General
Utah Medical Products, Inc. (UTMD) manufactures and markets a well-established
range of specialty medical devices. The Company's Form 10-K Annual Report for
the year ended December 31, 2022 provided a detailed description of products,
technologies, markets, regulatory issues, business initiatives, resources and
business risks, among other details, and should be read in conjunction with this
report. 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. Currency amounts in
the report are in thousands, except per share amounts or where otherwise noted.
Currencies in this report 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.
Analysis of Results of Operations
a)Overview
Income statement results in the first quarter (1Q) of 2023 compared to 1Q 2022
were as follows:
1Q 2023 1Q 2022 change
Net Sales $ 12,520 $ 12,323 +1.6%
Gross Profit 7,843 7,532 +4.1%
Operating Income 4,439 4,522 (1.9%)
Income Before Tax 5,119 4,530 +13.0%
Net Income 4,214 3,534 +19.2%
Earnings per Share (diluted) $ 1.159 $ 0.964 +20.2%
Profit margins in 1Q 2023 compared to 1Q 2022 follow:
1Q 2023 1Q 2022
(JAN - MAR) (JAN - MAR)
Gross Profit Margin (Gross Profit/ sales): 62.6% 61.1%
Operating Income Margin (Operating Income/ sales): 35.5% 36.7%
EBT Margin (Profits before Income Taxes/ sales): 40.9% 36.8%
Net Income Margin (Profit after Taxes/ sales): 33.7% 28.7%
Domestic sales in 1Q 2023 were 10% lower, but sales outside the U.S. (OUS) were
up 23% in USD terms compared to 1Q 2022. Using the same foreign currency
exchange (FX) rates for sales not invoiced in USD, i.e. in "constant currency"
terms, OUS sales were up 28%. Because 28% of consolidated USD sales were
invoiced in foreign currencies, the change in FX rates for OUS sales did have an
impact on period-to-period relative financial results. FX rates for income
statement purposes are transaction-weighted averages. The average FX rates from
the applicable foreign currency to USD during 1Q 2023 and 1Q 2022 follow:
1Q 2023 1Q 2022 Change
GBP 1.215 1.339 (9.3%)
EUR 1.078 1.126 (4.2%)
AUD 0.685 0.724 (5.3%)
CAD 0.739 0.789 (6.3%)
The weighted-average negative impact on foreign currency sales was 5.9%,
reducing reported USD sales by $223 relative to the same foreign currency sales
in 1Q 2022. In constant currency terms, total consolidated 1Q 2023 sales were
up $420 (+3.4%).
Due mostly to better absorption of manufacturing overhead costs in Ireland and
lower employee healthcare plan costs in the U.S., UTMD was able to increase its
1Q 2023 Gross Profit Margin (GPM), gross profits/sales, compared to 1Q 2022.
Consolidated OI in 1Q 2023 at $4,439 (35.5% of sales) was $84 lower than 1Q 2022
OI of $4,522 (36.7% of sales). Although UTMD's 1Q 2023 Operating Income Margin
(OIM) benefitted from higher sales, a higher GPM and a stronger USD which
reduced OUS operating expenses in USD terms by $80, it suffered more from the
$348 (2.8% of sales) higher litigation expenses compared to 1Q 2022. The $1,105
per quarter straight-line amortization of the $21,000 purchase price that UTMD
paid CSI in early 2019 to acquire the remaining 4.75 years' exclusive U.S.
Filshie distribution rights was 8.8% of 1Q 2023 sales compared to 9.0% of 1Q
2022 sales. The purchase price of CSI's remaining exclusive distribution rights
was recognized as an identifiable intangible asset (IIA) which will be fully
amortized in October 2023. IIA amortization expense in total, including that
remaining from the 2011 Femcare acquisition, which comprises a significant
portion of General & Administrative (G&A) operating expenses, was 12.7% of 1Q
2023 consolidated sales compared to 13.3% of 1Q 2022 consolidated sales. In
other words, UTMD's OIM excluding IIA amortization and litigation expense was
51.4% in 1Q 2023 compared to 50.5% in 1Q 2022.
Income Before Tax (EBT) benefitted from much higher interest income on UTMD's
cash reserves. Non-operating income (NOI) in 1Q 2023, in which interest income
is captured, was $681 compared to $8 in 1Q 2022. As a result of $589 higher EBT
and a lower income tax provision rate due to a portion of NOI received from tax
exempt interest, UTMD's Net Income Margin (NIM) in 1Q 2023 at 33.7% was
substantially higher than the 28.7% NIM in 1Q 2022. UTMD's consolidated income
tax provision rate in 1Q 2023 was 17.7% of EBT compared to 22.0% in 1Q 2022. The
result was that 1Q 2023 NI was 19.2% higher, and 1Q 2023 Earnings Per Share were
20.2% higher, than in 1Q 2022.
UTMD's March 31, 2023 Balance Sheet, in the absence of debt, remained strong.
Ending Cash and Investments were $80.9 million on March 31, 2023 compared to
$75.1 million on December 31, 2022. Stockholders' Equity was up $3.8 million in
the first three-month calendar period from December 31, 2022. 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 1Q 2023 and the end of 1Q 2022 follow:
3-31-23 3-31-22 Change
GBP 1.237 1.315 (6.0%)
EUR 1.087 1.110 (2.0%)
AUD 0.670 0.750 (10.6%)
CAD 0.739 0.801 (7.7%)
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b)Revenues
Terms of sale are established in advance of UTMD's acceptance of customer
orders. In the U.S., Ireland, UK, Canada, Australia and New Zealand, UTMD
generally accepted orders directly from and shipped directly to end user
clinical facilities, as well as third party medical/surgical distributors, under
UTMD's Standard Terms and Conditions (T&C) of Sale during both 1Q 2023 and 1Q
2022. UTMD may have separate discounted pricing agreements with a specific
clinical facility or group of affiliated facilities based on volume of
purchases. Pricing agreements which are documented arrangements with clinical
facilities, or groups of affiliated facilities, if applicable, are established
in advance of orders accepted or shipments made. For existing customers, past
actual shipment volumes typically determine the fixed price by part number for
the next agreement period of one year. For new customers, the customer's best
estimate of volume is usually accepted by UTMD for determining the ensuing fixed
prices for the agreement period. Prices are not adjusted after an order is
accepted. For the sake of clarity, the separate pricing agreements with clinical
facilities based on volume of purchases disclosure is not inconsistent with
UTMD's disclosure that the selling price is fixed prior to the acceptance of a
specific customer order.
Total consolidated 1Q 2023 UTMD revenues (sales) were $197 (+1.6%) higher than
in 1Q 2022. Constant currency sales were $420 (+3.4%) higher. U.S. domestic
sales were 10.0% lower and OUS sales were 22.9% higher despite an average 5.9%
stronger USD. 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.
Domestic sales in 1Q 2023 were $7,185 compared to $7,984 in 1Q 2022. The
components of domestic sales include 1) "direct sales" of UTMD's medical devices
to user facilities (and med/surg stocking distributors for hospitals), excluding
Filshie device sales, 2) "OEM sales" of components and other products
manufactured by UTMD for other medical device and non-medical device companies,
and 3) "Filshie device sales", manufactured by Femcare and distributed in the
U.S. by UTMD.
1)Direct sales, representing 50% of total domestic sales, were $372 (9.3%) lower
in 1Q 2023 than in 1Q 2022. This was due to continuing supply chain disruption,
in particular independent sterilizer capacity constraints.
2)OEM sales, representing 32% of total domestic sales, were $375 (14.0%) lower.
U.S. sales to UTMD's largest OEM customer which had grown rapidly in recent
years were $391 lower in 1Q 2023 compared to 1Q 2022.
3)Filshie device sales were $51 (3.9%) lower in 1Q 2023 compared to 1Q 2022.
OUS sales in 1Q 2023 were $5,335 compared to $4,339 in 1Q 2022. OUS sales
invoiced in GBP, EUR, AUD and CAD currencies were reduced $223 as a result of
changes in FX rates resulting from an average 5.9% stronger USD. In other
words, constant currency OUS sales were $5,558, which was 28.1% higher than in
1Q 2022. The foreign currency OUS sales in 1Q 2023 were $3,558, which was 67%
of OUS sales and 28% of total consolidated sales. Foreign currency OUS sales in
1Q 2022 were $2,906, which was 67% of OUS sales and 24% of total consolidated
sales.
The following table provides USD consolidated sales amounts divided into general
product categories for total worldwide sales and the subset of OUS sales:
WW revenues (USD) by product category:
1Q 2023 % 1Q 2022 %
Obstetrics $ 1,015 8 $ 1,049 9
Gynecology/ Electrosurgery/ Urology 5,593 45 5,102 41
Neonatal 1,762 14 1,873 15
Blood Pressure Monitoring and Accessories* 4,150 33 4,299 35
Total:
$ 12,520 100 $ 12,323 100
OUS revenues (USD) by product category:
1Q 2023 % 1Q 2022 %
Obstetrics $ 209 4 $ 126 3
Gynecology/ Electrosurgery/ Urology 3,073 58 2,522 58
Neonatal 377 7 291 7
Blood Pressure Monitoring and Accessories* 1,676 31 1,400 32
Total:
$ 5,335 100 $ 4,339 100
*includes molded components sold to OEM customers.
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c)Gross Profit
Gross Profit results from subtracting the costs of manufacturing products,
including quality assurance and freight for receiving raw materials from
vendors, from revenues. UTMD's Gross Profit was $310 (+4.1%) higher in 1Q 2023
than in 1Q 2022. Gross Profit increased more than revenues due primarily to two
favorable period-to-period differences: better absorption of manufacturing
overhead costs in Ireland as a result of production which increased more than
overhead costs increased, and 2) much lower healthcare costs for U.S. employees
compared to 1Q 2022 under UTMD's self-funded plan. The Company selectively
raised product prices during 1Q 2023 based on specific input costs from vendors.
As another cost-of-living pay adjustment for employees becomes effective in
April 2023, the Company still expects to maintain its GPM for the year as a
whole consistent with 2022.
d)Operating Income
Operating Income results from subtracting Operating Expenses from Gross Profit.
Operating Expenses are comprised of G&A (G&A) expenses, sales and marketing
(S&M) expenses and product development (R&D) expenses. Consolidated Operating
Expenses were $3,404 in 1Q 2023 (27.2% of sales) compared to $3,010 in 1Q 2022
(24.4% of sales). Ignoring the portion of Operating Expenses that were
litigation expenses and non-cash IIA amortization expenses, consolidated
Operating Expenses in 1Q 2023 were 11.2% of consolidated sales compared to 10.6%
of sales in 1Q 2022. A stronger USD in 1Q 2023 compared to 1Q 2022 helped
Operating Income performance by reducing OUS Operating Expenses in USD terms by
$80, comprised of reducing IIA amortization expense by $49 and all other OUS
Operating Expenses by $31.
Consolidated G&A expenses were $2,873 (22.9% of sales) in 1Q 2023 compared to
$2,551 (20.7% of sales) in 1Q 2022. G&A expenses include litigation costs which
were $409 in 1Q 2023 compared to $61 in 1Q 2022. The G&A expenses in 1Q 2023
included $483 (3.9% of sales) of non-cash expense from the amortization of IIA
resulting from the 2011 Femcare acquisition, which were $532 (4.3% of sales) in
1Q 2022. The lower USD IIA amortization expense was the result of a stronger
USD, as the Femcare amortization expense in GBP in 1Q 2023 was the same as in 1Q
2022. In addition, G&A expenses in both periods included $1,105 IIA amortization
expense resulting from the purchase of the CSI remaining U.S. exclusive Filshie
distribution rights, which represented 8.8% of 1Q 2023 sales compared to 9.0% of
1Q 2022 sales. Excluding the litigation and non-cash IIA amortization expenses,
G&A expenses were $876 (7.0% of sales) in 1Q 2023 compared to $853 (6.9% of
sales) in 1Q 2022. The change in FX rates reduced 1Q 2023 OUS G&A expenses by
$74, comprised of reducing IIA amortization expense by $49 and all other G&A
expenses by $24.
S&M expenses were $387 (3.1% of sales) in 1Q 2023 compared to $336 (2.7% of
sales) in 1Q 2022. The change in FX rates reduced 1Q 2023 OUS S&M expenses by
$6.
R&D expenses in 1Q 2023 were $144 (1.1% of sales) compared to $123 (1.0% of
sales) in 1Q 2022. The change in FX rates reduced 1Q 2023 OUS R&D expenses by
$1.
In summary, Operating Income in 1Q 2023 was $4,439 (35.5% of sales) compared to
$4,522 (36.7% of sales) in 1Q 2022. The lower Operating Income Margin was due
primarily to the $348 higher litigation expenses.
A summary comparison of (USD) consolidated Operating Expenses follows:
1Q 2023 1Q 2022
S&M Expense $ 387 $ 336
R&D Expense 144 123
G&A Expense:
CSI IIA amortization 1,105 1,105
Femcare IIA amortization 483 532
Litigation Expense 409 61
All Other G&A Expenses 876 853
Total Operating Expenses: $ 3,404 $ 3,010
After adjustment of OUS Operating Expenses for a stronger USD, the increases in
S&M, R&D and All Other G&A expenses (excluding litigation and IIA amortization)
were essentially due to cost-of-living increases for employees.
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e)Non-operating expense/ Non-operating income
Net non-operating expense, or net non-operating income, results from 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, royalties received from
licensing the Company's technology and other miscellaneous income. Net
non-operating income in 1Q 2023 was $681 compared to $8 in 1Q 2022. The primary
difference was due to higher average cash balances in 1Q 2023 compared to 1Q
2022 with higher interest rates, which resulted in $646 higher interest income.
UTMD also received $9 higher non-operating income in 1Q 2023 from renting
underutilized property compared to 1Q 2022, and the same non-operating income
from royalties. UTMD realized a slight gain in 1Q 2023 compared to a loss of $3
at the end of 1Q 2022 from remeasurement of foreign currency bank balances.
f)Income Before Income Taxes (EBT)
EBT results from adding net non-operating income to Operating Income.
Consolidated 1Q 2023 EBT was $5,119 (40.9% of sales) compared to $4,530 (36.8%
of sales) in 1Q 2022. The $589 (+13.0%) higher 1Q 2023 EBT compared to 1Q 2022
was the result of $673 higher non-operating income. In other words, the $646
higher interest income more than offset UTMD's $348 higher litigation expenses.
The EBT of Utah Medical Products, Inc. in the U.S. was $2,562 in 1Q 2023
compared to $2,916 in 1Q 2022. The EBT of Utah Medical Products, Ltd (Ireland)
was EUR 1,962 in 1Q 2023 compared to EUR 1,806 in 1Q 2022. The EBT of Femcare
Group Ltd (Femcare Ltd., UK and Femcare Australia Pty Ltd) was GBP 23 in 1Q 2023
compared to GBP (159) in 1Q 2022. The 1Q 2023 EBT of Utah Medical Products
Canada, Inc. was CAD 158 in 1Q 2023 compared to CAD 154 in 1Q 2022.
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. Excluding the noncash
effects of depreciation, amortization of intangible assets and stock option
expense, 1Q 2023 consolidated EBT excluding the remeasured bank balance currency
gain or loss and interest expense ("adjusted consolidated EBITDA") were $6,919
compared to $6,371 in 1Q 2022, an 8.6% increase. Management believes that the 1Q
2023 EBITDA operating performance provides a start that is consistent with
achieving its financial objectives for the calendar year 2023, as previously
provided in its 2022 SEC 10-K Report. UTMD's trailing last twelve-month EBITDA
was $28,439.
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:
1Q 2023 1Q 2022
EBT $ 5,119 $ 4,530
Depreciation Expense 154 149
Femcare IIA Amortization Expense 483 532
CSI IIA Amortization Expense
1,105 1,105
Other Non-Cash Amortization Expense 8 9
Stock Option Compensation Expense 50 43
Interest Expense
- -
Remeasured Foreign Currency Balances - 3
UTMD non-US GAAP EBITDA: $ 6,919 $ 6,371
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g)Net Income
Net Income in 1Q 2023 of $4,214 was 19.2% higher than the Net Income of $3,534
in 1Q 2022. UTMD's Net Income Margin, Net Income divided by consolidated sales,
was 33.7% in 1Q 2023 and 28.7% in 1Q 2022. The average consolidated income tax
provision rates (as a % of EBT) in 1Q 2023 was 17.7% and in 1Q 2022 was 22.0%.
The lower provision rate in 1Q 2023 resulted primarily from a portion of
interest income that is tax-exempt.
h) Earnings Per Share (EPS)
EPS are consolidated Net Income divided by the weighted average number of shares
of stock outstanding (diluted to take into consideration stock option awards
which are "in the money," i.e., have exercise prices below the applicable
period's weighted average market value).
Diluted EPS in 1Q 2023 were 20.2% higher than in 1Q 2022. UTMD's increase in NI
was leveraged for EPS as a result of 28,629 fewer diluted shares used to
calculate EPS in 1Q 2023 compared to 1Q 2022. Diluted shares were 3,636,286 in
1Q 2023 compared to 3,664,915 in 1Q 2022. Outstanding shares were 3,628,067 at
the end of 1Q 2023. 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. The total
number of outstanding unexercised employee and outside director options at March
31, 2023 was 66,883 at an average exercise price of $73.64, including shares
awarded but not yet vested. This compares to 67,433 unexercised option shares
at the end of 2022 at an average exercise price of $73.66/ share, including
shares awarded but not vested. The difference was due to 300 employee option
exercises and 250 cancellations during 1Q 2023. The number of shares added as a
dilution factor in 1Q 2023 was 8,456 compared to 10,125 in 1Q 2022.
Outstanding shares at the end of 1Q 2023 were 3,628,067 compared to 3,627,767 at
the end of calendar year 2022. The difference was due to 300 employee option
exercises during 1Q 2023.
There were no stock repurchases in 1Q 2023. During the last year since the end
of 1Q 2022, UTMD repurchased 30,105 of its shares. No options were awarded in
1Q 2023. During the last year since the end of 1Q 2022, 20,600 options were
awarded to 40 employees at an exercise price of $82.60.
UTMD paid a $1,070 ($0.295/share) cash dividend to stockholders in 1Q 2023. UTMD
did not pay a cash dividend to stockholders in 1Q 2022 because the special
$7,309 ($2.00/share) dividend, which was declared in 4Q 2021, was paid in
December before the end of the 2021 calendar year instead of in January 2022.
During 1Q 2023 and 1Q 2022, UTMD did not repurchase its shares. In 2Q 2022, UTMD
repurchased 30,105 shares at $82.88 per share. 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 1Q 2023 was $94.77, down 6% from the $100.53 closing price at the end of
2022. The closing share price at the end of 1Q 2022 was $89.86.
i) Return on Equity (ROE)
ROE is the portion of Net Income retained by UTMD to internally finance its
growth, divided by the average accumulated Stockholders' Equity for the
applicable time period. Annualized ROE (before stockholder dividends) in 1Q 2023
was 15% and in 1Q 2022 was 13%. The higher ROE in 1Q 2023 was due to 19% higher
Net Income divided by 7% higher average Stockholders' Equity. Targeting a high
ROE of 20% remains a key financial target for UTMD management. ROE can be
increased by increasing Net Income, and/or by reducing Stockholders' Equity by
paying cash dividends to stockholders or by repurchasing shares.
Liquidity and Capital Resources
j)Cash flows
Net cash provided by operating activities, including adjustments for
depreciation and amortization and other non-cash expenses along with changes in
working capital, totaled $6,915 in 1Q 2023 compared to $5,046 in 1Q 2022. Net
Income provided $680 more to cash in 1Q 2023 than in 1Q 2022. Other differences
in cash provided during the two periods were a $2,350 higher source of cash from
trade accounts receivable, a $141 lower reduction in deferred income taxes and a
$135 difference with lower instead of higher prepaid expenses and other current
assets, offset by a $886 higher use of cash for accounts payable, a $276 higher
increase in inventories and a $247 lower increase in accrued expenses.
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Capital expenditures for property and equipment (PP&E) were $43 in 1Q 2023
compared to $237 in 1Q 2022. Depreciation of PP&E was $155 in 1Q 2023 compared
to $149 in 1Q 2022.
Cash dividends paid to stockholders in 1Q 2023 were $1,070 compared to zero in
1Q 2022 because the special $7,309 dividend declared in 4Q 2021 was paid in
December 2021 instead of in January 2022.
In 1Q 2023, UTMD received $21 and issued 300 shares of its stock upon the
exercise of employee stock options. Option exercises in 1Q 2023 were at an
average price of $69.83 per share. In comparison, in 1Q 2022 UTMD received $19
and issued 250 shares of its stock upon the exercise of employee stock options.
Option exercises in 1Q 2022 were at an average price of $76.33 per share.
Management believes that current cash balances, income from operations and
effective management of working capital will provide the liquidity needed to
meet the challenges of the current economic environment in achieving operating
objectives, to maintain the capability to make opportunistic investments that
will provide for growth in future profits and to continue to allocate capital in
a way that will maximize stockholder value over time. During the remainder of
2023 the Company may utilize cash not needed to support normal operations in one
or a combination of the following: 1) in general, to continue to invest at an
opportune time in ways that will enhance future profitability; 2) to make
additional investments in new technology and/or processes; and/or 3) to acquire
a product line or company that will augment revenue and EPS growth and better
utilize UTMD's existing infrastructure. If there are no better strategic uses
for UTMD's cash, the Company will continue to return cash to stockholders in the
form of dividends and share repurchases when the stock appears undervalued.
k)Assets and Liabilities
UTMD's March 31, 2023 Balance Sheet, in the absence of debt, continued to
strengthen.
March 31, 2023 total consolidated assets increased $3,896 from December 31, 2022
to $127,770. The increase was due to a $5,860 increase in cash and a $17
increase in net fixed assets (property, plant and equipment), offset by a $667
decrease in current assets other than cash and $1,314 lower net intangible
assets.
The increase in cash was due to cash generated from operations coupled with a
$781 decrease in non-cash working capital. Current assets as a whole increased
$5,193 while current liabilities as a whole increased $114, yielding a $5,079
increase in working capital to $89,038. The decrease in current assets other
than cash resulted primarily from a $1,720 decrease in receivables offset by an
$1,126 increase in consolidated inventories. Average inventory turns were 2.0 in
1Q 2023 compared to 2.6 for the 2022 year. Accounts receivable were $1,720
lower due to faster collections, with the average age of trade receivables at 27
days from date of invoice at March 31, 2023 compared to 37 days at December 31,
2022. UTMD's excellent 15.1 current ratio at December 31, 2022 improved to 15.7
at March 31, 2023 because current assets increased 5.8% when current liabilities
increased just 1.9%.
The $17 higher net fixed assets at March 31, 2023 compared to December 31, 2022
resulted from $43 in capital expenditures, $155 in depreciation and the impact
of the period-to-period foreign currency exchange (FX) rates for assets OUS. 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 1Q 2023 and the end of 2022 follow:
3-31-23 12-31-22 Change
GBP 1.237 1.208 +2.4%
EUR 1.087 1.069 +1.7%
AUD 0.670 0.680 (1.5%)
CAD 0.739 0.739 -
At March 31, 2023, net Intangible Assets decreased to 17.5% of total
consolidated assets from 19.2% on December 31, 2022 because of the 1Q 2023
$1,588 amortization of identifiable intangibles, offset by a higher FX rate for
remaining GBP intangible assets in the UK and aided by the higher period-end
total asset denominator.
The $114 increase in current liabilities was a result of a $305 increase in
accrued liabilities, primarily for income taxes and customer deposits, offset by
a $191 decrease in accounts payable. Long term liabilities increased $19 to
$3,678 primarily as a result of an increase in deferred income taxes in the U.S.
and Ireland. Long term liabilities declined by a $57 lower deferred tax
liability for the Femcare Ltd GBP IIA to $1,456 at March 31, 2023 compared to
$9,084 on the date of the 2011 acquisition. Reduction of the deferred tax
liability occurs as the book/tax difference of IIA amortization is eliminated
over the remaining useful life of the Femcare Ltd IIA. UTMD's total debt ratio
(total liabilities/total assets) as of March 31, 2023 was 7.6% compared to 7.8%
as of December 31, 2022.
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l)Management's Outlook
Based on the first quarter of 2023 results, UTMD expects to achieve its plan for
2023 as a whole, as described in its 2022 Form SEC 10-K. UTMD's objectives for
2023 remain to
1)exploit distribution and manufacturing synergies by further integrating
capabilities and resources in its multinational operations;
2)more effectively market the benefits of the Filshie Clip System in the U.S.;
3)introduce additional products helpful to clinicians through internal new
product development;
4)continue to achieve profitable overall financial operating performance and a
stable working environment for employees;
5)utilize positive cash generation to continue providing cash dividends to
stockholders and make open market share repurchases if/when the UTMD share price
seems undervalued; and
6)be vigilant for accretive acquisition opportunities which may be brought about
by the current challenging economic environment on companies with more limited
resources.
m)Accounting Policy Changes
None.
Forward-Looking Information. This report contains certain forward-looking
statements and information relating to the Company that are based on the beliefs
of management as well as assumptions made by management based on information
currently available. When used in this document, the words "anticipate,"
"believe," "project," "estimate," "expect," "intend" and similar expressions, as
they relate to the Company or its management, are intended to identify
forward-looking statements. Such statements reflect the current view of the
Company respecting future events and are subject to certain risks, uncertainties
and assumptions, including the risks and uncertainties stated throughout the
document. Although the Company has attempted to identify important factors that
could cause the actual results to differ materially, there may be other factors
that cause the forward statement not to come true as anticipated, believed,
projected, expected, or intended. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may differ materially from those described herein as anticipated,
believed, projected, estimated, expected or intended. Financial estimates are
subject to change and are not intended to be relied upon as predictions of
future operating results, and the Company assumes no obligation to update or
disclose revisions to those estimates.
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UTAH MEDICAL PRODUCTS, INC. 
