UTMD Reports Audited Year 2023 and Fourth Quarter Financial Performance
- UTMD achieved financial results for the full year of 2023 consistent with management’s beginning of year projections.
- Net income and earnings per share were 1% higher in 2023 compared to 2022.
- UTMD's balance sheet remained strong, with cash and investments of $92.9 million on December 31, 2023.
- Revenues were 4% lower in 2023 compared to 2022.
- Operating income, income before tax, and gross profit margins were down in 2023 compared to 2022.
- Consolidated worldwide sales were lower in 2023 compared to 2022.
Insights
The reported financial results of Utah Medical Products, Inc. for the full year of 2023 reveal a mixed performance with a slight increase in Net Income (NI) and Earnings Per Share (EPS) despite a decrease in Revenues and Gross Profit (GP). The increase in NI and EPS is a positive sign for investors, as it suggests efficiency in managing expenses or other income sources compensating for the revenue shortfall. However, the decline in sales and gross profit margin indicates potential challenges in the company's core business operations.
From a financial perspective, the company's ability to maintain a strong Balance Sheet with a notable increase in Cash and Investments after dividend payments and capital expenditures is commendable. This reflects a solid liquidity position which is crucial for addressing unforeseen expenses or investing in growth opportunities. The increase in Stockholders’ Equity (SE) despite dividends payout is also a sign of overall financial health and could be a reassuring factor for shareholders.
Examining the sales dynamics, the decrease in UTMD's sales to its largest biopharma OEM customer is significant. The 12% decline in domestic sales underscores potential market challenges or competitive pressures within the U.S. Conversely, the 8% increase in sales outside the U.S. (OUS) suggests that the company may be experiencing better growth prospects internationally, which could be a strategic focus area moving forward.
The impact of foreign currency exchange (FX) rates on sales and the Balance Sheet is a critical factor for international businesses. UTMD's report indicates minimal impact from FX on sales, which suggests that the company has effectively managed its currency risk or that currency fluctuations have been relatively stable. Nevertheless, the company's decision to hedge against ongoing supply chain disruptions by increasing inventories, despite lower revenues, indicates a proactive approach to supply chain management but also implies a risk of inventory obsolescence if sales do not pick up.
The mention of unusual litigation expenses due to Filshie clip product liability lawsuits in the U.S. is a concern that investors should monitor closely. While it has diluted Operating Income (OI) margins, the extent of future financial impact depends on the outcomes of these litigations. It is essential to assess the company's legal strategies and potential liabilities, as prolonged or costly legal battles could affect future profitability and the company's reputation.
Furthermore, the legal landscape of medical devices is often complex and subject to change. Companies must navigate regulatory requirements, product liability issues and intellectual property rights, which can have significant financial implications. Investors should consider the company's ability to manage these risks when evaluating its long-term prospects.
SALT LAKE CITY, UT, Jan. 30, 2024 (GLOBE NEWSWIRE) -- via NewMediaWire – With Revenues
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.
Overview of Results
A summary comparison of 4Q and calendar year 2023 income statement measures with the same periods of 2022 follows:
| 4Q | Year | ||||
| 2023 to 2022 Comparison (January-December) | (October–December) | (January-December) | |||
| Revenues (Sales): | -9 | % | -4 | % | |
| Gross Profit (GP): | -15 | % | -7 | % | |
| Operating Income (OI): | -22 | % | -15 | % | |
| Income Before Tax (EBT): | -10 | % | -3 | % | |
| Net Income (NI): | -6 | % | 1 | % | |
| Earnings Per Share (EPS): | -6 | % | 1 | % | |
Profit margins in 4Q and year 2023 compared to 4Q and year 2022 follow:
| 4Q 2023 | 4Q 2022 | 2023 | 2022 | |||||
| (Oct – Dec) | (Oct-Dec) | (Jan–Dec) | (Jan–Dec) | |||||
| Gross Profit Margin (GP/ sales): | 57.60 | % | 61.30 | % | 59.80 | % | 61.60 | % |
| Operating Income Margin (OI/ sales): | 32.00 | % | 37.30 | % | 33.40 | % | 37.90 | % |
| Income Before Tax Margin (EBT/ sales): | 40.70 | % | 41.20 | % | 40.00 | % | 39.50 | % |
| Net Income Margin (NI/ sales): | 34.80 | % | 33.60 | % | 33.10 | % | 31.50 | % |
Total consolidated worldwide sales were
Worldwide (WW) consolidated sales in 2023 were
UTMD’s December 31, 2023 Balance Sheet, in the continued absence of debt, remained strong. After using
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 calendar year 2023 compared to the end of 2022 and the end of 3Q 2023 follow:
| 12-31-23 | 12-31-22 | Change | 9-30-23 | Change | |||
| GBP | 1.27386 | 1.20771 | 5.5 | % | 1.22134 | 4.3 | % |
| EUR | 1.10593 | 1.06940 | 3.4 | % | 1.05841 | 4.5 | % |
| AUD | 0.68248 | 0.68050 | 0.3 | % | 0.64494 | 5.8 | % |
| CAD | 0.75733 | 0.73899 | 2.5 | % | 0.73873 | 2.5 | % |
Revenues (sales) - 4Q 2023
Total consolidated 4Q 2023 UTMD worldwide (WW) sales were
Domestic U.S. sales in 4Q 2023 were
OUS sales in 4Q 2023 were
4Q 2023 4Q 2022 Change
GBP 1.2411 1.1788 +
EUR 1.0857 1.0192 +
AUD 0.6509 0.6530 (
CAD 0.7339 0.7361 (
The combined weighted-average positive FX impact on 4Q 2023 foreign currency sales was
OUS sales invoiced in foreign currencies are to direct end-users in Ireland, the UK, France, Canada, Australia and New Zealand, and to OUS distributors of products manufactured by UTMD subsidiaries in Ireland and the UK. In USD terms, export sales to OUS distributors from Ireland represented
Sales -2023 Year
Total consolidated 2023 UTMD WW USD-denominated sales were
Domestic U.S. sales in 2023 were
OUS USD-denominated sales in 2023 were
2023 2022 Change
GBP 1.2428 1.2287 +
EUR 1.0808 1.0520 +
AUD 0.6660 0.6932 (
CAD 0.7409 0.7683 (
The combined weighted-average favorable FX impact on 2023 foreign currency OUS sales was
Gross Profit (GP)
GP results from subtracting the costs of manufacturing, quality assurance and receiving materials from suppliers. UTMD’s GP was
Operating Income (OI)
OI results from subtracting Operating Expenses (OE) from GP. For the year 2023, OI was
OE are comprised of Sales and Marketing (S&M) expenses, G&A expenses and Product Development (R&D) expenses. The following table summarizes OE in 4Q and year 2023 compared to the same periods in 2022 by OE category:
| OE Category | 4Q 2023 | % of sales | 4Q 2022 | % of sales | 2023 | % of sales | 2022 | % of sales | ||||
| S&M: | $ | 475 | 3.9 | $ | 441 | 3.3 | $ | 1,685 | 3.4 | $ | 1,507 | 2.9 |
| G&A: | 2,533 | 20.5 | 2,693 | 19.8 | 11,016 | 21.9 | 10,407 | 19.9 | ||||
| R&D: | 146 | 1.2 | 123 | 0.9 | 560 | 1.1 | 493 | 0.9 | ||||
| Total OE: | 3,154 | 25.6 | 3,257 | 24.0 | 13,261 | 26.4 | 12,407 | 23.7 | ||||
The following table summarizes “constant currency” OE in 4Q and year 2023 compared to the same periods in 2022 by OE category:
| OE Category | 4Q 2023 const FX | 4Q 2022 | 2023 const FX | 2022 | |||
| S&M: | |||||||
| G&A: | 2,492 | 2,693 | 10,986 | 10,407 | |||
| R&D: | 146 | 123 | 560 | 493 | |||
| Total OE: | 3,109 | 3,257 | 12,231 | 12,407 |
The FX rate change impact in both periods was minor. A stronger EUR and GBP, partially offset by a weaker AUD and CAD, increased total 4Q 2023 OE by
S&M and R&D expenses increased in 2023 primarily as a result of cost-of-living salary increases. Constant currency S&M expenses were
With the exception of salary increases in all departments, the primary changes in OE were in the G&A expense category. The two major G&A expense changes were in litigation expense and in the amortization of the
A division of G&A expenses by location follows:
| G&A Exp Category | 4Q 2023 | % of sales | 4Q 2022 | % of sales | 2023 | % of sales | 2022 | % of sales | |||||
| IIA Amort - UK: | $ | 493 | 4 | $ | 467 | 3.4 | $ | 1,977 | 3.9 | $ | 1,965 | 3.8 | |
| IIA Amort– CSI: | 368 | 3 | 1,105 | 8.1 | 3,684 | 7.3 | 4,421 | 8.5 | |||||
| UK: | 179 | 145 | 678 | 573 | |||||||||
| US: | 1,339 | 809 | 4,091 | 2,826 | |||||||||
| IRE: | 95 | 94 | 322 | 319 | |||||||||
| AUS: | 28 | 42 | 134 | 166 | |||||||||
| CAN: | 31 | 31 | 130 | 137 | |||||||||
| Total G&A: | 2,533 | 20.5 | 2,693 | 19.8 | 11,016 | 21.9 | 10,407 | 19.9 | |||||
In both periods, the USD was weaker relative to the EUR and GBP, but stronger relative to the AUD and CAD. The GBP-denominated IIA Amort - UK was the same in both years’ periods. Looking forward, the IIA- CSI will be zero.
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 2023 EBT was
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; 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 2023 was
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. Consolidated EBT excluding the remeasured bank balance currency gain or loss, interest expense, noncash effects of depreciation, amortization of intangible assets and stock option expense (“adjusted consolidated EBITDA”) were
UTMD’s adjusted consolidated EBITDA as a percentage of sales was
Management believes that this operating performance metric provides meaningful supplemental information to both management and investors and confirms UTMD’s ongoing excellent financial 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:
| 4Q 2023 | 4Q 2022 | 2023 | 2022 | ||||||||
| EBT | $ | 5,017 | $ | 5,591 | $ | 20,089 | $ | 20,659 | |||
| Depreciation Expense | 158 | 158 | 624 | 612 | |||||||
| Femcare IIA Amortization Expense | 493 | 467 | 1,977 | 1,965 | |||||||
| CSI IIA Amortization Expense | 368 | 1,105 | 3,684 | 4,421 | |||||||
| Other Non-Cash Amortization Expense | 7 | 8 | 31 | 31 | |||||||
| Stock Option Compensation Expense Interest Expense | 73 - | 62 - | 225 - | 183 - | |||||||
| Remeasured Foreign Currency Balances | (1 | ) | 13 | 5 | 20 | ||||||
| UTMD non-US GAAP EBITDA: | $ | 6,115 | $ | 7,404 | $ | 26,635 | $ | 27,891 | |||
Net Income (NI)
NI for the year 2023 of
Earnings per share (EPS).
Despite
The number of shares used for calculating 4Q 2023 and year 2023 EPS were higher than the December 31, 2023 outstanding shares balance of 3,629,525 because of a time-weighted calculation of average outstanding shares plus dilution from unexercised employee options. Outstanding shares at the end of calendar year 2023 of 3,629,525 compared to 3,627,767 at the end of 2022. The difference was due to 1,758 shares in employee option exercises during 2023. The total number of outstanding unexercised employee and outside director options at December 31, 2023 was 84,301 at an average exercise price of
The number of shares added as a dilution factor for the year 2023 was 8,303 compared to 5,934 in 2022. The number of shares added as a dilution factor for 4Q 2023 was 2,539 compared to 7,630 in 4Q 2022. In October 2023, 19,000 non-qualified option shares were awarded to 48 employees at an exercise price of
UTMD paid
In 2Q 2022, UTMD repurchased 30,105 of its shares in the open market at
Balance Sheet
Please see the audited December 31, 2023 Balance Sheet at the end of this report. At the end of 2023 compared to the end of 2022, UTMD’s cash and investments increased
Financial ratios as of December 31, 2023 which may be of interest to stockholders follow:
1) Current Ratio = 22.9
2) Days in Trade Receivables (based on 4Q 2023 sales activity) = 24.3
3) Average Inventory Turns in 2023 (based on 2023 CGS) = 2.2
4) 2023 ROE (before dividends) =
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. UTMD’s 2023 SEC Form 10-K will be filed on or before March 29, 2024, and can be accessed on www.utahmed.com.
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, Fourth Quarter (three months ended December 31)
(in thousands except earnings per share):
| 4Q 2023 | 4Q 2022 | Percent Change | ||||||
| Net Sales | $ | 12,333 | $ | 13,575 | (9.1 | %) | ||
| Gross Profit | 7,098 | 8,327 | (14.8 | %) | ||||
| Operating Income | 3,944 | 5,070 | (22.2 | %) | ||||
| Income Before Tax | 5,017 | 5,591 | (10.3 | %) | ||||
| Net Income | 4,287 | 4,555 | (5.9 | %) | ||||
| Diluted EPS | $ | 1.180 | $ | 1.253 | (5.8 | %) | ||
| Shares Outstanding (diluted) | 3,632 | 3,635 | ||||||
INCOME STATEMENT, Twelve Months (Calendar Year ended December 31)
(in thousands except earnings per share):
| 2023 | 2022 | Percent Change | ||||||
| Net Sales | $ | 50,224 | $ | 52,281 | (3.9 | %) | ||
| Gross Profit | 30,038 | 32,196 | (6.7 | %) | ||||
| Operating Income | 16,777 | 19,790 | (15.2 | %) | ||||
| Income Before Tax | 20,089 | 20,659 | (2.8 | %) | ||||
| Net Income | 16,635 | 16,473 | 1.0 | % | ||||
| Diluted EPS | $ | 4.574 | $ | 4.522 | 1.2 | % | ||
| Shares Outstanding (diluted) | 3,637 | 3,643 | ||||||
BALANCE SHEET
| (in thousands) | (audited) DEC 31, 2023 | (unaudited) SEP 30, 2023 | (audited) DEC 31, 2022 | |||
| Assets | ||||||
| Cash & Investments | $ | 92,869 | $ | 88,209 | $ | 75,052 |
| Accounts & Other Receivables, Net | 3,390 | 3,487 | 5,538 | |||
| Inventories | 9,582 | 9,709 | 8,814 | |||
| Other Current Assets | 428 | 442 | 515 | |||
| Total Current Assets | 106,269 | 101,847 | 89,919 | |||
| Property & Equipment, Net | 10,552 | 10,347 | 10,224 | |||
| Intangible Assets, Net | 18,637 | 19,049 | 23,731 | |||
| Total Assets | $ | 135,458 | $ | 131,243 | $ | 123,874 |
| Liabilities & Stockholders’ Equity | ||||||
| Accounts Payable | $ | 769 | $ | 511 | $ | 1,218 |
| REPAT Tax Payable | 611 | 419 | 419 | |||
| Other Accrued Liabilities | 3,263 | 3,247 | 4,323 | |||
| Total Current Liabilities | $ | 4,643 | $ | 4,177 | $ | 5,960 |
| Deferred Tax Liability – Intangible Assets | 1,120 | 1,196 | 1,513 | |||
| Long Term Lease Liability Long Term REPAT Tax Payable | 295 765 | 305 1,256 | 341 1,256 | |||
| Deferred Revenue and Income Taxes | 322 | 607 | 549 | |||
| Stockholders’ Equity | 128,313 | 123,702 | 114,255 | |||
| Total Liabilities & Stockholders’ Equity | $ | 135,458 | $ | 131,243 | $ | 123,874 |
Contact: Brian Koopman (801) 566-1200
FAQ
What were the financial results of Utah Medical Products, Inc. (UTMD) for the full year of 2023?
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What were the net income and earnings per share margins for UTMD in 2023?
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