UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☒ Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Quarterly Period Ended March 31, 2022 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Transition Period from _________ to _________ |
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Commission File Number 001-32982
Atrion Corporation | ||
(Exact Name of Registrant as Specified in its Charter) |
Delaware |
| 63-0821819 |
(State or Other Jurisdiction of Incorporation or Organization) |
| (I.R.S. Employer Identification No.) |
One Allentown Parkway, Allen, Texas 75002
(Address of Principal Executive Offices) (Zip(Zip Code)
(972) 390-9800
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol | Name of each exchange on which registered |
Common stock, Par Value $0.10 per share | ATRI | The Nasdaq Global Select Market |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Registration S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large | ☒ | Accelerated filer | ☐ |
Non-accelerated filer | ☐ | ||
Smaller reporting company | ☐ | ||
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| Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
Indicate the number of shares outstanding of each of the issuer’sissuer's classes of common stock, as of the latest practicable date.
Title of Each Class |
| Number of Shares Outstanding at
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Common stock, Par Value $0.10 per share |
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ATRION CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
2 |
Table of Contents |
PART I
FINANCIAL INFORMATION
3 |
Table of Contents |
Item 1. | Financial Statements. |
ATRION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
|
| Three Months Ended March 31, |
| |||||||||||||||||||||
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| Three Months Ended June 30, |
| Six Months Ended June 30, |
|
| 2022 |
| 2021 |
| ||||||||||||||
|
| 2021 |
| 2020 |
| 2021 |
| 2020 |
|
| (in thousands, except per share amounts) |
| ||||||||||||
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| (in thousands, except per share amounts) |
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Revenues |
| $ | 42,693 |
| $ | 37,968 |
| $ | 81,862 |
| $ | 81,563 |
|
| $ | 47,138 |
| $ | 39,169 |
| ||||
Cost of goods sold |
|
| 24,826 |
|
|
| 20,499 |
|
|
| 47,656 |
|
|
| 44,226 |
|
|
| 27,894 |
|
|
| 22,830 |
|
Gross profit |
|
| 17,867 |
|
|
| 17,469 |
|
|
| 34,206 |
|
|
| 37,337 |
|
|
| 19,244 |
|
|
| 16,339 |
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Operating expenses: |
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|
|
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| ||||||||||
Selling |
| 1,874 |
| 1,703 |
| 3,800 |
| 3,773 |
|
| 2,517 |
| 1,926 |
| ||||||||||
General and administrative |
| 4,753 |
| 4,628 |
| 8,925 |
| 9,028 |
|
| 5,100 |
| 4,172 |
| ||||||||||
Research and development |
|
| 1,445 |
|
|
| 1,092 |
|
|
| 2,755 |
|
|
| 2,776 |
|
|
| 1,377 |
|
|
| 1,310 |
|
|
|
| 8,072 |
|
|
| 7,423 |
|
|
| 15,480 |
|
|
| 15,577 |
|
|
| 8,994 |
|
|
| 7,408 |
|
Operating income |
| 9,795 |
| 10,046 |
| 18,726 |
| 21,760 |
|
| 10,250 |
| 8,931 |
| ||||||||||
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Interest and dividend income |
| 183 |
| 367 |
| 399 |
| 858 |
|
| 137 |
| 217 |
| ||||||||||
Other investment income (losses) |
| 963 |
| 354 |
| 1,025 |
| (673 | ) | |||||||||||||||
Other investment income/(losses) |
| (240 | ) |
| 62 |
| ||||||||||||||||||
Other income |
|
| 0 |
|
|
| 0 |
|
|
| 66 |
|
|
| 0 |
|
|
| 25 |
|
|
| 66 |
|
|
| 1,146 |
| 721 |
| 1,490 |
| 185 |
|
| (78 | ) |
| 345 |
| |||||||||
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Income before provision for income taxes |
| 10,941 |
| 10,767 |
| 20,216 |
| 21,945 |
|
| 10,172 |
| 9,276 |
| ||||||||||
Provision for income taxes |
|
| (2,017 | ) |
|
| (2,162 | ) |
|
| (3,565 | ) |
|
| (4,443 | ) |
|
| (1,673 | ) |
|
| (1,550 | ) |
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Net income |
| $ | 8,924 |
|
| $ | 8,605 |
|
| $ | 16,651 |
|
| $ | 17,502 |
|
| $ | 8,499 |
|
| $ | 7,726 |
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Net income per basic share |
| $ | 4.89 |
|
| $ | 4.69 |
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| $ | 9.12 |
|
| $ | 9.49 |
|
| $ | 4.73 |
|
| $ | 4.23 |
|
Weighted average basic shares outstanding |
|
| 1,826 |
|
|
| 1,835 |
|
|
| 1,826 |
|
|
| 1,844 |
|
|
| 1,799 |
|
|
| 1,826 |
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Net income per diluted share |
| $ | 4.88 |
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| $ | 4.68 |
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| $ | 9.10 |
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| $ | 9.47 |
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| $ | 4.71 |
|
| $ | 4.22 |
|
Weighted average diluted shares outstanding |
|
| 1,828 |
|
|
| 1,839 |
|
|
| 1,830 |
|
|
| 1,849 |
|
|
| 1,803 |
|
|
| 1,832 |
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Dividends per common share |
| $ | 1.75 |
|
| $ | 1.55 |
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| $ | 3.50 |
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| $ | 3.10 |
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| $ | 1.95 |
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| $ | 1.75 |
|
The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
Table of Contents |
ATRION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
| June 30, |
|
| December 31, 2020 |
|
| March 31, 2022 |
|
| December 31, 2021 |
| ||||
Assets |
| (in thousands) |
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| (in thousands) |
| ||||||||||
Current assets: |
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|
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| ||||||
Cash and cash equivalents |
| $ | 17,070 |
| $ | 22,450 |
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| $ | 24,886 |
| $ | 32,264 |
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Short-term investments |
| 30,478 |
| 19,258 |
|
| 35,374 |
| 29,059 |
| ||||||
Accounts receivable |
| 22,682 |
| 16,445 |
|
| 24,158 |
| 21,023 |
| ||||||
Inventories |
| 47,725 |
| 50,298 |
|
| 51,414 |
| 50,778 |
| ||||||
Prepaid expenses and other current assets |
|
| 7,873 |
|
|
| 3,868 |
|
|
| 2,901 |
|
|
| 3,447 |
|
|
|
| 125,828 |
|
|
| 112,319 |
|
|
| 138,733 |
|
|
| 136,571 |
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|
|
|
|
|
|
|
| ||||||
Long-term investments |
| 32,441 |
| 46,207 |
|
| 17,566 |
| 19,423 |
| ||||||
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|
|
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| ||||||
Property, plant and equipment |
| 225,384 |
| 218,912 |
|
| 239,786 |
| 233,217 |
| ||||||
Less accumulated depreciation and amortization |
|
| 129,372 |
|
|
| 123,977 |
|
|
| 137,626 |
|
|
| 135,245 |
|
|
|
| 96,012 |
|
|
| 94,935 |
|
|
| 102,160 |
|
|
| 97,972 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Other assets and deferred charges: |
|
|
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|
|
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|
| ||||||
Patents |
| 1,361 |
| 1,421 |
|
| 1,272 |
| 1,302 |
| ||||||
Goodwill |
| 9,730 |
| 9,730 |
|
| 9,730 |
| 9,730 |
| ||||||
Other |
|
| 2,266 |
|
|
| 2,278 |
|
|
| 2,177 |
|
|
| 2,266 |
|
|
|
| 13,357 |
|
|
| 13,429 |
|
|
| 13,179 |
|
|
| 13,298 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Total assets |
| $ | 267,638 |
|
| $ | 266,890 |
|
| $ | 271,638 |
|
| $ | 267,264 |
|
|
|
|
|
|
|
|
|
|
| |||||||
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
| ||||||
Current liabilities: |
|
|
|
|
|
|
|
|
|
| ||||||
Accounts payable and accrued liabilities |
| $ | 11,999 |
| $ | 13,200 |
|
| $ | 13,542 |
| $ | 13,076 |
| ||
Accrued income and other taxes |
|
| 670 |
|
|
| 436 |
|
|
| 2,644 |
|
|
| 270 |
|
|
|
| 12,669 |
|
|
| 13,636 |
|
|
| 16,186 |
|
|
| 13,346 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Line of credit |
| 0 |
| 0 |
|
| 0 |
| 0 |
| ||||||
|
|
|
|
|
|
|
|
|
|
| ||||||
Other non-current liabilities |
| 14,248 |
| 12,812 |
|
| 9,222 |
| 9,622 |
| ||||||
|
|
|
|
|
|
|
|
|
|
| ||||||
Stockholders’ equity: |
|
|
|
|
|
|
|
|
|
| ||||||
Common stock, par value $0.10 per share; authorized 10,000 shares, issued 3,420 shares |
| 342 |
| 342 |
|
| 342 |
| 342 |
| ||||||
Paid-in capital |
| 60,470 |
| 53,527 |
|
| 61,560 |
| 61,174 |
| ||||||
Retained earnings |
| 347,954 |
| 337,700 |
|
| 362,313 |
| 357,324 |
| ||||||
Treasury shares,1,609 at June 30, 2021 and 1,594 at December 31, 2020, at cost |
|
| (168,045 | ) |
|
| (151,127 | ) | ||||||||
Treasury shares,1,625 at March 31, 2022 and 1,619 at December 31, 2021, at cost |
|
| (177,985 | ) |
|
| (174,544 | ) | ||||||||
Total stockholders’ equity |
|
| 240,721 |
|
|
| 240,442 |
|
|
| 246,230 |
|
|
| 244,296 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Total liabilities and stockholders’ equity |
| $ | 267,638 |
|
| $ | 266,890 |
|
| $ | 271,638 |
|
| $ | 267,264 |
|
The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
Table of Contents |
ATRION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(UNAUDITED)
|
| Six Months Ended |
|
| Three Months Ended March 31, |
| ||||||||||
|
| 2021 |
| 2020 |
|
| 2022 |
|
| 2021 |
| |||||
|
| (In thousands) |
|
| (In thousands) |
| ||||||||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
| ||||||
Net income |
| $ | 16,651 |
| $ | 17,502 |
|
| $ | 8,499 |
| $ | 7,726 |
| ||
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
| ||||||
Depreciation and amortization |
| 6,210 |
| 5,574 |
|
| 3,420 |
| 3,093 |
| ||||||
Deferred income taxes |
| 1,092 |
| 503 |
|
| (730 | ) |
| 186 |
| |||||
Stock-based compensation |
| 1,338 |
| 991 |
|
| 530 |
| 497 |
| ||||||
Net change in unrealized gains and losses on investments |
| (1,024 | ) |
| 933 |
|
| 167 |
| (61 | ) | |||||
Net change in accrued interest, premiums, and discounts on investments |
| 269 |
| (66 | ) |
| 77 |
| 61 |
| ||||||
Other |
|
| 25 |
|
|
| 22 |
|
|
| - |
|
|
| 25 |
|
|
|
| 24,561 |
|
|
| 25,459 |
|
|
| 11,963 |
|
|
| 11,527 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
| ||||||
Accounts receivable |
| (6,237 | ) |
| (3,558 | ) |
| (3,135 | ) |
| (3,790 | ) | ||||
Inventories |
| 2,573 |
| (3,712 | ) |
| (636 | ) |
| 779 |
| |||||
Prepaid expenses |
| (4,006 | ) |
| (681 | ) |
| 4 |
| 1,483 |
| |||||
Other non-current assets |
| 12 |
| (254 | ) |
| 630 |
| 78 |
| ||||||
Accounts payable and accrued liabilities |
| (1,454 | ) |
| 518 |
|
| 318 |
| (3,406 | ) | |||||
Accrued income and other taxes |
| 234 |
| 3,651 |
|
| 2,373 |
| 416 |
| ||||||
Other non-current liabilities |
|
| 345 |
|
|
| (2,000 | ) |
|
| 330 |
|
|
| 317 |
|
Cash flows from operating activities |
|
| 16,028 |
|
|
| 19,423 |
|
|
| 11,847 |
|
|
| 7,404 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
| ||||||
Property, plant and equipment additions |
| (7,252 | ) |
| (8,800 | ) |
| (7,577 | ) |
| (3,044 | ) | ||||
Purchase of investments |
| (16,110 | ) |
| (30,444 | ) |
| (10,009 | ) |
| (7,392 | ) | ||||
Proceeds from sale of investments |
| 166 |
| 896 |
|
| 82 |
| 65 |
| ||||||
Proceeds from maturities of investments |
|
| 19,246 |
|
|
| 20,774 |
|
|
| 5,226 |
|
|
| 13,728 |
|
Cash flows from investing activities |
|
| (3,950 | ) |
|
| (17,574 | ) |
|
| (12,278 | ) |
|
| 3,357 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
| ||||||
Purchase of treasury stock |
| (10,488 | ) |
| (17,037 | ) |
| (3,447 | ) |
| 0 |
| ||||
Shares tendered for employees’ withholding taxes on stock-based compensation |
| (585 | ) |
| (55 | ) |
| - |
| (585 | ) | |||||
Dividends paid |
|
| (6,385 | ) |
|
| (5,706 | ) |
|
| (3,500 | ) |
|
| (3,199 | ) |
Cash flows from financing activities |
|
| (17,458 | ) |
|
| (22,798 | ) |
|
| (6,947 | ) |
|
| (3,784 | ) |
|
|
|
|
|
|
|
|
|
|
| ||||||
Net change in cash and cash equivalents |
| (5,380 | ) |
| (20,949 | ) |
| (7,378 | ) |
| 6,977 |
| ||||
Cash and cash equivalents at beginning of period |
|
| 22,450 |
|
|
| 45,048 |
|
|
| 32,264 |
|
|
| 22,450 |
|
Cash and cash equivalents at end of period |
| $ | 17,070 |
|
| $ | 24,099 |
|
| $ | 24,886 |
|
| $ | 29,427 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Cash paid for: |
|
|
|
|
|
|
|
|
|
| ||||||
Income taxes |
| $ | 5,095 |
| $ | 199 |
|
| $ | 1,752 |
| $ | 79 |
| ||
|
|
|
|
|
| |||||||||||
Non-cash financing activities: |
|
|
|
|
|
|
|
|
|
| ||||||
Non-cash effect of stock option exercises |
| $ | 6,012 |
| 0 |
|
| $ | - |
| $ | 6,012 |
|
The accompanying notes to the condensed consolidated financial statements are an integral part of these statements
ATRION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
|
| For the Three Months Ended June 30, 2021 and 2020 |
| |||||||||||||||||||||||||
|
| Common Stock |
|
| Treasury Stock |
|
| Additional |
|
|
|
|
|
|
| |||||||||||||
|
| Shares Outstanding |
|
|
|
|
|
|
|
|
|
|
| Paid-in Capital |
|
| Retained Earnings |
|
| Total |
| |||||||
Balances, April 1, 2020 |
|
| 1,840 |
|
| $ | 342 |
|
|
| 1,580 |
|
| $ | (141,500 | ) |
| $ | 52,422 |
|
| $ | 323,733 |
|
| $ | 234,997 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 8,605 |
|
|
| 8,605 |
|
Stock-based compensation transactions |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 18 |
|
|
| 598 |
|
|
|
|
|
|
| 616 |
|
Shares surrendered in stock transactions |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (55 | ) |
|
|
|
|
|
|
|
|
|
| (55 | ) |
Purchase of treasury stock |
|
| (11 | ) |
|
|
|
|
|
| 11 |
|
|
| (7,792 | ) |
|
|
|
|
|
|
|
|
|
| (7,792 | ) |
Dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (2,844 | ) |
|
| (2,844 | ) |
Balances, June 30, 2020 |
|
| 1,829 |
|
| $ | 342 |
|
|
| 1,591 |
|
| $ | (149,329 | ) |
| $ | 53,020 |
|
| $ | 329,494 |
|
| $ | 233,527 |
|
Balances, April 1, 2021 |
|
| 1,827 |
|
| $ | 342 |
|
|
| 1,593 |
|
| $ | (157,572 | ) |
| $ | 59,760 |
|
| $ | 342,221 |
|
| $ | 244,751 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 8,925 |
|
|
| 8,925 |
|
Stock-based compensation transactions |
|
| 1 |
|
|
|
|
|
|
| (1 | ) |
|
| 15 |
|
|
| 710 |
|
|
|
|
|
|
| 725 |
|
Purchase of treasury stock |
|
| (17 | ) |
|
|
|
|
|
| 17 |
|
|
| (10,488 | ) |
|
|
|
|
|
|
|
|
|
| (10,488 | ) |
Dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (3,192 | ) |
|
| (3,192 | ) |
Balances, June 30, 2021 |
|
| 1,811 |
|
| $ | 342 |
|
|
| 1,609 |
|
| $ | (168,045 | ) |
| $ | 60,470 |
|
| $ | 347,954 |
|
| $ | 240,721 |
|
The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
6 |
Table of Contents |
ATRION CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTSSTATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
|
| For the Six Months Ended June 30, 2021 and 2020 |
| |||||||||||||||||||||||||
|
| Common Stock |
|
| Treasury Stock |
|
| Additional |
|
|
|
|
| |||||||||||||||
|
| Shares Outstanding |
|
|
|
|
|
|
|
|
|
|
| Paid-in Capital |
|
| Retained Earnings |
|
| Total |
| |||||||
Balances, December 31, 2019 |
|
| 1,855 |
|
| $ | 342 |
|
|
| 1,565 |
|
| $ | (132,260 | ) |
| $ | 52,043 |
|
| $ | 317,745 |
|
| $ | 237,870 |
|
Cumulative change in accounting principal |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (36 | ) |
|
| (36 | ) |
Balances, January 1, 2020 |
|
| 1,855 |
|
| $ | 342 |
|
|
| 1,565 |
|
| $ | (132,260 | ) |
| $ | 52,043 |
|
| $ | 317,709 |
|
| $ | 237,834 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 17,502 |
|
|
| 17,502 |
|
Stock-based compensation transactions |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 23 |
|
|
| 977 |
|
|
|
|
|
|
| 1,000 |
|
Shares surrendered in stock transactions |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (55 | ) |
|
|
|
|
|
|
|
|
|
| (55 | ) |
Purchase of treasury stock |
|
| (26 | ) |
|
|
|
|
|
| 26 |
|
|
| (17,037 | ) |
|
|
|
|
|
|
|
|
|
| (17,037 | ) |
Dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (5,717 | ) |
|
| (5,717 | ) |
Balances, June 30, 2020 |
|
| 1,829 |
|
| $ | 342 |
|
|
| 1,591 |
|
| $ | (149,329 | ) |
| $ | 53,020 |
|
| $ | 329,494 |
|
| $ | 233,527 |
|
For the Three Months Ended March 31, 2021 and 2022 | For the Three Months Ended March 31, 2021 and 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Common Stock |
| Treasury Stock |
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||
|
|
Shares Outstanding |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
| Additional Paid-in Capital | Retained Earnings | Total | ||||||||||||||||||||||||||||||||||||||||
Balances, January 1, 2021 |
| 1,826 |
| $ | 342 |
| 1,594 |
| $ | (151,127 | ) |
| $ | 53,527 |
| $ | 337,700 |
| $ | 240,442 |
| 1,826 | $ | 342 | 1,594 | $ | (151,127 | ) | $ | 53,527 | $ | 337,700 | $ | 240,442 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||
Net income |
|
|
|
|
|
|
|
|
|
|
| 16,651 |
| 16,651 |
| 7,726 | 7,726 | |||||||||||||||||||||||||||||||||||||||
Stock-based compensation transactions |
| 3 |
|
|
| (3 | ) |
| (5,845 | ) |
| 6,943 |
|
|
| 1,098 |
| 3 | (3 | ) | (5,860 | ) | 6,233 | 373 | ||||||||||||||||||||||||||||||||
Shares surrendered in stock transactions |
| (1 | ) |
|
|
| 1 |
| (585 | ) |
|
|
|
|
| (585 | ) | (1 | ) | 1 | (585 | ) | (585 | ) | ||||||||||||||||||||||||||||||||
Purchase of treasury stock |
| (17 | ) |
|
|
| 17 |
| (10,488 | ) |
|
|
|
|
| (10,488 | ) | |||||||||||||||||||||||||||||||||||||||
Dividends |
|
|
|
|
|
|
|
|
|
|
| (6,397 | ) |
| (6,397 | ) | (3,205 | ) | (3,205 | ) | ||||||||||||||||||||||||||||||||||||
Balances, June 30, 2021 |
| 1,811 |
| $ | 342 |
| 1,609 |
| $ | (168,045 | ) |
| $ | 60,470 |
| $ | 347,954 |
| $ | 240,721 |
| |||||||||||||||||||||||||||||||||||
Balances, March 31, 2021 | 1,828 | $ | 342 | 1,592 | $ | (157,572 | ) | $ | 59,760 | $ | 342,221 | $ | 244,751 | |||||||||||||||||||||||||||||||||||||||||||
Balances, January 1, 2022 |
|
| 1,801 |
|
| $ | 342 |
|
|
| 1,619 |
|
| $ | (174,544 | ) |
| $ | 61,174 |
|
| $ | 357,324 |
|
| $ | 244,296 |
| ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||
Net income |
|
|
|
|
|
|
|
|
|
|
| 8,499 |
| 8,499 |
| |||||||||||||||||||||||||||||||||||||||||
Stock-based compensation transactions |
|
|
|
|
|
|
| 6 |
| 386 |
|
|
| 392 |
| |||||||||||||||||||||||||||||||||||||||||
Purchase of Treasury Stock |
| (6 | ) |
|
|
| 6 |
| (3,447 | ) |
|
|
|
|
| (3,447 | ) | |||||||||||||||||||||||||||||||||||||||
Dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (3,510 | ) |
|
| (3,510 | ) | ||||||||||||||||||||||||||||
Balances, March 31, 2022 |
|
| 1,795 |
|
| $ | 342 |
|
|
| 1,625 |
|
| $ | (177,985 | ) |
| $ | 61,560 |
|
| $ | 362,313 |
|
| $ | 246,230 |
|
The accompanying notes to the condensed consolidated financial statements are an integral part of this statement.these statements.
7 |
Table of Contents |
ATRION CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Notes to condensed Consolidated Financial Statements
(Unaudited)
(UNAUDITED)
(1) | Basis of Presentation |
|
|
| The accompanying unaudited condensed consolidated financial statements of Atrion Corporation and its subsidiaries (collectively referred to herein as
This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, |
(2) | Inventories |
|
|
| Inventories are stated at the lower of cost or net realizable value. Cost is determined by using the first-in, first-out method. The following table details the major components of inventories (in thousands): |
|
| June 30, |
| December 31, |
|
| March 31, |
| December 31, |
| ||||||
|
| 2021 |
|
| 2020 |
|
| 2022 |
|
| 2021 |
| ||||
Raw materials |
| $ | 19,935 |
| $ | 20,308 |
|
| $ | 25,339 |
| $ | 23,733 |
| ||
Work in process |
| 10,626 |
| 11,339 |
|
| 10,173 |
| 9,571 |
| ||||||
Finished goods |
|
| 17,164 |
|
|
| 18,651 |
|
|
| 15,902 |
|
|
| 17,474 |
|
Total inventories |
| $ | 47,725 |
|
| $ | 50,298 |
|
| $ | 51,414 |
|
| $ | 50,778 |
|
8 |
Table of Contents |
ATRION CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Notes to condensed Consolidated Financial Statements
(Unaudited)
(3) | Income per share |
|
|
| The following is the computation for basic and diluted income per share: |
|
| Three Months Ended |
| Six Months Ended |
|
| Three Months ended March 31, |
| ||||||||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
|
| 2022 |
|
| 2021 |
| ||||||
|
| (in thousands, except per share amounts) |
|
| (in thousands, except per share amounts) |
| ||||||||||||||||||
Net income |
| $ | 8,924 |
|
| $ | 8,605 |
|
| $ | 16,651 |
|
| $ | 17,502 |
|
| $ | 8,499 |
|
| $ | 7,726 |
|
Weighted average basic shares outstanding |
| 1,826 |
| 1,835 |
| 1,826 |
| 1,844 |
|
| 1,799 |
| 1,826 |
| ||||||||||
Add: Effect of dilutive securities |
|
| 2 |
|
|
| 4 |
|
|
| 4 |
|
|
| 5 |
|
|
| 4 |
|
|
| 6 |
|
Weighted average diluted shares outstanding |
|
| 1,828 |
|
|
| 1,839 |
|
|
| 1,830 |
|
|
| 1,849 |
|
|
| 1,803 |
|
|
| 1,832 |
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Basic |
| $ | 4.89 |
|
| $ | 4.69 |
|
| $ | 9.12 |
|
| $ | 9.49 |
|
| $ | 4.73 |
|
| $ | 4.23 |
|
Diluted |
| $ | 4.88 |
|
| $ | 4.68 |
|
| $ | 9.10 |
|
| $ | 9.47 |
|
| $ | 4.71 |
|
| $ | 4.22 |
|
| Incremental shares from stock options and restricted stock units were included in the calculation of weighted average diluted shares outstanding using the treasury stock method. |
(4) | Investments |
|
|
| As of |
9 |
Table of Contents |
ATRION CORPORATION AND SUBSIDIARIES
Notes to condensed Consolidated Financial Statements
(Unaudited)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
| The components of the Company’s cash and cash equivalents and our |
|
| June 30, 2021 |
|
| December 31, 2020 |
|
| March 31, 2022 |
|
| December 31, 2021 |
| ||||
Cash and cash equivalents: |
|
|
|
|
|
|
|
|
|
| ||||||
Cash deposits |
| $ | 11,680 |
| $ | 16,628 |
| |||||||||
Money market funds |
| 4,640 |
| 4,822 |
|
| $ | 18,381 |
| $ | 29,876 |
| ||||
Commercial paper |
|
| 750 |
|
|
| 1,000 |
|
| 5,394 |
| 0 |
| |||
Cash deposits |
|
| 1,111 |
|
|
| 2,388 |
| ||||||||
Total cash and cash equivalents |
| $ | 17,070 |
|
| $ | 22,450 |
|
| $ | 24,886 |
|
| $ | 32,264 |
|
|
|
|
|
|
| |||||||||||
Short-term investments: |
|
|
|
|
|
|
|
|
|
| ||||||
Bonds (held-to-maturity) |
| $ | 22,864 |
| $ | 26,831 |
| |||||||||
Commercial paper (held-to-maturity) |
| $ | 5,852 |
| $ | 5,178 |
|
| 12,211 |
| 2,248 |
| ||||
Bonds (held-to-maturity) |
| 24,651 |
| 14,101 |
| |||||||||||
Equity securities (available for sale) |
| 312 |
| 0 |
| |||||||||||
Allowance for credit losses |
|
| (25 | ) |
|
| (21 | ) |
|
| (13 | ) |
|
| (20 | ) |
Total short-term investments |
| $ | 30,478 |
|
| $ | 19,258 |
|
| $ | 35,374 |
|
| $ | 29,059 |
|
Long-term investments: |
|
|
|
|
|
|
|
|
|
| ||||||
Bonds (held-to-maturity) |
| $ | 12,065 |
| $ | 13,405 |
| |||||||||
Equity securities (available for sale) |
| 5,015 |
| 5,468 |
| |||||||||||
Mutual funds (available for sale) |
| $ | 529 |
| $ | 563 |
|
| 493 |
| 559 |
| ||||
Bonds (held-to-maturity) |
| 26,915 |
| 41,619 |
| |||||||||||
Allowance for credit losses |
| (26 | ) |
| (52 | ) |
|
| (7 | ) |
|
| (9 | ) | ||
Equity securities (available for sale) |
|
| 5,023 |
|
|
| 4,077 |
| ||||||||
Total long-term investments |
| $ | 32,441 |
|
| $ | 46,207 |
|
| $ | 17,566 |
|
| $ | 19,423 |
|
Total cash, cash equivalents and short and long-term investments |
| $ | 79,989 |
|
| $ | 87,915 |
|
| $ | 77,826 |
|
| $ | 80,746 |
|
| We utilize a lifetime “expected credit loss” measurement objective for the recognition of credit losses for held-to-maturity securities at the time the financial asset is originated or acquired. The expected credit losses are adjusted each period for changes in expected lifetime credit losses. Our credit loss calculations for held-to-maturity securities are based upon historical default and recovery rates of bonds rated with the same rating as our portfolio. We also apply an adjustment factor to these credit loss calculations based upon our assessment of the expected impact from current economic conditions on our |
10 |
Table of Contents |
ATRION CORPORATION AND SUBSIDIARIES
Notes to condensed Consolidated Financial Statements
(Unaudited)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
| The following table summarizes the amortized cost of our held-to-maturity bonds at |
Held-to-Maturity Bonds | ||||||||||||||||||||
Credit Quality Indicators |
| Asset Backed Bonds |
|
| Fed Govt. Bonds/Notes |
|
| Municipal Bonds |
|
| Corporate Bonds |
|
| Totals |
| |||||
AAA/AA/A |
| $ | 83 |
|
| $ | 3,126 |
|
| $ | 634 |
|
| $ | 33,909 |
|
| $ | 37,752 |
|
BBB/BB |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 13,814 |
|
|
| 13,814 |
|
TOTAL |
| $ | 83 |
|
| $ | 3,126 |
|
| $ | 634 |
|
| $ | 47,723 |
|
| $ | 51,566 |
|
Held-to-Maturity Bonds
Credit Quality Indicators |
| Fed Govt. Bonds/Notes |
|
| Municipal Bonds |
|
| Corporate Bonds |
|
| Totals |
| ||||
AAA/AA/A |
| $ | 2,370 |
|
| $ | 635 |
|
| $ | 18,565 |
|
| $ | 21,570 |
|
BBB/BB |
|
| 0 |
|
|
| 0 |
|
|
| 13,359 |
|
|
| 13,359 |
|
TOTAL |
| $ | 2,370 |
|
| $ | 635 |
|
| $ | 31,924 |
|
| $ | 34,929 |
|
| Our investments are required to be measured for disclosure purposes at fair value on a recurring basis. Our investments are considered Level 1 or Level 2 as detailed in the table below. The fair values of these investments were estimated using recently executed transactions and market price quotations. The amortized cost and fair value of our investments, and the related gross unrealized gains and losses, were as follows as of the dates shown below (in thousands): |
|
| Gross Unrealized |
|
| Gross Unrealized |
| ||||||||||||||||||||||||||||||||||
|
| Level |
|
| Cost |
|
| Gains |
|
| Losses |
|
| Fair Value |
|
| Level |
|
| Cost |
|
| Gains |
|
| Losses |
|
| Fair Value |
| ||||||||||
As of June 30, 2021: |
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||
As of March 31, 2022: |
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||
Money market |
| 1 |
| 4,640 |
| $ | 0 |
| $ | 0 |
| $ | 4,640 |
|
| 1 |
| $ | 18,381 |
| $ | 0 |
| $ | 0 |
| $ | 18,381 |
| |||||||||||
Commercial paper |
| 2 |
| 6,602 |
| $ | 1 |
| $ | 0 |
| $ | 6,603 |
|
| 2 |
| $ | 17,605 |
| $ | 1 |
| $ | (9 | ) |
| $ | 17,597 |
| ||||||||||
Bonds |
| 2 |
| 51,566 |
| $ | 249 |
| $ | (20 | ) |
| $ | 51,795 |
|
| 2 |
| $ | 34,929 |
| $ | 29 |
| $ | (139 | ) |
| $ | 34,819 |
| |||||||||
Mutual funds |
| 1 |
| 509 |
| $ | 20 |
| $ | 0 |
| $ | 529 |
|
| 1 |
| $ | 527 |
| $ | 0 |
| $ | (34 | ) |
| $ | 493 |
| ||||||||||
Equity investments |
| 2 |
| 5,675 |
| $ | 0 |
| $ | (652 | ) |
| $ | 5,023 |
|
| 2 |
| $ | 6,054 |
| $ | 0 |
| $ | (727 | ) |
| $ | 5,327 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
As of December 31, 2020: |
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||
As of December 31, 2021: |
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||
Money Market |
| 1 |
| 4,822 |
| $ | 0 |
| $ | 0 |
| $ | 4,822 |
|
| 1 |
| $ | 29,876 |
| $ | 0 |
| $ | 0 |
| $ | 29,876 |
| |||||||||||
Commercial paper |
| 2 |
| 6,178 |
| $ | 0 |
| $ | 0 |
| $ | 6,178 |
|
| 2 |
| $ | 2,248 |
| $ | 0 |
| $ | 0 |
| $ | 2,248 |
| |||||||||||
Bonds |
| 2 |
| 55,720 |
| $ | 505 |
| $ | (44 | ) |
| $ | 56,181 |
|
| 2 |
| $ | 40,236 |
| $ | 97 |
| $ | (37 | ) |
| $ | 40,296 |
| |||||||||
Mutual funds |
| 1 |
| 599 |
| $ | 0 |
| $ | (36 | ) |
| $ | 563 |
|
| 1 |
| $ | 558 |
| $ | 1 |
| $ | 0 |
| $ | 559 |
| ||||||||||
Equity investments |
| 2 |
| 5,675 |
| $ | 0 |
| $ | (1,598 | ) |
| $ | 4,077 |
|
| 2 |
| $ | 5,675 |
| $ | 0 |
| $ | (207 | ) |
| $ | 5,468 |
|
| The carrying value of our investments is reviewed quarterly for changes in circumstances or the occurrence of events that suggest an investment may not be fully recoverable. The bonds represent investments in various issuers at
At |
11 |
Table of Contents |
ATRION CORPORATION AND SUBSIDIARIES
Notes to condensed Consolidated Financial Statements
(Unaudited)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(5) | Patents and Licenses |
|
|
| Patents and license fees paid for the use of other entities’ patents are amortized over the useful life of the patent or license. The following tables provide information regarding patents and licenses (dollars in thousands): |
June 30, 2021 |
| December 31, 2020 |
| |||||||||||||||||||||||||||||
March 31, 2022 | March 31, 2022 |
| December 31, 2021 | |||||||||||||||||||||||||||||
Weighted Average | Weighted Average |
|
| Gross |
|
|
|
|
| Weighted Average |
|
| Gross |
|
|
|
|
| Gross Carrying Amount |
|
Accumulated Amortization |
| Weighted Average Original Life (years) |
| Gross Carrying Amount |
|
Accumulated Amortization | |||||
| 15.67 |
| $ | 13,840 |
| $ | 12,479 |
| 15.67 |
| $ | 13,840 |
| $ | 12,419 |
| ||||||||||||||||
15.67 |
| $ 13,840 |
| $ 12,568 |
| 15.67 |
| $ 13,840 |
| $ 12,538 |
| Aggregated amortization expense for patents and licenses was $30 thousand in
Estimated future amortization expense for each of the years set forth below ending December 31 is as follows (in thousands): |
2022 |
| $ | 117 |
| ||||
2023 |
| $ | 113 |
|
| $ | 113 |
|
2024 |
| $ | 113 |
|
| $ | 113 |
|
2025 |
| $ | 112 |
|
| $ | 112 |
|
2026 |
| $ | 112 |
|
| $ | 112 |
|
2027 |
| $ | 108 |
| ||||
|
|
|
|
12 |
Table of Contents |
ATRION CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(6) | Revenues |
|
|
| We recognize revenue when performance obligations under the terms of a contract with our customer are satisfied. This occurs with the transfer of control of our products to customers when products are shipped. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products or services. Sales and other taxes we may collect concurrent with revenue-producing activities are excluded from revenue. |
| |
A summary of revenues by geographic area, based on shipping destination, for the three |
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||
|
| June 30, |
|
| June 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
United States |
| $ | 24,649 |
|
| $ | 19,530 |
|
| $ | 46,687 |
|
| $ | 45,722 |
|
Italy |
|
| 2,908 |
|
|
| 2,072 |
|
|
| 4,982 |
|
|
| 3,554 |
|
China |
|
| 2,611 |
|
|
| 1,800 |
|
|
| 4,212 |
|
|
| 2,998 |
|
Germany |
|
| 2,064 |
|
|
| 2,918 |
|
|
| 4,464 |
|
|
| 6,155 |
|
Other countries less than 5% of revenues |
|
| 10,461 |
|
|
| 11,648 |
|
|
| 21,517 |
|
|
| 23,134 |
|
Total |
| $ | 42,693 |
|
| $ | 37,968 |
|
| $ | 81,862 |
|
| $ | 81,563 |
|
ATRION CORPORATION AND SUBSIDIARIES
Notes to condensed Consolidated Financial Statements
(Unaudited)
|
| 2022 |
|
| 2021 |
| ||
United States |
| $ | 26,995 |
|
| $ | 22,038 |
|
European Union |
|
| 9,337 |
|
|
| 7,764 |
|
All other regions |
|
| 10,806 |
|
|
| 9,367 |
|
Total |
| $ | 47,138 |
|
| $ | 39,169 |
|
| A summary of revenues by product line for the three |
|
| Three Months Ended |
| Six Months Ended |
| |||||||||||||||||||
|
| June 30, |
| June 30, |
| |||||||||||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
|
| 2022 |
|
| 2021 |
| ||||||
Fluid Delivery |
| $ | 20,920 |
| $ | 21,761 |
| $ | 39,995 |
| $ | 44,108 |
|
| $ | 24,114 |
| $ | 19,075 |
| ||||
Cardiovascular |
| 13,157 |
| 10,841 |
| 25,987 |
| 25,666 |
|
| 15,303 |
| 12,830 |
| ||||||||||
Ophthalmology |
| 2,102 |
| 936 |
| 3,796 |
| 1,800 |
|
| 1,084 |
| 1,693 |
| ||||||||||
Other |
|
| 6,514 |
|
|
| 4,430 |
|
|
| 12,084 |
|
|
| 9,989 |
|
|
| 6,637 |
|
|
| 5,571 |
|
Total |
| $ | 42,693 |
|
| $ | 37,968 |
|
| $ | 81,862 |
|
| $ | 81,563 |
|
| $ | 47,138 |
|
| $ | 39,169 |
|
| More than 99 percent of our total revenue in the periods presented herein is pursuant to shipments initiated by a purchase order (our “contract”) and recognized at a single point in time when the performance obligation of the product being shipped is satisfied, rather than recognized over time, and is presented as a receivable on the balance sheet. Payment is typically due within 30 days.
We maintain an allowance for doubtful accounts to reflect estimated losses resulting from the failure of customers to make required payments.
We have elected to recognize the cost of shipping as an expense in cost of sales when control over the product has transferred to the customer.
We do not make any material accruals for product returns and warranty obligations because our returns and warranty obligations have been very low due to our focus on quality control.
We do not disclose the value of unsatisfied performance obligations for contracts for which we recognize revenue at the amount for which we have the right to invoice. We believe that the complexity added to our disclosures by the inclusion of a large amount of insignificant detail in attempting to disclose information about immaterial contracts would potentially obscure more useful and important information. |
(7) | Recent Accounting Pronouncements |
|
|
| From time to time, new accounting pronouncements applicable to us are issued by the Financial Accounting Standards Board or other standards-setting bodies. We generally adopt these standards as of the specified effective date. Unless otherwise discussed, we believe the impact of recently issued standards that are not yet effective will not have a material impact on our consolidated financial statements upon adoption. |
13 |
Table of Contents |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
Overview
Overview
We develop and manufacture products primarily for medical applications. We market components to other equipment manufacturers for incorporation in their products and sell finished devices to physicians, hospitals, clinics, and other treatment centers. Our medical products primarily serve the fluid delivery, cardiovascular, and ophthalmology markets. Our other medical and non-medical products include instrumentation and disposables used in valves and inflation devices used in marine and aviation safety products.
Our products are used in a wide variety of applications by numerous customers. We encounter competition in all of our markets and compete primarily on the basis of product quality, price, engineering, customer service, and delivery time.
Our business strategy is to provide hospitals, physicians, and other healthcare providers with the tools they need to improve the lives of the patients they serve. To do so, we provide a broad selection of products in the areas of our expertise. We have diverse product lines serving primarily the fluid delivery, cardiovascular, and ophthalmic markets, and this diversity has served us well as we encounter changing market conditions. Research and development, or R&D, efforts are focused on improving current products and developing highly-engineered products that meet customer needs and serve niche markets with meaningful sales potential. Proposed new products may be subject to regulatory clearance or approval prior to commercialization and the time period for introducing a new product to the marketplace can be unpredictable. We also focus on controlling costs by investing in modern manufacturing technologies and controlling purchasing processes. We have been successful in consistently generating cash from operations and have used that cash to reduce or eliminate indebtedness, to fund capital expenditures, to make investments, to repurchase stock, and to pay dividends.
Our strategic objective is to further enhance our position in our served markets by:
| · | Focusing on customer needs; |
| · | Expanding existing product lines and developing new products; |
| · | Maintaining a culture of controlling cost; and |
| · | Preserving and fostering a collaborative, entrepreneurial management structure. |
For the three months ended June 30, 2021, we reported revenues of $42.7 million, up 12 percent, operating income of $9.8 million, down 2 percent and net income of $8.9 million, up 4 percent from the three months ended June 30, 2020.
For the three months ended March 31, 2022, we reported revenues of $47.1 million, up 20 percent, operating income of $10.3 million, up 15 percent, and net income of $8.5 million, up 10 percent from the three months ended March 31, 2021. Results for the three months ended March 31, 2022 Consolidated net income totaled $8.5 million, or $4.73 per basic and $4.71 per diluted share, in the first quarter of 2022. This is compared with consolidated net income of $7.7 million, or $4.23 per basic and $4.22 per diluted share, in the first quarter of 2021. The income per basic share computations are based on weighted average basic shares outstanding of 1,799 thousand in the 2022 period and 1,826 thousand in the 2021 period. The income per diluted share computations are based on weighted average diluted shares outstanding of 1,803 thousand in the 2022 period and 1,832 thousand in the 2021 period. Consolidated revenues of $47.1 million for the first quarter of 2022 were 20.3 percent higher than revenues of $39.2 million for the first quarter of 2021. Our first quarter 2022 results were favorably impacted by a 26% increase in Fluid Delivery and 19% increase in Cardiovascular revenues compared to the first quarter of 2021. |
14 |
Table of Contents |
Results for the three months ended June 30, 2021
Revenues by product line were as follows (in thousands): |
Consolidated net income totaled $8.9 million, or $4.89 per basic and $4.88 per diluted share, in the second quarter of 2021. This is compared with consolidated net income of $8.6 million, or $4.69 per basic and $4.68 per diluted share, in the second quarter of 2020. The income per basic share computations are based on weighted average basic shares outstanding of 1,826 thousand in the 2021 period and 1,835 thousand in the 2020 period. The income per diluted share computations are based on weighted average diluted shares outstanding of 1,828 thousand in the 2021 period and 1,839 thousand in the 2020 period.
Consolidated revenues of $42.7 million for the second quarter of 2021 were 12.4 percent higher than revenues of $38.0 million for the second quarter of 2020. This increase was primarily due to sales volumes of our Cardiovascular products. Sales volumes in our Other product line also increased. The COVID-19 pandemic had a negative impact on our sales in the second quarter of 2020 as patients deferred elective procedures.
Revenues by product line were as follows (in thousands):
|
| Three Months Ended |
| |||||
|
| 2021 |
|
| 2020 |
| ||
|
|
|
|
|
|
| ||
Fluid Delivery |
| $ | 20,920 |
|
| $ | 21,761 |
|
Cardiovascular |
|
| 13,157 |
|
|
| 10,841 |
|
Ophthalmology |
|
| 2,102 |
|
|
| 936 |
|
Other |
|
| 6,514 |
|
|
| 4,430 |
|
Total |
| $ | 42,693 |
|
| $ | 37,968 |
|
Cost of goods sold of $24.8 million for the second quarter of 2021 was 21.1 percent higher than our cost of goods sold of $20.5 million for the second quarter of 2020 primarily due to higher sales volumes, sales mix and higher manufacturing costs. Our cost of goods sold in the second quarter of 2021 was 58.2 percent of revenues compared to 54.0 percent of revenues in the second quarter of 2020.
Gross profit of $17.9 million in the second quarter of 2021 was $0.4 million or 2.3 percent higher than in the comparable 2020 period. Our gross profit percentage in the second quarter of 2021 was 41.8 percent of revenues compared with 46.0 percent of revenues in the second quarter of 2020. The decrease in gross profit percentage in the 2021 period compared to the 2020 period was primarily related to a 2021 product sales mix with lower margins, inefficiencies in our manufacturing operations in 2021 and higher manufacturing costs.
Our second quarter 2021 operating expenses of $8.1 million were $649 thousand higher than the operating expenses for the second quarter of 2020. This increase was attributable to a $353 thousand increase in R&D expenses primarily for outside services related to ongoing projects and increased salaries. Selling expenses increased $171 thousand primarily for travel and commissions related to higher sales. General and Administrative expenses were $125 thousand higher primarily in compensation.
Operating income in the second quarter of 2021 decreased by $251 thousand to $9.8 million due to higher operating expenses discussed above. Operating income was 22.9 percent of revenues for the second quarter of 2021 and 26.5 percent of revenues for the second quarter of 2020.
Interest and dividend income in the second quarter of 2021 was $183 thousand compared with $367 thousand for the same period in the prior year. The decline in interest and dividend income was largely due to lower interest rates in the 2021 period as compared to the 2020 period.
|
| Three Months Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
|
|
|
|
|
|
| ||
Fluid Delivery |
| $ | 24,114 |
|
| $ | 19,075 |
|
Cardiovascular |
|
| 15,303 |
|
|
| 12,830 |
|
Ophthalmology |
|
| 1,084 |
|
|
| 1,693 |
|
Other |
|
| 6,637 |
|
|
| 5,571 |
|
Total |
| $ | 47,138 |
|
| $ | 39,169 |
|
Cost of goods sold of $27.9 million for the first quarter of 2022 was 22.2 percent higher than our cost of goods sold of $22.8 million for the first quarter of 2021, primarily due to higher sales volumes. Our cost of goods sold in the first quarter of 2022 was 59.2 percent of revenues compared to 58.3 percent of revenues in the first quarter of 2021. Gross profit of $19.2 million in the first quarter of 2022 was $2.9 million or 17.8 percent higher than in the comparable 2021 period. Our gross profit percentage in the first quarter of 2022 was 40.8 percent of revenues compared with 41.7 percent of revenues in the first quarter of 2021. The decrease in gross profit percentage in the 2022 period compared to the 2021 period was primarily related to cost increases in labor and materials. Our first quarter 2022 operating expenses of $9.0 million were $1.6 million higher than the operating expenses for the first quarter of 2021. This increase was attributable to a $928 thousand increase in general and administrative expenses primarily in compensation and depreciation expenses. Selling expenses increased $591 thousand primarily for outside services and travel. R&D expenses increased $67 thousand primarily for regulatory costs and supplies. Operating income of $10.3 million in the first quarter of 2022 represented a $1.3 million, or 15 percent, increase in operating income over first quarter 2021 operating income. This increase was due to higher sales and gross profit discussed above partially offset by higher operating expenses. Operating income was 21.7 percent of revenues for the first quarter of 2022 and 22.8 percent of revenues for the first quarter of 2021. Interest and dividend income in the first quarter of 2022 was $137 thousand compared with $217 thousand for the same period in the prior year. The decline in interest and dividend income was largely due to lower interest rates on our investments in the 2022 period as compared to the 2021 period. Other investment income in the first quarter of 2022 was a $240 thousand loss compared with Other investment income of $62 thousand in the first quarter of 2021. These amounts were attributable to unrealized gains and losses on equity investments resulting from changes in the market values of the investments in each quarter. Income tax expense was $1.7 million for first quarter of 2022 compared with $1.5 million for the first quarter of 2021. The effective tax rate for the first quarter of 2022 was 16.4 percent compared with 16.7 percent for the first quarter of 2021. We expect our effective tax rate for 2022 to be approximately 17 percent. Liquidity and Capital Resources As of March 31, 2022, we had a $75.0 million revolving credit facility with a money center bank pursuant to which the lender is obligated to make advances until February 28, 2024. The credit facility is secured by substantially all of our inventories, equipment, and accounts receivable. Interest under the credit facility is assessed at 30-day, 60-day or 90-day LIBOR, as selected by us, plus 1.0 percent and is payable monthly. We had no outstanding borrowings under the credit facility at March 31, 2022 and we were in compliance with all financial covenants. |
15 |
Table of Contents |
Other investment income in the second quarter of 2021 was $963 thousand compared with Other investment income of $354 thousand in the second quarter of 2020. These amounts were attributable to unrealized gains and losses on equity investments resulting from changes in the market values of the investments in each quarter.
Income tax expense was $2.0 million for the second quarter of 2021 compared with $2.2 million for the second quarter of 2020. The effective tax rate for the second quarter of 2021 was 18.4 percent compared with 20.1 percent for the second quarter of 2020. The decrease in the 2021 period’s effective tax rate compared to the prior-year period was primarily related to lower state income taxes.
Results for the six months ended June 30, 2021
Consolidated net income totaled $16.7 million, or $9.12 per basic and $9.10 per diluted share, in first six months of 2021. This is compared with consolidated net income of $17.5 million, or $9.49 per basic and $9.47 per diluted share, in the first six months of 2020. The income per basic share computations are based on weighted average basic shares outstanding of 1,826 thousand in the 2021 period and 1,844 thousand in the 2020 period. The income per diluted share computations are based on weighted average diluted shares outstanding of 1,830 thousand in the 2021 period and 1,849 thousand in the 2020 period.
Consolidated revenues of $81.9 million for the first six months of 2021 were slightly higher than revenues of $81.6 million for the first six months of 2020. Increased sales in Other and Ophthalmic products were offset by lower Fluid Delivery sales.
Revenues by product line were as follows (in thousands):
|
| Six Months Ended |
| |||||
|
| 2021 |
|
| 2020 |
| ||
|
|
|
|
|
|
| ||
Fluid Delivery |
| $ | 39,995 |
|
| $ | 44,108 |
|
Cardiovascular |
|
| 25,987 |
|
|
| 25,666 |
|
Ophthalmology |
|
| 3,796 |
|
|
| 1,800 |
|
Other |
|
| 12,084 |
|
|
| 9,989 |
|
Total |
| $ | 81,862 |
|
| $ | 81,563 |
|
Cost of goods sold of $47.7 million for the first six months of 2021 was $3.4 million higher than in the comparable 2020 period. This increase is due to an unfavorable product sales mix and higher manufacturing costs in the first six months of 2021. Our cost of goods sold in the first six months of 2021 and 2020 was 58.2 percent and 54.2 percent of revenues, respectively.
Gross profit was $34.2 million in the first six months of 2021 and $37.3 million in the first six months of 2020. Our gross profit percentage was 41.8 percent of revenues in the first six months in 2021 and 45.8 percent in 2020. This decrease was driven by unfavorable product sales mix and increased manufacturing costs.
At March 31, 2022, we had a total of $77.8 million in cash and cash equivalents, short-term investments, and long-term investments. At December 31, 2021, cash and cash equivalents, short-term investments, and long-term investments totaled $80.7 million.
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PART II - OTHER INFORMATION
We have no pending legal proceedings of the type described in Item 103 of Regulation S-K.
As of the date of this Report, there has been no material change in the risk factors described in our
The table below sets forth information with respect to our purchases of our common stock during each
(1) On May 21, 2015, our Board of Directors approved a stock repurchase program pursuant to which we can repurchase up to 250,000 shares of our common stock from time to time in open market or privately-negotiated transactions. At March 31, 2022, we had repurchased 81,447 shares of our common stock authorized under the program approved in May 2015. Our stock repurchase program has no expiration date but may be terminated by our Board of Directors at any time.
Exhibit Index
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|