neonatal intensive care unit (NICU) devices

Search documents
Utah Medical Q1 Earnings Drop 16% on Sales Slump, Stock Up 1%
ZACKSยท 2025-05-05 18:35
Core Viewpoint - Utah Medical Products, Inc. (UTMD) reported a decline in earnings and sales for the first quarter of 2025, leading to muted investor enthusiasm as reflected in its stock performance compared to the S&P 500 index [1][2]. Financial Performance - Earnings per share (EPS) for Q1 2025 were 92 cents, a 16% decrease from $1.09 in the same quarter last year [2]. - Net sales were $9.7 million, down 14.4% from $11.3 million year-over-year [2]. - Gross profit declined 18.1% year-over-year to $5.5 million [2]. - Operating income fell 18.8% to $3.2 million, while net income decreased 23.1% to $3 million [3]. Business Metrics - Gross profit margin decreased to 57% from 59.7% due to challenges in aligning fixed manufacturing overhead costs with declining sales volume [4]. - Operating income margin slipped to 32.5% from 34.2%, and net income margin contracted to 31.3% from 34.9% [5]. - Domestic direct sales increased by 11.6% year-over-year, driven by recovering demand for neonatal intensive care unit (NICU) devices [5]. - U.S. OEM sales dropped significantly by 61.3%, primarily due to reduced purchases by PendoTECH [5]. - International sales declined 19.8% year-over-year, affected by lower volumes and adverse currency effects [6]. Management Commentary - Management indicated that the sales decline was mainly due to reduced OEM orders from PendoTECH, which accounted for 91% of the total sales decline [7]. - Gross margin erosion was attributed to fixed overhead costs not decreasing in line with revenue drops [7]. - General and administrative costs were reduced, while sales and marketing expenses increased due to higher employee costs and trade show activities [7]. - The effective tax rate rose to 21.2% from 17.6% the previous year, impacting net income due to a shift in income mix and a tax provision related to repatriated earnings [8]. Outlook - Management did not provide specific financial forecasts but stated that Q1 performance aligns with full-year expectations outlined in the 2024 10-K filing [9]. - The company anticipates that revenue and gross margin levels will remain consistent throughout the year, targeting an adjusted EBITDA of approximately $18 million for 2025 [9]. Other Developments - During the quarter, UTMD repurchased 54,267 shares at an average price of $59.35, utilizing $3.2 million in cash [10]. - The company paid $1 million in dividends and maintained a strong financial position, with cash and investments totaling $83.3 million at the end of the quarter [10][11]. - Stockholders' equity remained stable at $117 million, reflecting financial discipline amid capital return activities [11].