UTAH MEDICAL PRODUCTS INC 10-Q

Item 1. Financial Statements UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS AS OF MARCH 31, 2025 AND DECEMBER 31, 2024 (in thousands) (unaudited) (audited) MARCH 31, 2025 DECEMBER 31, 2024 ASSETS Current assets: Cash & Investments $ 83,325 $ 82,976 Accounts & other receivables, net 3,944 4,094 Inventories 8,648 8,812 Other current assets 482 448 Total current assets 96,399 96,330 Property and equipment, net 9,945 9,763 Goodwill 13,770 13,580 Other intangible assets 54,650 53,772 Other intangible assets - accumulated amortization ( 52,245 ) ( 50,907 ) Other intangible assets, net 2,405 2,865 Total assets $ 122,519 $ 122,538 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 914 $ 696 Accrued expenses 3,410 3,061 Total current liabilities 4,324 3,757 Deferred tax liability - Femcare IIA 494 603 Other long term liabilities - - Long-term lease liability 269 282 Deferred income taxes 385 469 Total liabilities 5,472 5,111 Stockholders' equity: Common stock - $ 0.01 par value; authorized - 50,000 shares; issued and outstanding - March 31, 2025, 3,281 shares and December 31, 2024, 3,335 shares 33 33 Accumulated other comprehensive loss ( 11,190 ) ( 11,908 ) Additional paid-in capital - - Retained earnings 128,204 129,302 Total stockholders' equity 117,047 117,427 Total liabilities and stockholders' equity $ 122,519 $ 122,538 see notes to consolidated condensed financial statements 1 UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND MARCH 31, 2024 (in thousands, except per share amounts) (unaudited) THREE MONTHS ENDED MARCH 31, 2025 2024 Sales, net $ 9,710 $ 11,340 Cost of goods sold 4,172 4,574 Gross profit 5,538 6,766 Operating expense Selling, general and administrative 2,231 2,617 Research & development 154 266 Total operating expenses 2,385 2,883 Operating income 3,153 3,883 Other income 705 915 Income before provision for income taxes 3,858 4,798 Provision for income taxes 817 842 Net income $ 3,041 $ 3,956 Earnings per common share (basic) $ 0.92 $ 1.09 Earnings per common share (diluted) $ 0.92 $ 1.09 Shares outstanding (basic) 3,310 3,618 Shares outstanding (diluted) 3,310 3,618 Other comprehensive income (loss): Foreign currency translation net of taxes of $ 0 in all periods $ 718 $ ( 631 ) Total comprehensive income $ 3,759 $ 3,325 see notes to consolidated condensed financial statements 2 UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY Three Months Ended March 31, 2025 and 2024 (In thousands - unaudited) Accumulated Additional Other Total Common Stock Paid-in Comprehensive Retained Stockholders' Shares Amount Capital Income Earnings Equity Balance at December 31, 2024 3,335 $ 33 $ - $ ( 11,908 ) $ 129,302 $ 117,427 Shares issued upon exercise of employee stock options for cash - - - - - - Shares received and retired upon exercise of stock options - - - - - - Tax benefit attributable to appreciation of stock options - - - - - - Stock option compensation expense - - 82 - - 82 Common stock purchased and retired ( 54 ) ( 1 ) ( 82 ) - ( 3,138 ) ( 3,221 ) Foreign currency translation adjustment - - - 718 - 718 Unrealized holding gain (loss) from investments, available-for-sale, net of taxes - - - - - - Common stock dividends - - - - ( 1,001 ) ( 1,001 ) Net income - - - - 3,041 3,041 Balance at March 31, 2025 3,281 $ 33 $ - $ ( 11,190 ) $ 128,204 $ 117,047 Balance at December 31, 2023 3,630 $ 36 $ 593 $ ( 10,658 ) $ 138,341 $ 128,313 Shares issued upon exercise of employee stock options for cash 2 - 96 - - 96 Shares received and retired upon exercise of stock options - - - - - - Tax benefit attributable to appreciation of stock options - - - - - - Stock option compensation expense - - 79 - - 79 Common stock purchased and retired ( 43 ) - ( 769 ) - ( 2,221 ) ( 2,990 ) Foreign currency translation adjustment - - - ( 631 ) - ( 631 ) Unrealized holding gain (loss) from investments, available-for-sale, net of taxes - - - - - - Common stock dividends - - - - ( 1,081 ) ( 1,081 ) Net income - - - - 3,956 3,956 Balance at March 31, 2024 3,588 $ 36 $ - $ ( 11,289 ) $ 138,995 $ 127,742 see notes to consolidated condensed financial statements UTAH MEDICAL PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND MARCH 31, 2024 (in thousands - unaudited) MARCH 31, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 3,041 $ 3,956 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 200 156 Amortization 509 513 Provision for losses on/(recovery of) accounts receivable ( 9 ) ( 8 ) Amortization of Right-of-Use Assets 12 14 Deferred income taxes ( 209 ) ( 192 ) Stock-based compensation expense 82 79 Tax benefit attributable to exercise of stock options - 9 Changes in operating assets and liabilities: Accounts receivable and other receivables 12 ( 214 ) Inventories 275 271 Prepaid expenses and other current assets ( 26 ) ( 87 ) Accounts payable 217 230 Accrued expenses 360 549 Total adjustments 1,423 1,320 Net cash provided by operating activities 4,464 5,276 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures for: Property and equipment ( 184 ) ( 22 ) Proceeds from sale of equipment - 27 Net cash provided by/(used in) investing activities ( 184 ) 5 CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock - options - 96 Common stock purchased and retired ( 3,221 ) ( 2,990 ) Payment of dividends ( 1,017 ) ( 1,089 ) Net cash used in financing activities ( 4,238 ) ( 3,983 ) Effect of exchange rate changes on cash 307 ( 358 ) Net increase in cash and cash equivalents 349 940 Cash at beginning of period 82,976 92,868 Cash at end of period $ 83,325 $ 93,808 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for income taxes $ 46 $ 105 Cash paid during the period for interest $ - $ - see notes to consolidated condensed financial statements UTAH MEDICAL PRODUCTS, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (unaudited) (1) The unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by accounting principles generally accepted in the United States. These statements should be read in conjunction with the financial statements and notes included in the Utah Medical Products, Inc. ("UTMD" or "the Company") annual report on Form 10-K for the year ended December 31, 2024. In the opinion of management, the accompanying financial statements include all adjustments (consisting only of normal recurring adjustments) necessary to summarize fairly the Company's financial position and results of operations. Currency amounts are in thousands except per-share amounts and where noted. (2) Recent Accounting Standards. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting AUS 2023-09. In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses , requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03. (3) Inventories at March 31, 2025 and December 31, 2024 consisted of the following: March 31, December 31, 2025 2024 Finished goods $ 1,602 $ 1,913 Work-in-process 1,544 1,414 Raw materials 5,502 5,485 Total $ 8,648 $ 8,812 (4) Stock-Based Compensation. At March 31, 2025, the Company has stock-based employee compensation plans which authorize the grant of stock options to eligible employees and directors. The Company accounts for stock compensation under FASB Accounting Standards Codification (“ASC”) 718, Compensation - Stock Compensation . This statement requires the Company to recognize compensation cost based on the grant date fair value of options granted to employees and directors. In the quarters ended March 31, 2025 and March 31, 2024, the Company recognized $ 82 and $ 79 , respectively, in stock-based compensation cost. (5) Warranty Reserve. The Company’s published warranty is: “UTMD warrants its products to conform in all material respects to all published product specifications in effect on the date of shipment, and to be free from defects in material and workmanship for a period of thirty (30) days for supplies, or twenty-four (24) months for equipment, from date of shipment. During the warranty period UTMD shall, at its option, replace any products shown to UTMD's reasonable satisfaction to be defective at no expense to the Purchaser or refund the purchase price.” UTMD maintains a warranty reserve to provide for estimated costs which are likely to occur. The amount of this reserve is adjusted, as required, to reflect its actual experience. Based on its analysis of historical warranty claims and its estimate that existing warranty obligations were immaterial, no warranty reserve was made at December 31, 2024 or March 31, 2025. 5 (6) 1Q 2025 global revenues (USD) by product category: Domestic Outside US Total Obstetrics $ 832 $ 193 $ 1,025 Gynecology/Electrosurgery/Urology 2,329 2,567 4,896 Neonatal 1,622 360 1,982 Blood Pressure Monitoring and Accessories 800 1,007 1,807 Total $ 5,583 $ 4,127 $ 9,710 (7) Earnings Per Share. Basic earnings per share were calculated by dividing net income attributable to the common stockholders of the company by the weighted average number of common shares outstanding during each applicable period. Diluted earnings per share were calculated by assuming the exercise of stock options at the closing price of stock at the end of first quarter 2025 and 2024, as applicable. The following table reconciles the numerator and the denominator used to calculate basic and diluted earnings per share: Three months ended March 31 (in thousands) 2025 2024 Numerator Net income 3,041 3,956 Denominator Weighted average shares, basic 3,310 3,618 Dilutive effect of stock options - - Diluted shares 3,310 3,618 Earnings per share, basic $ 0.92 $ 1.09 Earnings per share, diluted $ 0.92 $ 1.09 (8) Segment Information. The Company operates as one operating segment. The Company’s chief operating decision maker (“CODM”) is its chief executive officer, who reviews financial information presented on a consolidated basis. The CODM uses consolidated gross profit margin, operating margin, and net income to assess financial performance and allocate resources. These financial metrics are used by the CODM to make key operating decisions such as the allocation of budget between cost of sales, sales and marketing, research and development, and general and administrative expenses. The following table presents selected financial information with respect to the Company’s single operating segment for the quarters ended March 31, 2025 and March 31, 2024: Quarter Ended March 31, 2025 2024 Revenues 9,710 11,340 Less: Standard cost of sales 3,656 3,822 Other cost of sales 516 753 Gross Profit 5,538 6,765 Gross Profit Margin 57.0 % 59.7 % Sales & Marketing 500 411 Research & Development 154 266 Litigation Fees 316 751 Amortization 509 513 Other General & Administrative 906 941 Operating Income 3,153 3,883 Operating Income Margin 32.5 % 34.2 % Other Income Interest income 737 891 Other income (expense) ( 32 ) 24 Income before income taxes 3,858 4,798 Provision for income taxes 817 842 Net Income 3,041 3,956 6 (9) Subsequent Events. UTMD has evaluated subsequent events through the date the financial statements were issued, and concluded there were no other events or transactions during this period that required recognition or disclosure in its March 31, 2025 financial statements. After March 31, 2025 through May 12, 2025, the Company made additional repurchases of 32,679 shares of its stock in the open market for $1,754, at an average price of $53.67 per share.