PRESS RELEASE
Utah
Medical Products, Inc.
Reports Financial Performance for
First Quarter 2007
April
24, 2007
Contact: Paul Richins
(801) 566-1200
Salt Lake City, Utah - Utah Medical Products,
Inc. (Nasdaq:UTMD) reports changes in measures of financial performance for
First Quarter (1Q) 2007 compared to 1Q 2006, as follows:
Sales |
n/c
|
Gross Profits |
(
2%) |
Operating Profits |
+ 2% |
Earnings before Taxes (EBT) |
(
2%) |
Net Income |
(
4%) |
Earnings per Share (EPS) |
(
3%) |
Compared to 1Q 2006, 1Q 2007 gross profits
declined 2% even though overall sales were slightly higher because of a mix
shift in distribution channels. International sales at wholesale prices were
up 20%, while domestic sales at retail prices were down 5%. Operating
profits were up 2% because operating expenses were $130,000 lower as a
result of lower litigation expenses and lower sales expenses when selling
through international distributors. Also, option compensation expense
included in G&A expenses in 1Q 2007 was $19,137 compared to $42,906 in 1Q
2006.
1Q 2007 EBT were 2% lower because UTMD realized $212,000 in capital gains
when liquidating investment holdings in 1Q 2006, which did not recur in 1Q
2007. Net income was 4% lower because of the lower EBT together with a
higher income tax provision rate, 35.0% in 1Q 2007 compared to 33.2% in 1Q
2006. The increased tax rate resulted primarily from IRS discontinuance of
the ETI deduction (extraterritorial income exclusion). EPS declined less
than net income because diluted shares used to calculate EPS declined from
4,069,630 in 1Q 2006 to 4,015,955 in 1Q 2007 as a result of continuing share
repurchases.
In 1Q 2007, UTMD achieved a consolidated gross profit margin (GPM) of 55.3%
and a net profit margin of 27.3%. In 1Q 2006, those respective profit
margins were 56.4% and 28.7%. Although lower than the prior year, these 1Q
2007 margins remain within management’s targets.
Comparing 1Q 2007 sales to 1Q 2006 sales in product categories, gynecology/
electrosurgery product sales were up 9%, blood pressure monitoring/
components sales were up 4%, neonatal product sales were down 1%, and
obstetrics product sales were down 6%. Trade shipments from UTMD Ireland
were up 9% in EURO terms, but 19% in US Dollar (USD) terms because of a
weaker USD. Because UTMD manufactures about 54% of its products sold
overseas in Ireland, a weaker USD also contributes to the dilution of GPM.
UTMD’s balance sheet remained strong. Please note that UTMD has classified
$441,000 from the (Ireland) Note Payable into Current Liabilities because
this amount of principal in current USD terms is due to be repaid within the
next year. Prior to December 31, 2006, the entire remaining balance of the
Note was classified in Liabilities below Current Liabilities on the Balance
Sheet. This reclassification reduces the Current Ratio as it was reported in
prior press releases since 4Q 2005.
Compared to December 31, 2006, cash and investments increased about $0.6
million even though inventories and receivables also increased $0.7 million,
which consumes operating cash. Stockholders’ Equity increased $0.7 million
even though dividends and share repurchases, which reduce Stockholders’
Equity, totaled $1.4 million. The increase in 1Q 2007 accrued liabilities
resulted from the fact that in the 1Q unlike other calendar quarters,
estimated income tax payments are due after the end of the quarter. Also
unlike 1Q 2007, in 1Q 2006 accrued income taxes from EBT were offset by a
much larger than usual tax benefit resulting from option exercises. Looking
forward, the Company expects accrued liabilities more consistent with prior
quarters.
Financial ratios, all of which meet management objectives, follow:
1) Current Ratio (including the current portion of Ireland loan) = 7.0
2) Days in Receivables (based on 1Q sales activity) = 49
3) Average Inventory Turns (based on 1Q CGS) = 4.1
4) Year-to-Date ROE (after payment of dividends) = 12%
Year-to-Date ROE (before payment of dividends) = 21%
UTMD's dilution from unexercised option shares
added to actual weighted average outstanding shares for purposes of
calculating eps was 74,500 in 1Q 2007 compared to 117,300 in 1Q 2006. The
actual number of outstanding shares at the end of 1Q 2007 was 3,946,400
which included 1Q employee and outside director option exercises of 25,900
shares and 1Q share repurchases of 16,900. The average price paid by the
Company to repurchase shares in the open market during 1Q 2007 was $32.18
including commissions. The total number of outstanding unexercised options
at March 31, 2007 was about 201,500 shares at an average exercise price of
$20.33/ share, including shares awarded but not vested. This compares to
280,300 option shares outstanding at the end of 1Q 2006.
Risk 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,
distribution limits 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 UTMD's
public disclosure filings with the SEC. The SEC Form 10-Q for 1Q 2007 will
be filed with the SEC by May 10.
Utah 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 at www.utahmed.com.
|
Net Sales
Gross Profit
Operating Income
Income Before Tax
Net Income
Earnings Per Share (EPS)
Shares Outstanding (diluted) |
1Q
2007
$7,118
3,937
2,691
2,991
1,944
$0.484
4,016
|
1Q
2006
$7,104
4,007
2,632
3,046
2,036
$0.500
4,070 |
Percent
Change
-
(1.8%)
+2.2%
(1.8%)
(4.5%)
(3.2%) |
|
|
|
(unaudited) |
(audited) |
(unaudited) |
|
MAR
31, 2007 |
DEC
31, 2006 |
MAR 31, 2006 |
Assets |
|
|
|
Cash &
Investments |
$
21,645 |
$
21,049 |
$
17,423 |
Accounts
& Other Receivables, Net |
4,279 |
3,746 |
4,825 |
Inventories |
3,204 |
3,037 |
3,470 |
Other Current Assets |
680 |
579 |
655 |
Total Current Assets |
29,808 |
28,411 |
26,373 |
Property & Equipment,
Net |
8,346 |
8,331 |
8,258 |
Intangible Assets, Net |
7,441 |
7,445 |
7,612 |
Total Assets |
$
45,595 |
$ 44,187 |
$ 42,243 |
|
|
|
|
Liabilities
&
Stockholders’ Equity |
|
|
|
A/P
& Accrued Liabilities |
$
3,829 |
$
2,940 |
$
2,848 |
Current Portion of Note Payable |
441 |
441 |
458 |
Total Current Liabilities |
4,270 |
3,381 |
3,306 |
Note Payable (excluding current
portion) |
4,223 |
4,383 |
4,793 |
Deferred Income Taxes |
311 |
308 |
257 |
Stockholders’ Equity |
36,791 |
36,115 |
33,887 |
Total Liabilities
&
|
$ 45,595 |
$ 44,187 |
$ 42,243 |
Stockholders’ Equity |
|