179,746, a 36.1% increase from $2,336,360 in the same period of 2020[13] - Net income for the nine months ended September 30, 2021, was $3,542,232, representing a 31.5% increase compared to $2,694,450 for the same period in 2020[13] - For the nine months ended September 30, 2021, total sales reached $10,268,592, up 19% from $8,613,918 in the prior year[46] - Basic earnings per share for the three months ended September 30, 2021, was $0.22, compared to $0.16 for the same period in 2020, marking a 37.5% increase[71] - Diluted earnings per share for the nine months ended September 30, 2021, was $0.77, up from $0.59 in 2020, reflecting a 30.5% increase[71] Expenses and Costs - Research and development expenses increased to $130,742 for the three months ended September 30, 2021, up from $114,836 in the same period of 2020, indicating a focus on innovation[13] - The Company has seen a substantial improvement in sales of its cosmetic ingredients, although still negatively impacted by increased shipping costs and higher raw material costs[84] - The Company experienced increased costs due to supply chain disruptions, affecting packaging and shipping expenses[28] - Operating expenses decreased by $34,622 (7%) for Q3 2021 and by $91,393 (6%) for the first nine months of 2021, mainly due to reduced payroll expenses[105] - Research and development expenses increased by $15,906 (14%) for Q3 2021 and by $17,919 (5%) for the first nine months of 2021, primarily due to higher payroll costs[106] Assets and Liabilities - Total current assets rose to $12,962,153 as of September 30, 2021, compared to $11,246,611 at the end of 2020, reflecting improved liquidity[15] - Cash and cash equivalents increased to $691,921 as of September 30, 2021, from $591,444 at the end of 2020, showing a positive cash flow position[15] - Total liabilities increased to $1,707,217 as of September 30, 2021, compared to $1,414,285 at the end of 2020, indicating a rise in current obligations[17] - The allowance for doubtful accounts receivable was $27,296 as of September 30, 2021, up from $14,017 at the end of 2020[42] - The Company reported total accrued expenses of $1,542,760 as of September 30, 2021, compared to $1,363,457 as of December 31, 2020, indicating an increase of 13.2%[64] Sales and Market Performance - Cosmetic ingredients sales for the three months ended September 30, 2021, were $1,578,650, compared to $550,177 in 2020, representing a 187% increase[46] - Approximately 16% of total sales in Q3 2021 were to customers outside the United States, down from 22% in Q3 2020[46] - Sales for Q3 2021 increased by $843,386 (36%) compared to Q3 2020, and for the first nine months of 2021, sales increased by $1,654,674 (19%) compared to the same period in 2020[94] - Sales of cosmetic ingredients in Q3 2021 rose by $1,028,473 (187%) compared to Q3 2020, primarily driven by a $983,466 (308%) increase in personal care product sales to ASI[95] - Pharmaceutical gross sales decreased by $92,405 (6%) for Q3 2021 and $178,459 (4%) for the first nine months of 2021, mainly due to a decline in Renacidin sales after terminating participation in the Medicaid Drug Rebate Program[97][99] Dividends and Contributions - The company declared dividends of $0.48 per share, totaling $2,204,616 for the nine months ended September 30, 2021, compared to $1,928,969 in the same period of 2020[24] - The Company accrued $87,000 in contributions to the 401(k) defined contribution plan for the nine months ended September 30, 2021, compared to $108,750 for the same period in 2020, indicating a decrease of 19.9%[61] Operational Impact of COVID-19 - The company maintained production throughout the COVID-19 pandemic, with minimal impact on pharmaceutical product sales[28] - The impact of COVID-19 led to a significant decline in sales of cosmetic ingredients in 2020, particularly in China, resulting in excess inventory[122] - Sales of cosmetic ingredients in Q1 2021 were slightly lower than Q1 2020 due to the ongoing effects of the pandemic[124] - The Company is unable to project the future impact of the pandemic on its operations or financial results, although it does not expect impairment of asset carrying values or liquidity[88] - The Company does not expect the pandemic to affect its ability to obtain raw materials or maintain production levels[126] Supply Chain and Raw Material Concerns - The Company anticipates continued supply chain disruptions affecting packaging and shipping costs, as well as raw material prices[125] - Some raw materials have experienced price increases, which may impact future manufacturing costs[126] - The timely shipping of products may continue to be affected by a shortage of truck drivers[126]