Core Viewpoint - UFP Technologies, Inc. is set to report its financial results for the second quarter of 2025 on August 4, 2025, with a conference call scheduled for August 5, 2025, at 8:30 AM Eastern Time [1][2]. Company Overview - UFP Technologies, Inc. is a contract development and manufacturing organization that specializes in single-use and single-patient medical devices [3]. - The company plays a crucial role in the medical device supply chain and serves as a valued outsourcing partner for many leading medical device manufacturers globally [3]. - Its products are utilized in various medical applications, including minimally invasive surgery, infection prevention, wound care, wearables, orthopedic soft goods, and orthopedic implants [3].

Core Insights - Trout Capital Advisors served as the exclusive financial advisor to Universal Plastics & Engineering Company, Inc. in its sale to UFP Technologies, Inc. [1] - UNIPEC specializes in precision thermoformed and heat-sealed polymer components for Class III implantable medical devices, making it a strategic fit for UFP Technologies' medical-focused portfolio [2] - The transaction is viewed as a strong strategic outcome for UNIPEC, emphasizing the importance of legacy and future opportunities for employees [2] Company Overview - Trout Capital Advisors is a boutique investment banking firm focused on lower-middle market businesses, particularly founder- and family-owned companies [4] - UNIPEC has been a family-owned business since 1957, highlighting its long-standing legacy in the industry [2] - UFP Technologies, Inc. is a designer and manufacturer of custom-engineered components for the medical market, indicating its commitment to innovation in healthcare [1][2] Transaction Details - The sale of UNIPEC to UFP Technologies represents a significant event in the company's history, facilitating its next chapter [2] - The transaction underscores Trout Capital Advisors' expertise in advising privately held businesses in advanced manufacturing and engineered products sectors [2]

Core Insights - UFP Technologies, Inc. has announced the acquisitions of Universal Plastics & Engineering Company, Inc. (UNIPEC) and Techno Plastics Industries, Inc. (TPI) to enhance its capabilities in the medical device market [1][5] - The acquisitions are aimed at expanding UFP's offerings in tight tolerance film components and thermoplastic molding, which are critical for medical devices [1][5] Company Overview - UFP Technologies is a designer and custom manufacturer of solutions for medical devices, sterile packaging, and other engineered products, serving top medical device manufacturers globally [5] - The company specializes in single-use and single-patient devices used in various medical applications, including minimally invasive surgery and infection prevention [5] Acquisition Details - UNIPEC, based in Rockville, Maryland, specializes in precision thermoformed and heat-sealed polymer components for Class III implantable medical devices, contributing to UFP's thin film platform [2][3] - TPI, located in Anasco, Puerto Rico, is a manufacturer of precision thermoplastic injection-molded components, enhancing UFP's thermoplastic molding capabilities [3][4] - UNIPEC has approximately $5 million in revenue and $2 million in EBITDA, while TPI has around $10 million in revenue and $1 million in EBITDA [7] Strategic Fit - The acquisitions are seen as strategic fits that will strengthen UFP's partnerships with leading medical device OEMs by adding unique technologies and expertise [5] - The integration of UNIPEC and TPI is expected to bolster UFP's production scale and capabilities in high-growth sectors of the medical device market [5][6]

Company Overview - UFP Technologies, Inc. is a contract development and manufacturing organization (CDMO) specializing in single-use, polymer-based medical devices and components [2] - The company partners with leading medical device companies to design and manufacture new devices, focusing on improving patient outcomes while reducing costs [2] - UFP Technologies operates in high-barrier, regulated markets such as robotic-assisted surgery, safe patient handling, infection prevention, interventional devices, orthopedics, and wound care [2] Recent Developments - UFP Technologies announced that its President Mitchell Rock and Sr. Vice President & CFO Ron Lataille will present and host one-on-one meetings at the CJS Securities 25th Annual Summer Conference on July 10, 2025 [1]

UFP Technologies (UFPT) FY Conference Summary Company Overview - UFP Technologies is a contract development and manufacturing outsource partner primarily in the medtech space, focusing on single-use and single-patient applications [2][3] - Founded in 1963, the company has over 4,000 employees across 20 manufacturing facilities in five countries and six design innovation centers [3] Core Business Model - UFP combines design engineering, materials expertise, and precision manufacturing to assist customers in product development, improvement, protection, and manufacturing [3][4] - The company has over 1,000 customers, including 26 of the top 30 medical device companies globally [5] - UFP has transitioned from providing product development as a free service to charging full rates, making it a profitable segment [8] Market Dynamics - The medtech market is growing at 6.3%, while the outsourced space is growing at double digits, specifically at 11% [21] - UFP's medtech business is segmented into 16% sterile packaging, 26% robotic surgery, and 58% devices [21] Strategic Growth Initiatives - UFP employs a two-pronged growth strategy: targeting high-margin markets and strategic acquisitions [25][30] - The company focuses on adjacent markets that are rapidly growing and have best-in-class customers, such as safe patient handling [31][68] - UFP has filled in critical geographies to enhance its value proposition, including Mexico, Costa Rica, Dominican Republic, and Ireland [36] Financial Performance - Revenue growth target is set at 12% to 18%, with half expected from acquisitions and half from internal growth [46] - Gross margins are targeted between 28% to 31%, and adjusted operating margins have been increased to 17% to 20% [47][54] Customer Relationships and Competitive Advantage - UFP has strong customer relationships, which lead to increased business opportunities [39] - The company has established barriers to entry through exclusive access to innovative materials and custom equipment [45][73] - UFP's strategy includes customer-funded development, which is critical for maintaining competitive advantages [29] Recent Developments - The acquisition of AJR has positioned UFP to rapidly grow in the safe patient handling market, with Stryker as a key customer [64] - UFP has seen a significant increase in revenue from acquired companies, with DAS Medical's revenue projected to grow from $50 million to $150 million post-acquisition [32] Challenges and Outlook - The company faces challenges related to labor compliance and integration of acquired businesses, which may temporarily impact gross margins [49][52] - Despite these challenges, UFP remains optimistic about its growth trajectory and the overall market dynamics favoring its business model [41][44] Conclusion - UFP Technologies is well-positioned in the medtech industry with a robust growth strategy, strong customer relationships, and a focus on innovation and quality [38][39] - The company aims to leverage its competitive advantages and strategic acquisitions to drive future growth and enhance shareholder value [46][47]

Company Overview - UFP Technologies, Inc. is a designer and custom manufacturer of comprehensive solutions for medical devices, sterile packaging, and other highly engineered custom products [2] - The company plays a crucial role in the medical device supply chain and serves as a valued outsourcing partner to many leading medical device manufacturers globally [2] - UFP's products include single-use and single-patient devices and components utilized in various medical applications such as minimally invasive surgery, infection prevention, wound care, wearables, orthopedic soft goods, and orthopedic implants [2] Upcoming Event - Jeffrey Bailly, Chairman and CEO, along with Ron Lataille, Sr. Vice President & CFO, will present at the Goldman Sachs 46th Annual Global Healthcare Conference on June 9, 2025 [1] - The presentation is scheduled to begin at 11:20 AM ET [1]

Company Overview - UFP Technologies is a designer and custom manufacturer of comprehensive solutions for medical devices, sterile packaging, and other highly engineered custom products [4] - The company plays a significant role in the medical device supply chain and serves as a valued outsourcing partner to many leading medical device manufacturers globally [4] - UFP's products include single-use and single-patient devices and components used in various medical applications such as minimally invasive surgery, infection prevention, wound care, wearables, orthopedic soft goods, and orthopedic implants [4] Event Participation - UFP Technologies will present at the East Coast IDEAS Investor Conference on June 11, 2025, at The Westin Times Square in New York, NY [1] - The presentation will be led by Jeffrey Bailly, Chairman and CEO, and Ron Lataille, Sr. Vice President & CFO, starting at 7:55 AM ET [1] - The presentation will be available via webcast on the conference host's website and UFP's investor relations section [1] Conference Information - The IDEAS Investor Conferences aim to provide independent venues for quality companies to present their investment merits to investment professionals [2] - The conferences are sponsored by investors for the benefit of regional investment communities, with sponsors managing over $200 billion in assets [2] - The events are produced annually by Three Part Advisors, LLC, with additional information available on their website [3]

Core Viewpoint - Growth investors are increasingly focused on identifying stocks with above-average financial growth, which can lead to solid returns, but finding such stocks is challenging due to inherent volatility and risks [1] Group 1: Company Overview - UFP Technologies (UFPT) is highlighted as a recommended growth stock due to its favorable Growth Score and top Zacks Rank [2][10] Group 2: Earnings Growth - UFP has a historical EPS growth rate of 48.5%, with projected EPS growth of 12.3% for the current year, significantly outperforming the industry average of 2.3% [5][4] Group 3: Cash Flow Growth - UFP's year-over-year cash flow growth stands at 39.3%, far exceeding the industry average of 1.8%, and its annualized cash flow growth rate over the past 3-5 years is 24.1% compared to the industry average of 6.5% [6][7] Group 4: Earnings Estimate Revisions - There has been a positive trend in earnings estimate revisions for UFP, with the Zacks Consensus Estimate for the current year increasing by 5.4% over the past month, indicating strong near-term stock price movements [8] Group 5: Investment Positioning - UFP's combination of a Growth Score of B and a Zacks Rank 1 positions it well for potential outperformance, making it an attractive option for growth investors [10]

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Q1 2025 and 2024, including balance sheets, income, equity, and cash flow statements, with detailed notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20March%2031%2C%202025%2C%20and%20December%2031%2C%202024%20(unaudited)) This section provides the unaudited condensed consolidated balance sheets as of March 31, 2025, and December 31, 2024, detailing assets, liabilities, and stockholders' equity | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | **Assets** | | | | Total current assets | $205,886 | $194,945 | | Total assets | $642,642 | $628,995 | | **Liabilities and Stockholders' Equity** | | | | Total current liabilities | $79,874 | $76,295 | | Total liabilities | $281,968 | $286,235 | | Total stockholders' equity | $360,674 | $342,760 | | Total liabilities and stockholders' equity | $642,642 | $628,995 | - Total assets increased by **$13.6 million** from December 31, 2024, to March 31, 2025, primarily driven by increases in receivables and inventories[9](index=9&type=chunk) - Total stockholders' equity increased by **$17.9 million**, reflecting net income and other comprehensive income[9](index=9&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202025%2C%20and%20March%2031%2C%202024%20(unaudited)) This section presents the unaudited condensed consolidated statements of comprehensive income for the three months ended March 31, 2025, and 2024, highlighting key performance metrics | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | YoY Change (%) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------- | | Net sales | $148,148 | $105,009 | 41.1% | | Gross profit | $42,151 | $30,083 | 40.1% | | Operating income | $23,126 | $15,924 | 45.2% | | Net income | $17,184 | $12,693 | 35.4% | | Basic EPS | $2.24 | $1.66 | 34.9% | | Diluted EPS | $2.21 | $1.64 | 34.8% | | Comprehensive income | $19,509 | $12,109 | 61.1% | - Net sales increased by **41.1%** year-over-year, primarily driven by acquisitions in the medical market[12](index=12&type=chunk)[98](index=98&type=chunk)[102](index=102&type=chunk) - Net income increased by **35.4%** year-over-year, reaching **$17.2 million**[12](index=12&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202025%2C%20and%20March%2031%2C%202024%20(unaudited)) This section details the unaudited condensed consolidated statements of stockholders' equity for the three months ended March 31, 2025, and 2024, showing changes in equity components | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Total Stockholders' Equity | $360,674 | $342,760 | | Retained Earnings | $323,685 | $306,501 | | Additional Paid-in Capital | $39,339 | $40,934 | | Accumulated Other Comprehensive Loss | $(1,840) | $(4,165) | - Total stockholders' equity increased by **$17.9 million** from December 31, 2024, to March 31, 2025, primarily due to net income of **$17.2 million** and other comprehensive income of **$2.3 million**[15](index=15&type=chunk) - Additional paid-in capital decreased by **$1.6 million**, mainly due to net share settlement of RSUs[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202025%2C%20and%20March%2031%2C%202024%20(unaudited)) This section provides the unaudited condensed consolidated statements of cash flows for the three months ended March 31, 2025, and 2024, outlining operating, investing, and financing activities | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net cash provided by operating activities | $13,810 | $10,654 | | Net cash used in investing activities | $(2,817) | $(1,732) | | Net cash used in financing activities | $(10,698) | $(2,717) | | Net increase in cash and cash equivalents | $578 | $6,109 | | Cash and cash equivalents at end of period | $14,028 | $11,372 | - Net cash provided by operating activities increased to **$13.8 million** in Q1 2025 from **$10.7 million** in Q1 2024, driven by higher net income and non-cash adjustments[17](index=17&type=chunk)[110](index=110&type=chunk) - Net cash used in financing activities significantly increased to **$10.7 million** in Q1 2025 from **$2.7 million** in Q1 2024, primarily due to higher payments on revolving credit and long-term debt[17](index=17&type=chunk)[113](index=113&type=chunk) [Notes to Interim Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Interim%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes to the interim condensed consolidated financial statements, explaining accounting policies, acquisitions, and other financial instrument details [(1) Basis of Presentation](index=9&type=section&id=(1)%20Basis%20of%20Presentation) This note describes the basis of preparation for the interim condensed consolidated financial statements, adhering to SEC rules and GAAP - The interim condensed consolidated financial statements are prepared in accordance with SEC rules for Form 10-Q and should be read with the 2024 Annual Report on Form 10-K[20](index=20&type=chunk) - Management's opinion is that all necessary adjustments (normal, recurring) are included for a fair presentation of results for these unaudited interim periods[21](index=21&type=chunk) - No newly issued accounting pronouncements are expected to have a material effect on the financial statements[24](index=24&type=chunk) [(2) Acquisitions](index=9&type=section&id=(2)%20Acquisitions) This note details the Company's four acquisitions completed in 2024, their strategic impact, and purchase price allocations - The Company completed four acquisitions in 2024: Marble Medical (June 24, 2024, **$4.5 million** cash + **$0.5 million** contingent), AJR Enterprises (July 1, 2024, **$110 million** cash), Welch Fluorocarbon (July 15, 2024, **$34.6 million** cash + **$6.0 million** contingent), and AQF (August 23, 2024, **€43 million** cash)[25](index=25&type=chunk)[29](index=29&type=chunk)[34](index=34&type=chunk)[39](index=39&type=chunk) - These acquisitions expanded the Company's capabilities in adhesive-based medical components, patient handling systems, thin-film thermoforming for implantable devices, and custom-engineered foam and thermoplastic components, along with an expanded European and Asian manufacturing presence[26](index=26&type=chunk)[30](index=30&type=chunk)[35](index=35&type=chunk)[40](index=40&type=chunk) Summary of 2024 Acquisitions Purchase Price Allocation (in thousands) | Acquisition | Total Purchase Price (net of cash acquired) | | :---------- | :---------------------------------------- | | Marble Medical | $5,012 | | AJR Enterprises | $110,732 | | Welch Fluorocarbon | $35,221 | | AQF | $47,703 | Pro Forma Consolidated Statement of Comprehensive Income (Three-month period ended March 31, 2024, in thousands) | Metric | Pro Forma (Unaudited) | | :---------------- | :-------------------- | | Sales | $135,161 | | Operating Income | $19,304 | | Net Income | $13,322 | | Basic EPS | $1.74 | | Diluted EPS | $1.72 | [(3) Equity Method Investment](index=14&type=section&id=(3)%20Equity%20Method%20Investment) This note explains the Company's 50% equity interest in AQF Asia PTE Ltd., accounted for using the equity method - The Company holds a **50% equity interest** in AQF Asia PTE Ltd. (Singapore), accounted for using the equity method due to significant influence but not control[45](index=45&type=chunk) Equity Method Investment Roll-Forward (Three-month period ended March 31, 2025, in thousands) | Metric | Amount | | :-------------------------------- | :----- | | Equity Method Investment - Dec 31, 2024 | $6,808 | | 50% share of AQF Asia net income | $71 | | Amortization of basis differences | $(30) | | Equity Method Investment - Mar 31, 2025 | $6,849 | [(4) Revenue Recognition](index=14&type=section&id=(4)%20Revenue%20Recognition) This note outlines the Company's revenue recognition policies and disaggregates net sales by product, tooling, and engineering services - Revenue is recognized when customers obtain control of promised goods or services, primarily upon shipment for products, customer acceptance for tooling/machinery, and as services are performed for engineering services[47](index=47&type=chunk) Disaggregated Revenue by Type (Three Months Ended March 31, in thousands) | Net Sales of: | 2025 | 2024 | | :---------------- | :----- | :----- | | Products | $145,100 | $99,838 | | Tooling and Machinery | $1,498 | $4,291 | | Engineering services | $1,550 | $880 | | Total net sales | $148,148 | $105,009 | - Product sales increased significantly by **45.3%** year-over-year, while tooling and machinery sales decreased by **65.1%**[49](index=49&type=chunk) [(5) Supplemental Cash Flow Information](index=16&type=section&id=(5)%20Supplemental%20Cash%20Flow%20Information) This note provides supplemental cash flow details, including cash paid for interest and income taxes Supplemental Cash Flow Information (Three Months Ended March 31, in thousands) | Cash Paid For: | 2025 | 2024 | | :--------------- | :----- | :----- | | Interest | $2,796 | $619 | | Income taxes, net of refunds | $(468) | $- | - Cash paid for interest increased significantly to **$2.8 million** in Q1 2025 from **$0.6 million** in Q1 2024, primarily due to higher debt from 2024 acquisitions[53](index=53&type=chunk)[106](index=106&type=chunk) [(6) Receivables and Allowance for Credit Losses](index=16&type=section&id=(6)%20Receivables%20and%20Allowance%20for%20Credit%20Losses) This note details net receivables and the allowance for credit losses, including changes over the period Receivables, Net (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :----------------------- | :------------- | :---------------- | | Accounts receivable–trade | $94,821 | $85,562 | | Less allowance for credit losses | $(1,042) | $(885) | | Receivables, net | $93,779 | $84,677 | - Net receivables increased by **$9.1 million** from December 31, 2024, to March 31, 2025, primarily due to increased sales in the latter part of Q1 2025[54](index=54&type=chunk)[111](index=111&type=chunk) Allowance for Credit Losses Roll-Forward (Three Months Ended March 31, in thousands) | Metric | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Allowance - beginning of period | $885 | $727 | | Provision (adjustment) for expected credit losses | $157 | $(51) | | Allowance - end of period | $1,042 | $660 | [(7) Fair Value of Financial Instruments](index=17&type=section&id=(7)%20Fair%20Value%20of%20Financial%20Instruments) This note describes the fair value measurement of financial instruments, including contingent consideration and non-competition payments - Financial instruments measured at fair value on a recurring basis include purchase price contingent consideration and the present value of non-competition payments, both categorized as Level 3 liabilities[59](index=59&type=chunk)[60](index=60&type=chunk) Fair Value of Level 3 Financial Liabilities (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Accrued contingent consideration (earn-out) | $10,252 | $10,239 | | Present value of non-competition payments | $5,179 | $6,871 | - The fair value of contingent consideration for Welch, Marble, and DAS Medical acquisitions totaled approximately **$10.3 million** at March 31, 2025, out of potential remaining payments of **$14.3 million**[59](index=59&type=chunk) [(8) Share-Based Compensation](index=18&type=section&id=(8)%20Share-Based%20Compensation) This note details share-based compensation expense, including common stock, stock option, and RSU awards - Share-based compensation expense is measured at grant date fair value and recognized over the vesting period[62](index=62&type=chunk) Share-Based Compensation Expense (Three Months Ended March 31, in thousands) | Share-based compensation related to: | 2025 | 2024 | | :----------------------------------- | :----- | :----- | | Common stock grants | $100 | $100 | | Stock option grants | $108 | $113 | | Restricted Stock Unit Awards ("RSUs") | $2,004 | $1,300 | | Total share-based compensation | $2,212 | $1,513 | - Total share-based compensation increased by **46.2%** year-over-year, primarily due to a significant increase in RSU awards expense[63](index=63&type=chunk) - As of March 31, 2025, approximately **$16.0 million** of unrecognized compensation expense is expected to be recognized over 3 years[67](index=67&type=chunk) [(9) Inventories](index=19&type=section&id=(9)%20Inventories) This note provides a breakdown of inventory components, including raw materials, work in process, and finished goods Inventories (in thousands) | Inventory Component | March 31, 2025 | December 31, 2024 | | :------------------ | :------------- | :---------------- | | Raw materials | $65,336 | $65,747 | | Work in process | $6,540 | $5,730 | | Finished goods | $17,963 | $16,059 | | Total inventory | $89,839 | $87,536 | - Total inventory increased by **$2.3 million** from December 31, 2024, to March 31, 2025, primarily due to an increase in work in process and finished goods[68](index=68&type=chunk)[111](index=111&type=chunk) [(10) Property, Plant and Equipment](index=20&type=section&id=(10)%20Property%2C%20Plant%20and%20Equipment) This note details the net property, plant, and equipment, including gross amounts and accumulated depreciation Net Property, Plant and Equipment (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Property, plant and equipment (gross) | $138,168 | $134,934 | | Accumulated depreciation and amortization | $(66,662) | $(64,370) | | Net property, plant and equipment | $71,506 | $70,564 | - Net property, plant and equipment increased by **$0.9 million** from December 31, 2024, to March 31, 2025, reflecting additions to manufacturing machinery, equipment, and building improvements[69](index=69&type=chunk)[112](index=112&type=chunk) [(11) Leases](index=20&type=section&id=(11)%20Leases) This note describes the Company's operating and finance leases, including ROU assets, lease liabilities, and lease costs - The Company has operating and finance leases for offices, manufacturing plants, vehicles, and equipment, recognizing ROU assets and lease liabilities based on the net present value of fixed lease payments[70](index=70&type=chunk)[71](index=71&type=chunk) Total ROU Assets and Lease Liabilities (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :----------------------- | :------------- | :---------------- | | Total ROU assets | $15,259 | $16,148 | | Total lease liabilities - current | $4,125 | $4,226 | | Total lease liabilities - long-term | $11,668 | $12,432 | Total Lease Cost (Three Months Ended March 31, in thousands) | Lease Cost Component | 2025 | 2024 | | :------------------- | :----- | :----- | | Finance lease cost | $15 | $26 | | Operating lease cost | $1,097 | $855 | | Variable lease cost | $79 | $80 | | Short-term lease cost | $51 | $35 | | Total lease cost | $1,242 | $996 | [(12) Income Per Share](index=22&type=section&id=(12)%20Income%20Per%20Share) This note outlines the calculation of basic and diluted income per share, including weighted average common shares outstanding - Basic income per share is based on weighted average common shares outstanding, while diluted income per share includes dilutive common stock equivalents[74](index=74&type=chunk) Weighted Average Common Shares Outstanding (Three Months Ended March 31, in thousands) | Metric | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Basic weighted average common shares outstanding | 7,688 | 7,651 | | Diluted weighted average common shares outstanding | 7,776 | 7,737 | - **2,958 stock awards** were excluded from diluted EPS computation in Q1 2025 due to their antidilutive effect, compared to zero in Q1 2024[74](index=74&type=chunk) [(13) Segment Data](index=23&type=section&id=(13)%20Segment%20Data) This note confirms the Company operates as a single segment and provides disaggregated sales by market and customer concentration - The Company operates as a single operating and reportable segment, with the CEO reviewing consolidated results to allocate resources and assess performance[75](index=75&type=chunk) Segment Net Sales and Expenses (Three Months Ended March 31, in thousands) | Metric | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Net sales from external customers | $148,148 | $105,009 | | Materials | $61,366 | $47,722 | | Salaries and Benefits | $43,962 | $27,390 | | Depreciation and amortization | $4,634 | $2,999 | | Interest expense, net | $2,809 | $631 | | Segment net income | $17,184 | $12,693 | - Medical market sales comprised **91.4%** of total net sales in Q1 2025, up from **85.7%** in Q1 2024[78](index=78&type=chunk) - Two major customers accounted for **24.0%** and **21.4%** of consolidated net sales in Q1 2025[77](index=77&type=chunk) [(14) Goodwill and Other Intangible Assets](index=24&type=section&id=(14)%20Goodwill%20and%20Other%20Intangible%20Assets) This note details the Company's goodwill and definite-lived intangible assets, including amortization expense Goodwill (in thousands) | Metric | Amount | | :-------------------- | :------- | | December 31, 2024 | $189,657 | | Foreign currency translation | $901 | | March 31, 2025 | $190,558 | Net Definite Lived Intangible Assets (March 31, 2025, in thousands) | Intangible Asset | Net Balance | | :----------------- | :---------- | | Customer List | $112,855 | | Intellectual Property | $24,677 | | Tradename & Brand | $749 | | Non Compete | $4,387 | | Total | $142,668 | - Amortization expense for intangible assets was **$2.4 million** in Q1 2025, up from **$1.0 million** in Q1 2024[79](index=79&type=chunk) [(15) Other Long-Term Liabilities](index=24&type=section&id=(15)%20Other%20Long-Term%20Liabilities) This note provides a breakdown of other long-term liabilities, including contingent consideration and non-competition payments Other Long-Term Liabilities (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Accrued contingent consideration (earn-out) | $5,077 | $4,989 | | Present value of non-competition payments | $3,241 | $4,938 | | Other | $500 | $1,217 | | Total | $8,818 | $11,144 | - Total other long-term liabilities decreased by **$2.3 million** from December 31, 2024, to March 31, 2025, primarily due to a reduction in the present value of non-competition payments[80](index=80&type=chunk) [(16) Income Taxes](index=24&type=section&id=(16)%20Income%20Taxes) This note discusses the Company's effective income tax rate and the factors influencing its changes - The effective income tax rate decreased to **15.3%** for Q1 2025 from **17.2%** for Q1 2024[81](index=81&type=chunk)[108](index=108&type=chunk) - The decrease in the effective tax rate is largely due to increased discrete tax benefits from vested equity and a state tax refund[108](index=108&type=chunk) [(17) Debt](index=24&type=section&id=(17)%20Debt) This note details the Company's credit agreement, outstanding borrowings, and weighted average interest rate - The Company entered into a **$275 million** Third Amended and Restated Credit Agreement on June 27, 2024, comprising a **$125 million** secured term loan and a **$150 million** secured revolving credit facility, maturing on June 27, 2029[82](index=82&type=chunk)[83](index=83&type=chunk) - As of March 31, 2025, outstanding borrowings under the agreement totaled **$182.8 million**, with a weighted average interest rate of approximately **5.9%**[85](index=85&type=chunk) Long-Term Debt (March 31, 2025, in thousands) | Debt Component | Amount | | :--------------- | :------- | | Revolving credit facility | $64,000 | | Term loan | $118,750 | | Total long-term debt | $182,750 | | Current portion | $(12,500) | | Long-term debt, excluding current portion | $170,250 | [(18) Subsequent Events](index=26&type=section&id=(18)%20Subsequent%20Events) This note reports on the Company's acquisition of AJR Specialty Products and AJR Custom Foam Products in April 2025 - On April 25, 2025, the Company acquired AJR Specialty Products, LLC and AJR Custom Foam Products, LLC for an aggregate purchase price of **$2.8 million** in cash[87](index=87&type=chunk) - These acquisitions are expected to provide additional capacity in single-use safe patient handling and expertise in specialty fabrics and foam fabrication[88](index=88&type=chunk) - The accounting for this business combination is incomplete, making it impracticable to disclose all required information under ASC 805[90](index=90&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 financial condition and results, covering key metrics, acquisition impacts, and future outlook [Overview](index=29&type=section&id=Overview) This section provides an overview of UFP Technologies' business, strategic focus, and key financial highlights for Q1 2025 - UFP Technologies is a designer and custom manufacturer of solutions for medical devices, sterile packaging, and other highly engineered custom products, serving as an outsource partner to medical device manufacturers[96](index=96&type=chunk) - The Company's strategy focuses on organic growth and strategic acquisitions[97](index=97&type=chunk) - Net sales for Q1 2025 increased by **41.1%** to **$148.1 million**, primarily due to **50.4%** growth in the medical market, with 2024 acquisitions contributing approximately **$40.7 million**[98](index=98&type=chunk) [Impact of Tariffs](index=30&type=section&id=Impact%20of%20Tariffs) This section discusses the potential impact of increased US tariffs on the Company's business, financial condition, and operations - Increased US tariffs on foreign imports have not had a material direct impact on the Company's business, financial condition, or results of operations to date[101](index=101&type=chunk) - However, the dynamic tariff environment could lead to increased manufacturing costs, supply chain disruptions, limitations on sales, and reduced sales volumes or gross margins[101](index=101&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) This section analyzes the Company's financial performance for Q1 2025, detailing changes in net sales, gross profit, and expenses [Net Sales](index=30&type=section&id=Net%20Sales) This section analyzes the drivers behind the 41.1% increase in net sales for Q1 2025, primarily due to medical market growth and acquisitions - Net sales increased by **41.1%** to **$148.1 million** for Q1 2025, from **$105.0 million** in Q1 2024[102](index=102&type=chunk) - The increase was primarily driven by a **50.4%** growth in medical market sales, with 2024 acquisitions contributing approximately **$40.7 million**[102](index=102&type=chunk) - Organic sales growth for Q1 2025 was **2.3%**, with medical market organic growth at **5.4%** due to strong sales in interventional, surgical infection prevention, and advanced wound care segments[102](index=102&type=chunk) [Gross Profit](index=30&type=section&id=Gross%20Profit) This section examines the slight decrease in gross margin for Q1 2025, attributing it to increased material, labor, and overhead costs - Gross margin slightly decreased to **28.5%** in Q1 2025 from **28.6%** in Q1 2024[103](index=103&type=chunk) - The slight decrease was due to a collective **0.1%** increase in material and labor costs and a **0.1%** increase in overhead costs as a percentage of sales[103](index=103&type=chunk) - Inefficiencies in newly acquired AJR operations related to onboarding new direct labor associates are anticipated to continue through Q2[103](index=103&type=chunk) [Selling, General and Administrative Expenses](index=30&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses) This section discusses the 34.6% increase in SG&A expenses for Q1 2025, primarily due to recent acquisitions - SG&A expenses increased by **34.6%** to **$18.7 million** in Q1 2025 from **$13.9 million** in Q1 2024, primarily due to the 2024 acquisitions[104](index=104&type=chunk) - As a percentage of sales, SG&A decreased to **12.6%** in Q1 2025 from **13.2%** in Q1 2024[104](index=104&type=chunk) [Change in fair value of contingent consideration](index=30&type=section&id=Change%20in%20fair%20value%20of%20contingent%20consideration) This section details the contingent consideration liabilities related to acquisitions and their fair value at March 31, 2025 - The Company is required to make contingent payments for the Welch, Marble, and DAS Medical acquisitions, subject to financial performance thresholds[105](index=105&type=chunk) - The fair value of the contingent consideration liability at March 31, 2025, was approximately **$10.3 million**, out of remaining potential payments of **$14.3 million**[105](index=105&type=chunk) - Approximately **$0.3 million** was paid during Q1 2025 related to contingent consideration[105](index=105&type=chunk) [Interest expense, net](index=31&type=section&id=Interest%20expense%2C%20net) This section explains the significant increase in net interest expense for Q1 2025, driven by higher debt from acquisitions - Net interest expense increased significantly to **$2.8 million** in Q1 2025 from **$0.6 million** in Q1 2024[106](index=106&type=chunk) - This increase was primarily due to higher debt related to borrowings for the 2024 acquisitions[106](index=106&type=chunk) [Other expense (income)](index=31&type=section&id=Other%20expense%20(income)) This section outlines the change from other income to other expense in Q1 2025, influenced by equity method investment and foreign currency - Other expense was **$36 thousand** in Q1 2025, compared to other income of **$42 thousand** in Q1 2024[107](index=107&type=chunk) - Changes were primarily driven by equity method investment income in 2025 and foreign currency transaction losses in 2025 (vs. gains in 2024)[107](index=107&type=chunk) [Income Taxes](index=31&type=section&id=Income%20Taxes) This section discusses the decrease in the effective tax rate for Q1 2025, primarily due to discrete tax benefits - The effective tax rate decreased to **15.3%** in Q1 2025 from **17.2%** in Q1 2024[108](index=108&type=chunk) - This decrease is mainly attributed to increased discrete tax benefits from vested equity and a state tax refund[108](index=108&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) This section analyzes the Company's cash flows, debt, and future liquidity, including capital expenditure plans and potential financing needs [Cash Flows](index=31&type=section&id=Cash%20Flows) This section details cash flows from operating, investing, and financing activities for Q1 2025 and Q1 2024 - Net cash provided by operations was **$13.8 million** in Q1 2025, primarily from net income, depreciation, share-based compensation, and increases in deferred taxes and accounts payable[110](index=110&type=chunk) - Net cash used in investing activities was **$2.8 million**, mainly for additions to manufacturing machinery, equipment, and building improvements[112](index=112&type=chunk) - Net cash used for financing activities was **$10.7 million**, driven by payments on the revolving line of credit and long-term debt, partially offset by new borrowings[113](index=113&type=chunk) [Outstanding and Available Debt](index=32&type=section&id=Outstanding%20and%20Available%20Debt) This section outlines the Company's credit agreement, outstanding borrowings, and compliance with debt covenants - The Company has a **$275 million** Third Amended and Restated Credit Agreement, including a **$125 million** term loan and a **$150 million** revolving credit facility, maturing June 27, 2029[114](index=114&type=chunk)[115](index=115&type=chunk) - As of March 31, 2025, **$182.8 million** was outstanding under the agreement, with a weighted average interest rate of approximately **5.9%**[117](index=117&type=chunk) - The Company was in compliance with all debt covenants at March 31, 2025[117](index=117&type=chunk) [Future Liquidity](index=33&type=section&id=Future%20Liquidity) This section discusses the Company's expectations for funding future cash flow requirements, capital expenditures, and potential acquisitions - The Company expects existing resources, including its revolving credit facility and cash from operations, to be sufficient to fund cash flow requirements and capital expenditures for the next twelve months[122](index=122&type=chunk) - Future expansion, including potential acquisitions, may require additional capital, which the Company anticipates financing through existing resources, cash flow, or new financing[123](index=123&type=chunk) - Economic uncertainties (inflation, tariffs, bank failures) could affect the Company's long-term ability to access public markets and obtain necessary capital[121](index=121&type=chunk) [Stock Repurchase Program](index=33&type=section&id=Stock%20Repurchase%20Program) This section reports on the termination of the Company's stock repurchase program and the absence of repurchases in Q1 2025 - The Board of Directors authorized a **$10.0 million** stock repurchase program on June 16, 2015, which was terminated in March 2025[124](index=124&type=chunk) - No share repurchases occurred during the three-month periods ended March 31, 2025, and 2024[124](index=124&type=chunk) [Critical Accounting Estimates](index=33&type=section&id=Critical%20Accounting%20Estimates) This section confirms no material changes to the Company's critical accounting estimates since the 2024 Annual Report on Form 10-K - There have been no material changes to the Company's Critical Accounting Estimates as disclosed in the 2024 Annual Report on Form 10-K[125](index=125&type=chunk) [Commitments and Contractual Obligations](index=33&type=section&id=Commitments%20and%20Contractual%20Obligations) This section states no material changes to the Company's contractual obligations and commitments since the 2024 Annual Report - There have been no material changes outside the ordinary course of business to the Company's contractual obligations and commitments as disclosed in the 2024 Annual Report on Form 10-K[126](index=126&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there have been no material changes in the Company's market risks since the disclosures in its 2024 Annual Report on Form 10-K - No material changes in market risks have occurred since the last annual report[127](index=127&type=chunk) [Item 4. Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of the Company's disclosure controls and procedures, concluding their effectiveness as of March 31, 2025 - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of March 31, 2025[128](index=128&type=chunk) - The internal controls over financial reporting of the 2024 acquired businesses (Marble, AJR, Welch, AQF) were excluded from the assessment due to the timing of their acquisitions, in accordance with SEC guidance[129](index=129&type=chunk) - The acquired businesses' total assets and net sales constituted approximately **34.2%** and **27.5%**, respectively, of the Company's consolidated totals as of and for the period ended March 31, 2025[129](index=129&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) This section confirms that the Company is not a party to any material litigation or other material legal proceedings - The Company is not involved in any material litigation or legal proceedings[130](index=130&type=chunk) - Management believes that any routine suits, claims, and complaints arising in the ordinary course of business will not result in material adverse effects on the Company's financial condition or results of operations[130](index=130&type=chunk) [Item 1A. Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) This section refers readers to the detailed discussion of risks affecting the business in the Company's 2024 Annual Report on Form 10-K - Readers should refer to the detailed discussion of risks in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and other SEC filings[131](index=131&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=30&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section states that there were no unregistered sales of equity securities or use of proceeds to report - No unregistered sales of equity securities or use of proceeds occurred[132](index=132&type=chunk) [Item 3. Defaults upon Senior Securities](index=30&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) This section indicates that there were no defaults upon senior securities - No defaults upon senior securities occurred[133](index=133&type=chunk) [Item 4. Mine Safety Disclosures](index=30&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the Company - Mine safety disclosures are not applicable[134](index=134&type=chunk) [Item 5. Other Information](index=30&type=section&id=Item%205.%20Other%20Information) This section reports that no directors or executive officers adopted or terminated Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements during the first quarter of fiscal 2025 - No directors or executive officers adopted or terminated Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements during Q1 2025[135](index=135&type=chunk) [Item 6. Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications, supplier agreements, and XBRL interactive data files - The report includes certifications from the CEO and CFO (Rule 13a-14(a)/15d-14(a) and 18 U.S.C., Section 1350)[137](index=137&type=chunk) - Key exhibits include supplier letter agreements with Sage Products, LLC and various Inline XBRL taxonomy documents[137](index=137&type=chunk) [Signatures](index=31&type=section&id=Signatures) This section contains the signatures of the Company's Chairman, Chief Executive Officer, and Director, R. Jeffrey Bailly, and Chief Financial Officer, Ronald J. Lataille, certifying the report - The report is signed by R. Jeffrey Bailly, Chairman, Chief Executive Officer, and Director, and Ronald J. Lataille, Chief Financial Officer, on May 12, 2025[138](index=138&type=chunk)

If you like to see more ideas, please subscribe to the premium service "Value in Corporate Events" here and try the free trial. In this service we cover major earnings events, M&A, IPOs and other significant corporate events with actionable ideas. Furthermore, we provide coverage of situations and names on request!In April, I called UFP Technologies (NASDAQ: UFPT ) a medical sterile producer which looked quite clean in a premium article in my service. Following a 50% stock pullback, the custom medical compo ...