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Utah Medical Products, Inc. Reports Financial Performance For Third Quarter 2010

SALT LAKE CITY, Oct. 21, 2010 (GLOBE NEWSWIRE) -- Utah Medical Products, Inc. (Nasdaq:UTMD) reports lower sales, improved profit margins and a stronger ending balance sheet for the third calendar quarter (3Q) 2010 compared to 3Q 2009.

Despite lower total sales for the third quarter, domestic sales have improved in 2010 on a quarterly basis:  

(in thousand $) 1Q 2010 (JAN – MAR) 2Q 2010 (APR – JUN) 3Q 2010 (JUL – SEP)
Domestic Direct: 4,040 4,035 4,094
Domestic OEM:  335  359  361
Domestic Total: 4,375 4,394 4,455

Continued lower U.S. hospital utilization rates of medical devices and unit price reductions have resulted in three quarters year-to-date, or nine months (9M) of 2010, domestic sales that were 5% lower than in 9M 2009.

International sales in 2010, on the other hand, have declined on a quarterly basis:

(in thousand $) 1Q 2010 (JAN – MAR) 2Q 2010 (APR – JUN) 3Q 2010 (JUL – SEP)
International: 2,060 1,882 1,745

However, 9M 2010 international sales were 5% higher than in 9M 2009. International sales fluctuate because UTMD sells through third party distributors which purchase several months' of supply at a time to minimize costs. UTMD expects that 4Q 2010 international sales will recover closer to 1Q 2010. 

Profit margins in 3Q 2010 improved compared to 3Q 2009:

    3Q 2010 (JUL – SEP) 3Q 2009 (JUL – SEP)
Gross Profit Margin (gross profits/ sales): 53.8% 52.4%
Operating Profit Margin (operating profits/ sales): 36.4% 35.7%
Net Profit Margin (profit after taxes/ sales): 24.4% 24.2%

Although the unit prices of devices sold declined, UTMD achieved a higher 3Q 2010 gross profit margin (GPM) due to three factors: 1) a more favorable distribution mix as international sales at lower prices were a smaller portion of total sales, 2) lower manufacturing overhead costs as a result of the completion of consolidating Oregon molding operations into Utah in 2Q 2010, and 3) reallocation of shipping costs previously included in cost of goods sold to operating expenses (sales and marketing expense).

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