via NewMediaWire --UTMD achieved second calendar quarter (2Q)
and first half (1H) 2022 financial results better than those
anticipated in its beginning of year projections.
Currencies in this release are denoted as $ or USD
= U.S. Dollars; AUD = Australia Dollars; £ or GBP = UK Pound
Sterling; C$ or CAD = Canadian Dollars; and € or EUR = Euros.
Currency amounts throughout this report are in thousands, except
per share amounts and where noted. Because of the relatively short
span of time, results for any given three-month period in
comparison with a previous three-month period may not be indicative
of comparative results for the year as a whole.
Overview of Results
In brief, UTMD was able to adjust to the
challenges of rapidly rising variable costs in the 1H of 2022. The
following is an income statement summary comparison of 2Q and 1H
2022 with 2Q and 1H 2021 according to U.S. Generally Accepted
Accounting Principles (US GAAP):
2Q
1H
(April – June)
(January-June)
Revenues
(Sales): |
+ 7% |
+
9% |
Gross Profit
(GP): |
+ 5% |
+
6% |
Operating Income
(OI): |
+ 6% |
+
11% |
Income Before Tax
(EBT):Net Income (NI): |
+ 8% + 20% |
+ 12%
+ 18% |
Earnings Per Share
(EPS): |
+ 20% |
+
18% |
The above comparisons of GP and OI indicate costs
rising faster than revenues in 1H 2022. The expansion in EBT was
due to better non-operating income. The high expansion in NI and
EPS was due to comparison after a one-time negative income tax
provision adjustment in the prior year as a result of a long-term
tax rate change enacted in the UK in June 2021.
For clarity, the above comparisons of NI and EPS
according to US GAAP were affected by a long term deferred tax
liability (DTL) adjustment on the balance of Femcare identifiable
intangible assets (IIA) in 2Q 2021. As stockholders may remember,
the DTL was initiated as part of the 2011 acquisition of Femcare
because the expense from amortizing Femcare IIA, most of which is
occurring over a fifteen-year time span from the acquisition date,
is not tax-deductible in the UK. According to US GAAP, the future
tax impact of a change in DTL must be recognized in the quarter in
which a tax law change is enacted. In 2Q 2021, a $390 increase in
DTL over the remaining five years of amortization occurred because
in June 2021, UK parliament ratified an increase of the UK
corporate income tax rate from 19% to 25% beginning on April 1,
2023, which affects the deferred taxes for IIA to be amortized
after April 1, 2023, until fully amortized as of March 2026.
UTMD management believes that the presentation of
results excluding the unfavorable deferred tax liability adjustment
to its 2Q and 1H 2021 income tax provisions provide meaningful
supplemental information to both management and investors that is
more clearly indicative of UTMD’s year-to-prior-year operating
result comparisons. The non-US GAAP exclusion only affects Net
Income and Earnings Per Share.
Excluding the 2Q 2021 deferred tax liability
increase and resulting “one-time” tax provision increase in 2Q 2021
due to the UK income tax rate change, the resulting year-to-year
period comparisons of non-US GAAP NI and EPS changes are consistent
with that of EBT:
2Q
1H
(April – June)
(January-June)
NI (non-US
GAAP): |
+ 8% |
+ 12% |
EPS (non-US
GAAP): |
+ 8% |
+
12% |
Sales in all product categories, except for domestic U.S. sales
of the Filshie Clip System, were up in 2Q and 1H 2022 compared to
the same periods in 2021. Sales invoiced in foreign currencies,
which represented 29% of total consolidated sales (when expressed
in USD) during 2Q 2022, and 26% during 1H 2022, were hindered by a
stronger USD. USD sales in 2Q 2022 were approximately 3% lower, and
2% lower for the 1H, to that which would have resulted using the
same foreign currency exchange (FX) rates as in the prior year’s
same periods (“constant currency” sales).
Profit margins in 2Q and 1H 2022 compared to 2Q
and 1H 2021 follow:
|
2Q 2022 |
2Q 2021 |
1H 2022 |
1H 2021 |
(Apr – Jun) |
(Apr – Jun) |
(Jan – Jun) |
(Jan – Jun) |
Gross Profit
Margin (GP/ sales): |
60.70 |
% |
61.80 |
% |
60.90 |
% |
62.50 |
% |
Operating
Income Margin (OI/ sales): |
37.70 |
% |
37.80 |
% |
37.20 |
% |
36.70 |
% |
Net Income
Margin (US GAAP) |
30.60 |
% |
27.20 |
% |
29.70 |
% |
27.40 |
% |
Net Income
Margin (Non-US GAAP, B4 DTL Adj): |
30.60 |
% |
30.30 |
% |
29.70 |
% |
29.00 |
% |
Note: The Net Income Margin is NI divided by sales.
In 2Q and 1H 2022, the dilution in GP Margin from
variable costs rising more than sales was mitigated in the OI
Margin as a result of better absorption of fixed IIA amortization
expense and a reduction of foreign currency operating expenses in
USD terms due to the stronger USD. The improvement in Net Income
and EPS was greater than the growth in sales primarily as a result
of the additional benefit of higher non-operating income. Please
see the income statements on the last page of this report.
UTMD’s June 30, 2022 Balance Sheet continued
strong, with no debt. Ending Cash and Investments were $66.2
million on June 30, 2022 compared to $61.0 million on December 31,
2021. The June 30, 2022 cash balance resulted after paying $1.1
million in cash dividends to stockholders and repurchasing $2.5
million in UTMD stock during 2Q 2022. During the last twelve months
(TTM) since June 30, 2021, UTMD has returned $12,943 to
stockholders in the form of cash dividends and UTMD share
repurchases.
Foreign currency exchange (FX) rates for Balance
Sheet purposes are the applicable rates at the end of each
reporting period. The FX rates from the applicable foreign currency
to USD for assets and liabilities at the end of 2Q 2022 compared to
the end of calendar year 2021 and the end of 2Q 2021 were
|
6-30-22 |
12-31-21 |
Change |
6-30-21 |
Change |
GBP |
1.21601 |
1.35358 |
(10.2%) |
1.38065 |
(11.9%) |
EUR |
1.04657 |
1.13765 |
( 8.0%) |
1.18514 |
(11.7%) |
AUD |
0.69042 |
0.72678 |
( 5.0%) |
0.74952 |
( 7.9%) |
CAD |
0.77691 |
0.79016 |
( 1.7%) |
0.80619 |
( 3.6%) |
Revenues (sales) -2Q 2022
Total consolidated 2Q 2022 UTMD worldwide (WW)
sales were $824 (+6.5%) higher than in 2Q 2021. Without the
negative impact of a stronger USD in converting foreign currency
sales, WW constant currency sales were $1,280 higher (+10.2%) than
in 2Q 2021, which was the second highest sales quarter of 2021.
“Constant currency” sales means exchanging foreign currency sales
into USD-denominated sales at the same FX rate as was in the
previous period of time being compared.
Overall 2Q 2022 U.S. domestic sales were 2.4%
lower and outside the U.S. (OUS) sales were 22.2% higher, despite
an FX rate $456 (10.6%) negative impact on sales invoiced in
foreign currencies. In other words, 2Q 2022 constant currency OUS
sales were 32.2% higher than in 2Q 2021. In 2021, U.S. domestic
sales recovered from the COVID-19 pandemic faster than OUS sales.
In 2022, it appears that OUS sales are catching up with the U.S.
recovery.
Domestic U.S. sales in 2Q 2022 were $7,829
compared to $8,023 in 2Q 2021. Domestic sales are invoiced in USD
and not subject to FX rate fluctuations. The components of domestic
sales include 1) “direct non-Filshie device sales” of UTMD’s
medical devices to user facilities (and med/surg stocking
distributors for hospitals), 2) “OEM sales” of components and other
products manufactured by UTMD for other medical device and
non-medical device companies, and 3) “domestic Filshie device
sales”. UTMD separates domestic Filshie device sales from other
medical device sales direct to medical facilities because UTMD is
simply a distributor for Femcare in the U.S. Direct non-Filshie
device sales, representing 51% of total domestic sales, were $266
(+7.1%) higher in 2Q 2022 than in 2Q 2021. Domestic OEM sales,
representing 34% of total domestic sales, were $16 (0.6%) lower.
Domestic Filshie device sales, representing 15% of total domestic
sales, were $444 (27.9%) lower in 2Q 2022 compared to 2Q 2021.
OUS sales in 2Q 2022 were $5,599 compared to
$4,581 in 2Q 2021. The increase in USD-denominated OUS sales is
understated in constant currency terms. The stronger USD subtracted
$456 from 2Q 2022 OUS sales invoiced in GBP, EUR, AUD and CAD
currencies. FX rates for income statement purposes are
transaction-weighted averages. The average FX rates from the
applicable foreign currency to USD during 2Q 2022 and 2Q 2021 for
revenue purposes follow:
2Q
2022 2Q
2021
Change
GBP
1.2525
1.3986
(10.4%)
EUR
1.0571
1.2043
(12.2%)
AUD
0.7178
0.7696 (
6.7%)
CAD
0.7847
0.8119 ( 3.4%)
The weighted average unfavorable impact on 2Q 2022
foreign currency OUS sales was 10.6%. In constant currency terms,
foreign currency sales in 2Q 2022 were 32.2% higher than in 2Q
2021. The portion of OUS sales invoiced in foreign currencies in
USD terms were 29% of total consolidated 2Q 2022 sales compared to
27% in 2Q 2021.
OUS sales invoiced in foreign currencies are due
to direct end-user sales in Ireland, the UK, France, Canada,
Australia and New Zealand, and to shipments to OUS distributors of
products manufactured by UTMD subsidiaries in Ireland and the UK.
Export sales from the U.S. to OUS distributors are invoiced in USD.
Direct to end-user OUS 2Q 2022 sales in USD terms (including the
negative impact of FX rate differences) were 11% lower in Ireland
with the EUR FX rate down 12%, 1% lower in Canada with the CAD FX
rate down 3%, about the same in the UK with the GBP FX rate down
10%, 23% lower in Australia/New Zealand with the AUD FX rate down
7%, and 15% higher in France with the EUR FX rate down 12%. Sales
to OUS distributors were 41% higher in 2Q 2022 than in 2Q 2021.
Sales -1H 2022
Total consolidated 1H 2022 UTMD WW sales were
$2,184 (+9.3%) higher than in 1H 2021. Constant currency sales were
$2,792 (+11.8%) higher. U.S. domestic sales were 6.8% higher and
OUS sales were 13.4% higher in 1H 2022 compared to 1H 2021. In
constant currency terms, 1H 2022 OUS sales were up 20.4%.
Domestic U.S. sales in 1H 2022 were $15,813
compared to $14,805 in 1H 2021. Direct non-Filshie device sales,
representing 51% of total domestic sales, were $859 (+12.0%) higher
in 1H 2022 than in 1H 2021, led by an increase in domestic neonatal
device sales. OEM sales, representing 34% of total domestic sales,
were $767 (+16.7%) higher. Domestic Filshie device sales,
representing 15% of total domestic sales, were $618 (20.1%) lower
in 1H 2022 compared to 1H 2021.
OUS sales in 1H 2022 were $9,938 compared to
$8,762 in 1H 2021. The increase in USD-denominated OUS sales is
understated in constant currency terms. The stronger USD subtracted
$608 from 1H 2022 OUS sales invoiced in GBP, EUR, AUD and CAD
currencies. The transaction-weighted average FX rates from the
applicable foreign currency to USD during 1H 2022 and 1H 2021 for
revenue purposes follow:
1H 2022 1H
2021
Change
GBP
1.2886
1.3908 (
7.3%)
EUR
1.0852
1.2037 (
9.8%)
AUD
0.7206
0.7711 (
6.6%)
CAD
0.7866
0.8009 ( 1.8%)
The weighted-average FX rate negative impact on 1H
2022 foreign currency OUS sales was 8.3%. In constant currency
terms, foreign currency sales in 1H 2022 were 20.4% higher than in
1H 2021. The portion of OUS sales invoiced in foreign currencies in
USD terms were 26% of total consolidated 1H 2022 sales compared to
27% in 1H 2021. Direct to end-user OUS 1H 2022 sales in actual USD
terms were 5% higher in Ireland with a 10% lower EUR, 8% lower in
Canada with a 2% lower CAD, 3% lower in France with a 10% lower
EUR, 23% higher in the UK with a 7% lower GBP, and 28% lower in
Australia/New Zealand with a 7% lower AUD. Sales to OUS
distributors were 24% higher in 1H 2022 than in 1H 2021.
Gross Profit (GP)
GP results from subtracting the costs of
production, manufacturing engineering, depreciation of equipment,
maintenance and repairs, quality assurance including regulatory
compliance, and purchasing including freight for receiving
materials from suppliers. As expected, despite dilution of fixed
overhead costs from higher sales, the 2Q and 1H significant
inflationary increases in UTMD’s variable manufacturing costs
squeezed UTMD’s GP Margin (GPM). UTMD’s 2Q 2022 GP was $365 (+4.7%)
higher than in 2Q 2021. UTMD’s 1H 2022 GP was $951 (+6.5%) higher
than in 1H 2021. Although revenue was up more than GP in both 1Q
and 1H periods, the resulting lower GPMs remained consistent with
UTMD’s long term profitability goals. Incremental direct labor
costs increased significantly as a result of competition for a
limited number of people currently seeking work, and the Company’s
efforts to help mitigate the negative impact of inflation on its
long-term employees. UTMD also experienced double-digit percentage
cost increases in raw materials costs. Incoming freight costs to
receive raw materials doubled. The growing administrative burden of
compliance with regulatory requirements, particularly OUS,
continued to pressure UTMD’s GPM. Although managing the rapid rise
in variable manufacturing costs will apparently continue to be a
significant challenge for the rest of 2022, the 1H 2022 GPM helps
confirm that UTMD is likely to be able to successfully manage
it.
Operating Income (OI)
OI results from subtracting Operating Expenses
(OE) from GP. After subtracting OE from higher 2Q and 1H 2022 GP,
OI in 2Q 2022 was $5,057 compared to $4,765 in 2Q 2021, an increase
of 6.1%, representing a healthy OI Margin (OI as a percentage of
sales) of 37.7%. OI in 1H 2022 was $9,579 compared to $8,652 in 1H
2021, an increase of 10.7%, representing an OI margin of 37.2%. The
increase in OI was almost the same as the increase in sales despite
a lower GPM and higher litigation expenses (included in G&A OE)
because of two offsetting factors; 1) better absorption of fixed
IIA amortization expenses (i.e. a lower percentage of sales for
relatively fixed non-cash expenses), and 2) a reduction in
USD-denominated foreign currency OE of foreign subsidiaries as a
result of a stronger USD (i.e. lower FX rates for the EUR, GBP, AUD
and CAD expenses).
OE are comprised of Sales and Marketing (S&M)
expenses, General and Administrative (G&A) expenses and Product
Development (R&D) expenses. The following table summarizes OE
in 2Q and 1H 2022 compared to the same periods in 2021 by OE
category:
OE Category |
2Q 2022 |
% of sales |
2Q 2021 |
% of sales |
1H 2022 |
% of sales |
1H 2021 |
% of sales |
S&M: |
$ 357 |
2.7 |
$ 364 |
2.9 |
$ 693 |
2.7 |
$ 748 |
3.2 |
G&A: |
2,602 |
19.3 |
2,528 |
20.1 |
5,153 |
20.0 |
5,073 |
21.5 |
R&D: |
135 |
1.0 |
128 |
1.0 |
258 |
1.0 |
259 |
1.1 |
Total OE: |
3,094 |
23.0 |
3,020 |
24.0 |
6,104 |
23.7 |
6,080 |
25.8 |
A stronger USD helped decrease foreign currency OE
when converted to USD by $100 in 2Q 2022 and $135 in 1H 2022. The
following table summarizes “constant currency” OE in 2Q and 1H 2022
compared to the same periods in 2021 by OE category:
OE Category |
2Q 2022 const FX |
|
2Q 2021 |
|
1H 2022 const FX |
|
1H 2021 |
S&M: |
$ 366 |
|
$ 364 |
|
$ 707 |
|
$ 748 |
G&A: |
2,693 |
|
2,528 |
|
5,274 |
|
5,073 |
R&D: |
135 |
|
128 |
|
258 |
|
259 |
Total OE: |
3,194 |
|
3,020 |
|
6,239 |
|
6,080 |
OUS OE when converted to USD were decreased 10% in
2Q 2022 and 7% in 1H 22 by the FX rate change. Constant currency 2Q
2022 OE were 6% higher than in 2Q 2021, and 3% higher in 1H 2022
than in 1H 2021. In other words, the FX rate change which decreased
foreign OE in USD terms almost offset the higher G&A expenses
in the U.S.
A segmentation of USD-denominated G&A expenses
by subsidiary location follows. Note that over 60% of G&A
expenses were non-cash expenses from the amortization of IIA
associated with the Filshie Clip System:
G&A Exp
Category |
2Q 2022 |
% of sales |
2Q 2021 |
% of sales |
1H 2022 |
% of sales |
1H 2021 |
% of sales |
IIA Amort-
UK: |
$ 498 |
3.7 |
$ 556 |
4.4 |
$1,030 |
4.0 |
$1,106 |
4.7 |
IIA Amort–
CSI:Other– UK:U.S. LitigationOther– US:IRE:AUS:CAN:Total
G&A: |
1,105 142 165
528 85
42 372,602 |
8.2 19.3 |
1,105 155 -
552 77 42
412,528 |
8.8 20.1 |
2,210 296
226 1,082 152
85 72 5,153 |
8.6 20.0 |
2,210 312
- 1,113 161
88 835,073 |
9.4 21.5 |
OUS G&A expenses were $804 in 2Q 2022 compared
to $871 in 2Q 2021. OUS G&A expenses were $1,634 in 1H 2022
compared to $1,750 in 1H 2021. The table below identifies “constant
currency” OUS G&A expenses for 2Q and 1H 2022 compared to the
same periods in 2021:
G&A Exp
Category |
2Q 2022 const FX |
|
2Q 2021 |
|
1H 2022 const FX |
|
1H 2021 |
IIA Amort-
UK: |
$ 556 |
|
$ 556 |
|
$1,106 |
|
$1,106 |
Other–
UK:IRE:AUS:CAN:Total G&A: |
159 97
44 38 894 |
|
155 77
42 41 871 |
|
318
168 91
73 1,756 |
|
312
161 88 831,750 |
Period to period product development (R&D)
expenses varied slightly depending on specific project costs. Since
almost all R&D is being carried out in the U.S., there was
negligible FX rate impact.
Income Before Tax (EBT)
EBT results from subtracting net non‑operating
expense (NOE) or adding net non-operating income (NOI) from or to,
as applicable, OI. Consolidated 2Q 2022 EBT was $5,199 (38.7% of
sales) compared to $4,825 (38.3% of sales) in 2Q 2021. Consolidated
1H 2022 EBT was $9,729 (37.8% of sales) compared to $8,723 (37.0%
of sales) in 1H 2021.
NOE/NOI includes the combination of 1) expenses
from loan interest and bank fees; 2) expenses or income from losses
or gains from remeasuring the value of EUR cash bank balances in
the UK, and GBP cash balances in Ireland, in USD terms on June 30,
2022; and 3) income from rent of underutilized property, investment
income and royalties received from licensing the Company’s
technology. Negative NOE is NOI. Net NOI in 2Q 2022 was $142
compared to $60 net NOI in 2Q 2021. Net NOI in 1H 2022 was $150
compared to $71 net NOI in 1H 2021. With higher cash balances and
higher interest rates in 2022 compared to 2021, UTMD received more
interest income. UTMD Ireland realized $17 more NOI in 2Q 2022 than
in 2Q 2021, and $69 more NOI in 1H 2022 than in 1H 2021, from
renting underutilized facility space.
EBITDA is a non-US GAAP metric that measures
profitability performance without factoring in effects of
financing, accounting decisions regarding non-cash expenses,
capital expenditures or tax environments. Management believes that
this operating performance metric provides meaningful supplemental
information to both management and investors and confirms UTMD’s
ongoing excellent financial operating performance, as well as its
ability to sustain performance during a challenging economic
time.
Excluding the noncash effects of depreciation,
amortization of intangible assets and stock option expense, 2Q 2022
consolidated EBT excluding the remeasured bank balance currency
gain or loss (“adjusted consolidated EBITDA”) was $7,005 (+4.6%)
compared to $6,695 in 2Q 2021. Adjusted consolidated EBITDA at
$13,376 in 1H 2022 was 7.3% higher compared to $12,471 in 1H 2021.
Adjusted consolidated TTM EBITDA was $27,435 as of June 30,
2022.
UTMD’s adjusted consolidated EBITDA as a
percentage of sales (EBITDA margin) was 52.2% in 2Q 2022 compared
to 53.1% in 2Q 2021. UTMD’s EBITDA margin was 51.9% in 1H 2022
compared to 52.9% in 1H 2021. The lower 2022 EBITDA margins reflect
the 2022 GPM squeeze. Nevertheless, management believes that
current EBITDA margins demonstrate continued outstanding operating
performance.
UTMD’s non-US GAAP adjusted consolidated EBITDA is
the sum of the elements in the following table, each element of
which is a US GAAP number:
|
2Q 2022 |
2Q 2021 |
1H 2022 |
1H 2021 |
EBT |
$ 5,199 |
$4,825 |
$ 9,729 |
$8,723 |
Depreciation
Expense |
153 |
162 |
302 |
326 |
Femcare IIA
Amortization Expense |
498 |
556 |
1,030 |
1,106 |
CSI IIA Amortization
Expense |
1,105 |
1,105 |
2,211 |
2,211 |
Other Non-Cash
Amortization Expense |
8 |
10 |
16 |
18 |
Stock Option
Compensation ExpenseInterest Expense |
40- |
41- |
83- |
82- |
Remeasured Foreign Currency Balances |
2 |
(4) |
5 |
5 |
UTMD non-US GAAP EBITDA: |
$7,005 |
$6,695 |
$13,376 |
$12,471 |
Note
All UTMD income statement measures from GP through
EBT, including non-US GAAP adjusted consolidated EBITDA, for both
2022 and 2021 time periods were unaffected by the 2Q 2021 enacted
change in the UK corporate income rate.
Net Income (NI)
NI in 2Q 2022 of $4,103 (30.6% of sales) was 19.7%
higher than the US GAAP NI of $3,426 (27.2% of sales) in 2Q 2021.
Excluding the “one-time” income tax provision increase recognized
in 2Q 2021 as a result of a future UK tax rate increase and
resulting DTL adjustment, diluted NI in 2Q 2022 was $4,103 (30.6%
of sales) compared to non-US GAAP NI of $3,817 (30.3% of sales) in
2Q 2021, a 7.7% increase, which is consistent with the increase in
EBT per US GAAP.
As a reminder, in 2Q 2021, because the UK reset
its corporate tax rate from 19% to 25% beginning with 2Q 2023, it
caused UTMD to have to book an additional $390 in its 2Q 2021
income tax provision that represents the additional tax which would
be paid in the UK over the remaining IIA amortization life of the
2011 Femcare acquisition. Excluding the $390 DTL increase in 2Q
2021 which reduced NI by that same amount, 2Q 2021 non-US GAAP NI
was $3,817 (30.3% of sales) compared to 2Q 2021 US GAAP NI of
$3,427 (27.2% of sales). Excluding the same tax provision increase
in 1H 2021 due to the DTL adjustment, non-US GAAP 1H 2021 NI was
$6,840 (29.0% of sales), compared to US GAAP 1H 2021 NI of $6,450
(27.4% of sales).
The average consolidated income tax provisions (as
a % of the same period EBT) per US GAAP in 2Q 2022 and 2Q 2021 were
21.1% and 29.0% respectively, and were 21.5% and 26.1% in 1H 2022
and 1H 2021 respectively. As the tax rates for 2Q and 1H 2021 are
not directly related to EBT generated in the same periods, UTMD
provides the following tax rates excluding the 2Q 2021 $390 tax
provision adjustment: The resulting non-GAAP income tax provision
rates were 21.1% and 20.9% for 2Q 2022 and 2Q 2021 respectively,
and were 21.5% and 21.6% for 1H 2022 and 1H 2021 respectively.
The consolidated income tax provision rate varies
as the mix in taxable income among U.S. and foreign subsidiaries
with differing income tax rates differs from period to period. The
basic corporate income tax rates in each of the sovereignties were
the same as in the prior year.
Earnings per share (EPS)
Diluted EPS in 2Q 2022 were $1.124 compared to US
GAAP diluted EPS of $0.937 in 2Q 2021, a 19.9% increase. Excluding
the “one-time” income tax provision increase recognized in 2Q 2021
as a result of a future UK tax rate increase and a DTL adjustment,
diluted EPS in 2Q 2022 were $1.124 compared to non-US GAAP diluted
EPS of $1.044 in 2Q 2021, a 7.7% increase, consistent with the
increase in EBT per US GAAP.
Diluted EPS in 1H 2022 were $2.088 compared to US
GAAP diluted EPS of $1.765 in 1H 2021, an 18.3% increase. Excluding
the “one-time” income tax provision increase recognized in 2Q 2021
as a result of a future UK tax rate increase and a DTL adjustment,
diluted EPS in 1H 2022 were $2.088 compared to non-US GAAP diluted
EPS of $1.871 in 1H 2021, an 11.6% increase, also consistent with
the increase in EBT per US GAAP.
Diluted shares were 3,650,242 in 2Q 2022 compared
to 3,655,319 in 2Q 2021. Diluted shares were 3,657,864 in 1H 2022
compared to 3,655,514 in 1H 2021. The lower diluted shares in 2Q
2022 were the result of shares repurchased during 2Q 2022 offset by
employee options exercised, and a lower dilution factor for
unexercised options. The number of shares added as a dilution
factor in 2Q 2022 was 7,375 compared to 9,526 in 2Q 2021. The
number of shares added as a dilution factor in 1H 2022 was 9,069
compared to 10,569 in 1H 2021.
The number of shares used for calculating EPS was
higher than ending shares because of a time-weighted calculation of
average outstanding shares plus dilution from unexercised employee
and director options. Outstanding shares at the end of 2Q 2022 were
3,624,932 compared to 3,654,737 at the end of calendar year 2021.
The difference was due to 300 shares added from employee option
exercises during 1H 2022, offset by 30,105 shares repurchased in
the open market and retired during 2Q 2022. For comparison,
outstanding shares were 3,645,798 at the end of 2Q 2021. The total
number of outstanding unexercised employee and outside director
options at June 30, 2022 was 50,408 at an average exercise price of
$69.07, including shares awarded but not yet vested. This compares
to 63,874 unexercised option shares at the end of 2Q 2021 at an
average exercise price of $68.38/ share, including shares awarded
but not vested. No options were awarded in 2021 and to date in
2022.
UTMD paid $1,060 ($0.290/share) in dividends to
stockholders in 2Q 2022 compared to $1,039 ($0.285/ share) paid in
2Q 2021. The dividends paid to stockholders during 2Q 2022 were 26%
of NI. UTMD paid $1,060 ($0.290/share) in dividends to stockholders
in 1H 2022 compared to $2,077 ($0.285/ share) paid in 1H 2021. The
1H 2022 dividend total excludes a dividend normally paid in
January. A special dividend of $7,309 ($2.00/share) was paid in
December 2021 in lieu of January 2022.
In 2Q 2022, UTMD repurchased 30,105 of its shares
for $2,495, an average cost of $82.88/ share. No UTMD shares were
repurchased in 2021. The Company retains the strong desire and
financial ability for repurchasing its shares at a price it
believes is attractive for remaining stockholders. UTMD’s closing
share price at the end of 2Q 2022 was $85.90, down 4.4% from the
closing price of $89.86 at the end of 1Q 2022, and down 14.1% from
the closing price of $100.00 at the end of 2021. The closing share
price one year ago at the end of 2Q 2021 was $85.04.
Balance Sheet.
At June 30, 2022 compared to the end of 2021,
UTMD’s cash and investments increased $5,249 to $66,224 primarily
as a result of 1H 2022 NP of $7,638 less $3,555 use of cash for
dividends to stockholders and UTMD share repurchases. At June 30,
2022, net Intangible Assets decreased to 22.9% of total
consolidated assets from 27.2% on December 31, 2021 due in part to
a stronger USD which lowers the USD value of Femcare’s GBP IIA.
UTMD’s still strong 17.8 current ratio at June 30, 2022 was lower
than the 19.5 current ratio at December 31, 2021 as a result of
$636 higher accrued liabilities. The average age of trade
receivables was 33 days from date of invoice at June 30, 2022
compared to 36 days at December 31, 2021 based on the most recent
calendar quarter of sales. Average inventory turns declined
slightly to 2.9 in 2Q 2022 compared to 3.0 for the last quarter of
2021 due to increasing safety stocks of raw material.
Financial ratios as of June 30, 2022 which may be
of interest to stockholders follow:
1) Current Ratio =
17.8
2) Days in Trade
Receivables (based on 2Q 2022 sales activity) = 33
3) Average Inventory
Turns (based on 2Q 2022 CGS) = 2.9
4) 2022 YTD ROE
(before dividends) = 14%
Investors are cautioned that this press release
contains 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 global economic
conditions, market acceptance of products, regulatory approvals of
products, regulatory intervention in current operations, government
intervention in healthcare in general, tax reforms, the Company’s
ability to efficiently manufacture, market and sell products,
cybersecurity and foreign currency exchange rates, among other
factors that have been and will be outlined in UTMD’s public
disclosure filings with the SEC.
Utah Medical Products, Inc., with particular
interest in health care for women and their babies, develops,
manufactures and markets a broad range of disposable and reusable
specialty medical devices recognized by clinicians in over one
hundred countries around the world as the standard for obtaining
optimal long term outcomes for their patients. For more information
about Utah Medical Products, Inc., visit UTMD’s website at
www.utahmed.com.
Utah Medical Products, Inc.INCOME STATEMENT, Second
Quarter (three months ended June 30)(in thousands except earnings
per share):
|
2Q 2022 |
2Q 2021 |
Percent Change |
Net Sales |
$ 13,428 |
$ 12,604 |
6.5% |
Gross Profit |
8,151 |
7,785 |
4.7% |
Operating
Income |
5,057 |
4,765 |
6.1% |
Income Before Tax |
5,199 |
4,825 |
7.7% |
Net Income before DTL adjustNet Income (US GAAP) |
4,1034,103 |
3,8173,426 |
7.5%19.7% |
EPS before DTL adjustmentEarnings Per Share (US GAAP) |
$1.124$ 1.124 |
$ 1.044$ .937 |
7.7%19.9% |
Shares Outstanding
(diluted) |
3,650 |
3,655 |
|
INCOME STATEMENT, First Half (six months ended June 30)(in
thousands except earnings per share):
|
1H 2022 |
1H 2021 |
Percent
Change |
Net Sales |
$ 25,752 |
$ 23,568 |
9.3% |
Gross Profit |
15,683 |
14,732 |
6.5% |
Operating
Income |
9,579 |
8,652 |
10.7% |
Income Before Tax |
9,729 |
8,723 |
11.5% |
Net Income before DTL adjustNet Income (US GAAP) |
7,6387,638 |
6,8406,450 |
11.7%18.4% |
EPS before DTL adjustmentEPS (US GAAP) |
$ 2.088$ 2.088 |
$ 1.871$ 1.765 |
11.6%18.3% |
Shares Outstanding
(diluted) |
3,658 |
3,656 |
|
BALANCE SHEET(in thousands)
|
(unaudited) JUN 30, 2022 |
(unaudited) MAR 31, 2022 |
(audited)DEC 31, 2021 |
(unaudited)JUN 30, 2021 |
Assets |
|
|
|
|
Cash
& Investments |
$66,224 |
$65,873 |
$60,974 |
$59,506 |
Accounts & Other Receivables, Net |
4,938 |
5,720 |
5,132 |
4,606 |
Inventories |
7,338 |
7,367 |
6,596 |
6,118 |
Other
Current Assets |
453 |
520 |
456 |
357 |
Total Current Assets |
78,953 |
79,480 |
73,158 |
70,587 |
Property &
Equipment, Net |
10,591 |
10,997 |
11,066 |
11,168 |
Intangible Assets,
Net |
26,605 |
29,326 |
31,412 |
35,039 |
Total Assets |
$116,149 |
$119,803 |
$115,636 |
$116,794 |
Liabilities &
Stockholders’ Equity |
|
|
|
|
Accounts
Payable |
818 |
1,454 |
761 |
1,186 |
REPAT Tax
Payable |
220 |
220 |
220 |
245 |
Other Accrued
Liabilities |
3,401 |
4,424 |
2,765 |
3,000 |
Total
Current Liabilities |
$4,439 |
$6,098 |
$3,746 |
$4,431 |
Deferred Tax
Liability – Intangible Assets |
1,707 |
1,946 |
2,104 |
2,355 |
Long Term Lease
Liability Long Term REPAT Tax Payable |
3681,675 |
3821,675 |
3961,675 |
3221,835 |
Deferred Revenue
and Income Taxes |
489 |
534 |
577 |
486 |
Stockholders’
Equity |
107,471 |
109,168 |
107,138 |
107,365 |
Total Liabilities &
Stockholders’ Equity |
$116,149 |
$119,803 |
$115,636 |
$116,794 |
Contact: Crystal Rios (801) 566-1200
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