PRESS RELEASE
Utah
Medical Products, Inc.
Reports Financial Performance for
Second Quarter 2006
July
20, 2006
Contact: Paul Richins
(801) 566-1200
Salt Lake City, Utah - In the second calendar
quarter (2Q) of 2006, Utah Medical Products, Inc.’s (Nasdaq: UTMD)
consolidated sales were up 4%, gross profits up 1%, operating profits up 5%,
net income up 9%, and earnings per share (eps) up 14%, compared to 2Q 2005.
Comparing 2Q 2006 sales to 2Q 2005 sales in product categories, neonatal
product sales were up 4%, obstetrics product sales were down 1%, gynecology/
electrosurgery product sales were up 18% and blood pressure monitoring/
components sales were down 1%. Domestic sales in 2Q 2006 were down 2%, while
international sales were up 21% compared to the same quarter last year.
Although trade shipments from Ireland were down 8% in EURO terms, they were
only down 6% in US Dollar terms because of a weaker U.S. dollar.
UTMD’s gross profit margin in 2Q 2006 was only 55.9% compared to 57.2% in 2Q
2005, primarily because the current quarter’s sales growth was driven by
international shipments at lower than average prices. Even with a lower
gross profit margin, 2Q 2006 operating profits grew more than the rate of
sales growth because operating expenses declined to 20.3% of sales compared
to 22.1% of sales in 2Q 2005. Litigation expenses, which are part of G&A
expenses, were $279,000 lower than in 2Q 2005. The lower litigation expenses
were offset by $32,800 in G&A expenses for estimated option expense,
according to valuations established by the Black-Scholes model, which were
not part of 2Q 2005 expenses. The impact of expensing options, which did not
occur in the prior year, to year-to-date operating expenses for the first
half (1H) of 2006 was $75,700. In addition, higher 2Q 2006 R&D expenses
resulted from a one-time $130,000 write-off of intellectual property which
looks as if it will not come to fruition in terms of a marketable product.
Net income was up substantially because, in addition to the increase in
operating profits, the Company liquidated most of its investments in common
stock securities, resulting in realizing capital gains of $305,000 during 2Q
2006. Virtually all of UTMD’s excess cash is now invested in short term
money market instruments, currently yielding about 4.9%. Partially
offsetting the higher non-operating income from investments, the Company’s
consolidated provision for income taxes in 2Q 2006 was 35.0% of pretax
profits compared to 29.7% in 2Q 2005. In 2005, UTMD benefited from The
American Jobs Creation Act of 2004 which allowed a tax deduction on foreign
earnings repatriated in 2005.
According to CEO Kevin Cornwell, “Based on an excellent operating
performance during the first half of the year, the Company is well on its
way to meeting its overall plan for 2006.” Comparing year-to-date financial
results for 1H 2006 with 1H 2005,
Sales |
+ 5% |
Gross Profits |
+ 4% |
Operating Profits |
+ 4% |
Earnings before Taxes (EBT) |
+ 13% |
Net Income |
+ 6% |
Earnings per Share (EPS) |
+12% |
Eps for the most recent 4 calendar quarters
were $1.91.
Financial ratios as of June 30, 2006 which may be of interest to
shareholders follow:
1) Current Ratio = 9.6
2) Days in Receivables (based on 2Q sales activity) = 45
3) Average Inventory Turns (based on 2Q CGS) = 3.8
4) Year-to-Date ROE = 16% (after dividends)
UTMD's dilution from unexercised option shares
added to actual weighted average outstanding shares for purposes of
calculating eps was 96,300 in 2Q 2006 compared to 218,700 in 2Q 2005, and
106,200 in 1H 2006 compared to 224,300 in 1H 2005. The actual number of
outstanding shares at the end of 2Q 2006 was 3,929,600 which included 2Q
employee option exercises of 3,700 shares and 2Q share repurchases of
39,500. The average price paid by the Company to repurchase shares in the
open market during 2Q 2006 was $30.84 including commissions. Year-to-date
purchases through 1H 2006 have been 51,600 shares at an average per share
cost of $30.80. The total number of outstanding unexercised options at June
30, 2006 was 286,300 shares at an average exercise price of $18.33/ share,
including shares awarded but not vested. This compares to 701,400
unexercised option shares outstanding at the end of 2Q 2005.
Investors are cautioned that this press release may contain forward looking
statements, and that actual events may differ from those projected. Risk
factors that could cause results to differ materially from those projected
include market acceptance of products, timing of regulatory approval of new
products, regulatory intervention in current operations, 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 2Q 2006 will
be filed with the SEC by August 9.
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) |
2Q
2006
$7,293
4,077
2,595
3,166
2,059
$0.509
4,043
|
2Q
2005
$7,028
4,022
2,471
2,684
1,887
$0.446
4,229 |
Percent
Change
+3.8%
+1.4%
+5.0%
+18.0%
+9.1%
+14.1% |
|
|
Net Sales
Gross Profit
Operating Income
Income Before Tax
Net Income
Earnings Per Share (EPS)
Shares Outstanding (diluted) |
1H
2006
$14,396
8,084
5,227
6,212
4,094
$1.010
4,056
|
1H
2005
$13,680
7,756
5,023
5,490
3,856
$0.902
4,277 |
Percent
Change
+5.2%
+4.2%
+4.1%
+13.2%
+6.2%
+12.0% |
|
|
|
(unaudited) |
(audited) |
(unaudited) |
|
JUN
30, 2006 |
DEC
31, 2005 |
JUN 30, 2005 |
Assets |
|
|
|
Cash &
Investments |
$18,421 |
$17,453 |
$13,302 |
Receivables, Net |
3,879 |
4,418 |
3,935 |
Inventories |
3,323 |
3,305 |
2,650 |
Other Current Assets |
661 |
682 |
956 |
Total Current Assets |
26,284 |
25,858 |
20,843 |
Property & Equipment,
Net |
8,360 |
8,160 |
8,423 |
Intangible Assets, Net |
7,470 |
7,624 |
7,649 |
Total Assets |
$42,114 |
$41,642 |
$36,915 |
|
|
|
|
Liabilities
&
Stockholders’ Equity |
|
|
|
Total Current Liabilities |
$2,724 |
$3,175 |
$2,693 |
Note Payable |
5,313 |
5,336 |
- |
Deferred Income Taxes |
187 |
274 |
672 |
Stockholders’ Equity |
33,890 |
32,857 |
33,550 |
Total Liabilities
&
|
$42,114 |
$41,642 |
$36,915 |
Stockholders’ Equity |
|