UTAH MEDICAL PRODUCTS INC - Form 10-Q SEC filing

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-12575

UTAH MEDICAL PRODUCTS INC

(Exact name of Registrant as specified in its charter)

Utah	87-0342734
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

7043 South 300 West

Midvale, Utah 84047

(Address of principal executive offices) (Zip Code)

(801) 566-1200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:	Trading Symbol:	Name of each exchange on which registered:
Common stock, $0.01 par value	UTMD	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of November 11, 2021: 3,650,929.

UTAH MEDICAL PRODUCTS, INC.

INDEX TO FORM 10-Q

		PAGE
PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Condensed Balance Sheets as of September 30, 2021 and December 31, 2020	1

	Consolidated Condensed Statements of Income for the three and nine months ended September 30, 2021 and September 30, 2020	2

	Consolidated Condensed Statements of Cash Flows for the nine months ended September 30, 2021 and September 30, 2020	3

	Consolidated Condensed Statements of Stockholders’ Equity for the three and nine months ended September 30, 2021 and September 30, 2020	4

	Notes to Consolidated Condensed Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	7

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16

Item 4.	Controls and Procedures	16

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	17

Item 1A.	Risk Factors	17

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18

Item 6.	Exhibits	18

SIGNATURES		19

UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS AS OF
SEPTEMBER 30, 2021 AND DECEMBER 31, 2020
(in thousands)
	(unaudited)	(audited)
	SEPTEMBER 30, 2021	DECEMBER 31, 2020
ASSETS
Current assets:
Cash & investments	$ 64,321	$ 51,590
Accounts & other receivables, net	4,853	4,104
Inventories	6,299	6,222
Other current assets	373	346
Total current assets	75,846	62,262
Property and equipment, net	10,547	10,949
Operating lease – right-of-use assets, net	384	377
Goodwill	14,064	14,164
Other intangible assets	55,701	56,159
Other intangible assets - accumulated amortization	(36,790)	(32,166)
Other intangible assets, net	18,911	23,993
Total assets	$ 119,752	$ 111,745

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$ 1,026	$ 788
Accrued expenses	3,989	3,003
Total current liabilities	5,015	3,791
Deferred tax liability – Femcare IIA	1,810	2,151
Other long term liabilities	2,196	1,995
Operating lease liability	343	335
Deferred income taxes	408	651
Total liabilities	9,772	8,923

Stockholders' equity:
Common stock - $0.01 par value; authorized - 50,000 shares; issued - September 30, 2021, 3,649 shares and December 31, 2020, 3,643 shares	36	36
Accumulated other comprehensive income (loss)	(9,068)	(8,281)
Additional paid-in capital	520	115
Retained earnings	118,492	110,952
Total stockholders' equity	109,980	102,822

Total liabilities and stockholders' equity	$ 119,752	$ 111,745

see notes to consolidated condensed financial statements

UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME FOR THE
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND SEPTEMBER 30, 2020
(in thousands, except per share amounts - unaudited)
	Three Months Ended		Nine Months Ended
	September 30, 2021	September 30, 2020	September 30, 2021	September 30, 2020

Sales, net	$ 12,572	$ 10,479	$ 36,140	$ 30,168

Cost of goods sold	4,499	3,982	13,336	11,885
Gross profit	8,073	6,497	22,804	18,283

Operating expense
Selling, general and administrative	2,848	2,785	8,669	8,480
Research & development	127	125	385	375
Total operating expenses	2,975	2,910	9,054	8,855
Operating income	5,098	3,587	13,750	9,428

Other income	59	1	130	125
Income before provision for income taxes	5,157	3,588	13,880	9,553

Provision for income taxes	951	655	3,224	2,167
Net income	$ 4,206	$ 2,933	$ 10,656	$ 7,386

Earnings per common share (basic)	$ 1.15	$ 0.81	$ 2.92	$ 2.02

Earnings per common share (diluted)	$ 1.15	$ 0.80	$ 2.91	$ 2.01

Shares outstanding - basic	3,647	3,642	3,645	3,664

Shares outstanding - diluted	3,658	3,653	3,656	3,678

Other comprehensive income (loss):
Foreign currency translation net of taxes of $0 in all periods	$ (782)	$ 1,511	$ (787)	$ (416)
Total comprehensive income	$ 3,424	$ 4,444	$ 9,869	$ 6,970

see notes to consolidated condensed financial statements

UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND SEPTEMBER 30, 2020
(in thousands - unaudited)
	Nine Months Ended September 30,
	2021	2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 10,656	$ 7,386
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	483	495
Amortization	4,996	4,875
Provision for (recovery of) losses on accounts receivable	20	(4)
Amortization of right-of-use assets	32	29
(Gain) loss on disposal of assets	-	1
Deferred income taxes	(160)	(20)
Stock-based compensation expense	123	121
Tax benefit attributable to exercise of stock options	11	7
Changes in operating assets and liabilities:
Accounts receivable and other receivables	(802)	442
Inventories	(161)	757
Prepaid expenses and other current assets	(35)	58
Accounts payable	242	(439)
Accrued expenses	811	651
Total adjustments	5,560	6,973
Net cash provided by operating activities	16,216	14,359

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for:
Property and equipment	(299)	(806)
Net cash used in investing activities	(299)	(806)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock - options	281	282
Common stock purchased and retired	-	(6,977)
Payment of dividends	(3,116)	(3,097)
Net cash used in financing activities	(2,835)	(9,792)

Effect of exchange rate changes on cash	(351)	(254)
Net increase in cash and cash equivalents	12,731	3,507
Cash at beginning of period	51,590	42,787
Cash at end of period	$ 64,321	$ 46,294

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for income taxes	$ 3,094	$ 2,153
Cash paid during the period for interest	-	-

see notes to consolidated condensed financial statements

		September 30, 2021		December 31, 2020
Finished goods	$	1,436	$	1,363
Work-in-process		1,459		1,375
Raw materials		3,404		3,484
Total	$	6,299	$	6,222

		Domestic		Outside US		Total
Obstetrics	$	1,014	$	232	$	1,246
Gynecology/Electrosurgery/Urology		2,743		2,815		5,558
Neonatal		1,336		312		1,648
Blood Pressure Monitoring and Accessories		2,656		1,464		4,120
Total	$	7,749	$	4,823	$	12,572

(in thousands)	Three months ended		Nine months ended
	September 30,		September 30,
	2021	2020	2021	2020
Numerator
Net income	4,206	2,933	10,656	7,386

Denominator
Weighted average shares, basic	3,647	3,642	3,645	3,664
Dilutive effect of stock options	11	11	11	14
Diluted shares	3,658	3,653	3,656	3,678

Earnings per share, basic	1.15	0.81	2.92	2.02
Earnings per share, diluted	1.15	0.80	2.91	2.01

	3Q 2021	3Q 2020	change	9M 2021	9M 2020	change
Net Sales	$ 12,572	$ 10,479	20.0%	$ 36,140	$ 30,168	19.8%
Gross Profit	8,073	6,497	24.3%	22,804	18,283	24.7%
Operating Income	5,098	3,588	42.1%	13,750	9,428	45.8%
Income Before Tax	5,157	3,588	43.7%	13,880	9,553	45.3%
Net Income (NI)	4,206	2,933	43.4%	10,656	7,386	44.3%
Earnings per Diluted Share (EPS)	1.150	0.803	43.2%	2.915	2.008	45.2%

	3Q 2021	3Q 2019	change	9M 2021	9M 2019	change
Net Sales	$ 12,572	$ 12,494	0.6%	$ 36,140	$ 35,073	3.0%
Gross Profit	8,073	7,379	9.4%	22,804	21,652	5.3%
Operating Income	5,098	4,371	16.6%	13,750	12,954	6.2%
Income Before Tax	5,157	4,448	16.0%	13,880	13,150	5.6%
Net Income (NI)	4,206	3,705	13.5%	10,656	10,369	2.8%
Earnings per Diluted Share (EPS)	1.150	0.991	16.0%	2.915	2.774	5.1%

	Sep 30, 2021	Sep 30, 2020	Change
GBP	1.347	1.292	+4.3%
EUR	1.158	1.172	(1.3%)
AUD	0.723	0.716	+0.9%
CAD	0.789	0.751	+5.1%

	3Q 21	3Q 20	Change	9M 21	9M 20	Change
GBP	1.379	1.295	+6.5%	1.386	1.279	+8.3%
EUR	1.179	1.173	+0.6%	1.196	1.128	+6.0%
AUD	0.735	0.714	+2.9%	0.758	0.677	+12.0%
CAD	0.794	0.751	+5.7%	0.798	0.745	+7.2%

		Domestic		Outside US		Total
Obstetrics	$	2,864	$	559	$	3,423
Gynecology/Electrosurgery/Urology		8,229		8,130		16,359
Neonatal		3,813		1,064		4,877
Blood Pressure Monitoring and Accessories		7,649		3,832		11,481
Total	$	22,555	$	13,585	$	36,140

	3Q 2021	3Q 2020	3Q 2019	9M 2021	9M 2020	9M 2019
	(Jul – Sep)	(Jul – Sep)	(Jul – Sep)	(Jan – Sep)	(Jan – Sep)	(Jan – Sep)
Gross Profit Margin: (gross profit/ sales)	64.2%	62.0%	59.1%	63.1%	60.6%	61.7%
Operating Income Margin: (operating income/ sales)	40.6%	34.2%	35.0%	38.0%	31.3%	36.9%
Net Income Margin: (profit after taxes/ sales)	33.5%	28.0%	29.7%	29.5%	24.5%	29.6%

	Domestic	Outside US	Total
Obstetrics	$ 2,864	$ 559	$ 3,423
Gynecology/Electrosurgery/Urology	8,229	8,130	16,359
Neonatal	3,813	1,064	4,877
Blood Pressure Monitoring and Accessories*	7,649	3,832	11,481
Total:	$ 22,555	$ 13,585	$ 36,140

	3Q 2021	3Q 2020	9M 2021	9M 2020
S&M Expense	$ 324	$ 352	$ 1,071	$ 1,195
R&D Expense	126	125	385	375
G&A Expense	2,524	2,432	7,598	7,285
Total Operating Expenses:	$ 2,974	$ 2,909	$ 9,054	$ 8,855

	3Q 2021 const FX	3Q 2020	9M 2021 const FX	9M 2020
S&M Expense	$ 321	$ 352	$ 1,049	$ 1,195
R&D Expense	126	125	384	375
G&A Expense	2,478	2,432	7,400	7,285
Total Operating Expenses:	$ 2,925	$ 2,909	$ 8,833	$ 8,855

Percent of Sales:	3Q 2021	3Q 2020	9M 2021	9M 2020
IIA amortization expense	13.1%	15.5%	13.7%	16.0%
All other G&A expense	7.0%	7.7%	7.3%	8.1%
Total G&A Expenses:	20.1%	23.2%	21.0%	24.1%

Component of EBITDA	3Q 2021	3Q 2020	Change	9M 2021	9M 2020	Change
EBT	$ 5,157	$ 3,588	+43.7%	$ 13,880	$ 9,553	+45.3%
Depreciation of fixed assets	157	160		483	495
Amortization of patent expenses	9	12		27	37
Amortization of Femcare IIA	548	517		1,653	1,523
Amortization of CSI distribution agreement IIA	1,105	1,105		3,316	3,316
Stock option compensation expense	41	49		123	121
Remeasured currency (gains) or losses	7	2		13	(41)
Adjusted Consolidated EBITDA:	$ 7,024	$ 5,433	+29.3%	$19,495	$15,004	+29.9%

Exhibit #	Title of Document

31.1	Certification of CEO pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1	Certification of CEO pursuant to 18 U.S.C. §1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. §1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101	The following financial information from the Utah Medical Products, Inc. quarterly report on Form 10-Q for the quarter ended September 30, 2021, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) Consolidated Condensed Balance Sheets, (ii) Consolidated Condensed Statements of Income, (iii) Consolidated Condensed Statements of Cash Flows, (iv) Consolidated Condensed Statements of Stockholders’ Equity, and (v) related Notes to the Consolidated Condensed Financial Statements, tagged in detail.

104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

SEC Form 10-Q filed by Utah Medical Products, Inc.