Utah Medical Q3 Earnings Decline Y/Y on Lower OEM Sales

Core Insights - Utah Medical Products, Inc. (UTMD) reported a decrease in earnings per share (EPS) to $1.025, down 5.2% from the previous year, with revenues dropping 20% year over year to $10 million [1][2] Revenue Performance - Worldwide consolidated sales decreased by 20%, with U.S. sales down 21.7% and international sales down 17.6% [3] - Domestic OEM sales experienced a significant decline of 54.7%, primarily due to a $1.1 million drop in PendoTECH sales, while direct Filshie Clip System sales fell by 10.7% [3] Profitability Metrics - Gross profit decreased by 21.2% to $5.8 million, with gross profit margin slightly contracting from 58.8% to 58% due to material cost inflation and lower operational efficiencies [4] - Operating income fell by 15.8% to $3.3 million, but the operating income margin improved from 31.7% to 33.4% due to reduced operating expenses [6] - Net income was reported at $3.6 million, a decrease of 9.4%, yet the net income margin improved from 31.5% to 35.6% [7] Operating Expenses - Operating expenses were reduced to $2.5 million, a 27.5% decrease from $3.4 million in the same quarter of the previous year, largely due to the end of amortization related to previous acquisitions [5] Non-Operating Income - Net non-operating income rose to $0.84 million from $0.81 million, supported by higher interest income and currency remeasurement gains, despite the impact of the U.S. excise tax on share repurchases [8] Balance Sheet Overview - As of September 30, 2024, cash and investments totaled $88.5 million, down from $92.9 million at the end of 2023, while total assets decreased to $129.7 million [9] - Current liabilities were reduced to $3.4 million, and stockholders' equity stood at $124.2 million, reflecting a minor decrease [9] Management Guidance - Management anticipates a $6 million annual revenue decline in 2024, primarily from reduced PendoTECH sales, projecting an overall revenue decline of around 18-19% year over year [10] - EBITDA is projected to range from $19 to $20 million for the full calendar year, indicating a focus on maintaining operational profitability [10] Share Repurchase Activity - During the third quarter, UTMD repurchased 58,377 shares at an average cost of $66.22 per share, totaling $3.9 million, reflecting management's confidence in the company's long-term value [11]