Utah Medical Products Inc. Reports Operating Results (10-Q)
Utah Medical Products Inc. has a market cap of $104.7 million; its shares were traded at around $28.7901 with a P/E ratio of 17.5 and P/S ratio of 4.1. The dividend yield of Utah Medical Products Inc. stocks is 3.3%. Utah Medical Products Inc. had an annual average earning growth of 5.3% over the past 10 years. GuruFocus rated Utah Medical Products Inc. the business predictability rank of 2.5-star.UTMD is in the portfolios of Chuck Royce of Royce& Associates.
Highlight of Business Operations:The reduction in receivables and inventories indicates that as of September 30, 2010, receivables are current (40 days in trade receivables) and inventories fresh (3.6 turns based on 3Q 2010 CGS) relative to recent production and sales activities. In 9M 2010, cash and equivalents balances rose after the Company used cash generated by operations to pay $2,555 in shareholder dividends (counting the 4Q 2009 dividend which was paid in late December 2009 instead of early January 2010), repurchase 17,600 of its shares in the open market for $439, invest $1,155 in facilities expansion in Utah (in order to house consolidated Oregon operations), invest $142 in new product technology and make $121 purchases of capital equipment and tooling. Shareholders Equity rose despite the above noted payment of dividends and share repurchases which reduce Shareholders Equity. The Company continues to repay the Ireland subsidiary loan (UTMD s only debt) with profits generated by Ireland operations. The increase in current liabilities from the end of 2009 is due to the 4Q 2009 shareholder dividend having already been paid at the end of December 2009, whereas the 3Q 2010 dividend was paid in October after the end of 3Q 2010 (and therefore included in current liabilities on September 30, 2010). As a more consistent comparison because of the same timing of dividend payments, current liabilities on September 30, 2010 are down $341 compared to September 30, 2009.
G&A expenses in 3Q 2010 were 9.5% of sales compared to 9.4% of sales in 3Q 2009, and 9.2% of sales in both 9M 2010 and 9M 2009. In addition to litigation expense, G&A expenses include the cost of outside financial auditors and corporate governance activities relating to the implementation of SEC rules resulting from the Sarbanes-Oxley Act, as well as estimated stock-based compensation cost. Option compensation expense included in G&A expenses in 3Q 2010 was $19 compared to $22 in 3Q 2009, and $64 in 9M 2010 compared to $75 in 9M 2009.
Non-operating income in 3Q 2010 was $31 compared to $61 in 3Q 2009, and $66 in 9M 2010 compared to $148 in 9M 2009. The decrease in both 2010 periods was due primarily to UTMD receiving less in investment income as a result of lower interest rates. UTMD projects its non-operating income will be about $90 for all of 2010.
3Q 2010 earnings before income taxes (EBT) were $2,289 compared to $2,445 in 3Q 2009. EBT in 9M 2010 were $6,807 compared to $7,204 in 9M 2009. EBT margins (EBT divided by sales) were 36.9% and 36.0% in 3Q and 9M 2010, respectively, compared to 36.6% and 37.1% in 3Q and 9M 2009. The domestic component of EBT was $2,240 and $6,560 in 3Q and 9M 2010, respectively, compared to $2,334 and $6,872 in 3Q and 9M 2009. The Ireland contribution to (foreign component of) EBT was $48 and $247 in 3Q and 9M 2010, respectively, compared to $111 and $332 in 3Q and 9M 2009.
In 9M 2010, UTMD received $380 and issued 20,826 shares of stock upon the exercise of employee stock options. Option exercises in 9M 2010 were at an average price of $19.04 per share. Employees exercised a total of 22,595 option shares in 9M 2010, with 1,769 shares immediately being retired as a result of the individuals trading the shares in payment of the exercise price of the options. For comparison, the Company received $104 from issuing 13,027 shares of stock on the exercise of employee stock options in 9M 2009, net of 2,145 shares retired upon employees trading those shares in payment of the stock option exercise price. The Company repurchased 17,570 shares of its stock in the open market at a cost of $439 during 9M 2010, an average cost of $24.98 per share including commissions and fees. For comparison, UTMD repurchased 5,367 shares of stock in the open market at a cost of $116 during 9M 2009.
UTMD s long term liabilities are comprised of the Ireland subsidiary note payable ($1,037 on September 30, 2010) and deferred income taxes ($741 on September 30, 2010). The deferred taxes result primarily from the temporary difference created by accelerated depreciation of assets for tax purposes compared to depreciation for book purposes. As of December 31, 2009, the respective long term liabilities were $1,403 and $608. The September 30, 2010 Ireland note payable balance, denominated in thousand Euros, declined 226. This translated to a $399 USD-denominated decline because the USD increased in value against the Euro.
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