UFP Technologies(UFPT) - 2025 Q2 - Quarterly Results

Executive Summary & Financial Highlights This section presents UFP Technologies' record Q2 and strong YTD 2025 financial results, along with key strategic initiatives and CEO commentary Q2 & YTD 2025 Financial Performance Overview UFP Technologies achieved record Q2 and strong YTD 2025 results, marked by significant sales growth and net income increases Q2 2025 Financial Performance (YoY) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :----- | :------ | :------ | :--------- | | Net Income | $17.2M | $13.6M | 26.5% | | Diluted EPS | $2.21 | $1.75 | 26.3% | | Adjusted Diluted EPS | $2.50 | - | 27% | | Sales | $151.2M | $110.2M | 37.2% | YTD 2025 Financial Performance (YoY) | Metric | YTD 2025 | YTD 2024 | Change (%) | | :----- | :------- | :------- | :--------- | | Net Income | $34.4M | $26.2M | 31.3% | | Diluted EPS | $4.42 | $3.38 | 30.8% | | Sales | $299.3M | $215.2M | 39.1% | Organic Sales Growth | Period | Organic Growth Rate | | :----- | :------------------ | | Q2 2025 | 4.9% | | YTD 2025 | 3.6% | Sales by Market Segment (YoY) | Segment | Q2 2025 Sales | Q2 2024 Sales | Q2 Change (%) | YTD 2025 Sales | YTD 2024 Sales | YTD Change (%) | | :------ | :------------ | :------------ | :------------ | :------------- | :------------- | :------------- | | Medical | $139.3M | - | 46.0% | $274.7M | - | 48.2% | | Non-Medical | $11.8M | - | -19.8% | $24.6M | - | -17.3% | Gross Margin | Period | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :----- | :------ | :------ | :------- | :------- | | Gross Margin | 28.8% | 30.0% | 28.6% | 29.3% | SG&A Expenses (YoY) | Period | Q2 2025 | Q2 2024 | Q2 Change (%) | YTD 2025 | YTD 2024 | YTD Change (%) | | :----- | :------ | :------ | :------------ | :------- | :------- | :------------ | | SG&A | $18.7M | $13.9M | 34.4% | $37.4M | $27.8M | 34.5% | | SG&A as % of Sales | 12.4% | 12.6% | - | 12.5% | 12.9% | - | | Adjusted SG&A as % of Sales | 10.8% | 11.6% | - | 10.9% | 11.9% | - | Operating Income (YoY) | Period | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :----- | :------ | :------ | :------- | :------- | | Operating Income | $24.3M | $18.0M | $47.5M | $33.9M | Adjusted Operating Income (YoY) | Period | Q2 2025 | Q2 2024 | Q2 Change (%) | YTD 2025 | YTD 2024 | YTD Change (%) | | :----- | :------ | :------ | :------------ | :------- | :------- | :------------ | | Adjusted Operating Income | $27.3M | $20.2M | 34.8% | $53.1M | $37.5M | 41.6% | Adjusted Net Income (YoY) | Period | Q2 2025 | Q2 2024 | Q2 Change (%) | YTD 2025 | YTD 2024 | YTD Change (%) | | :----- | :------ | :------ | :------------ | :------- | :------- | :------------ | | Adjusted Net Income | $19.4M | $15.3M | 27% | $38.6M | $29.0M | 33.1% | Adjusted EBITDA (YoY) | Period | Q2 2025 | Q2 2024 | Q2 Change (%) | YTD 2025 | YTD 2024 | YTD Change (%) | | :----- | :------ | :------ | :------------ | :------- | :------- | :------------ | | Adjusted EBITDA | $31.8M | $23.9M | 33.2% | $62.1M | $44.6M | 39.1% | CEO Commentary & Strategic Initiatives CEO R. Jeffrey Bailly highlighted strong Q2 sales growth from acquisitions and organic expansion, alongside key strategic initiatives - Sales grew 37%, driven by strong contributions from 2024 acquisitions combined with 5% organic growth[3] - MedTech business grew 46%, while Advanced Components business declined 20%[3] - Gross margins were 28.8%, impacted by approximately $1.2 million in incremental labor costs at the AJR facility due to E-Verify protocols, with Q3 expected to be the low point of labor inefficiencies and gradual improvement in Q4[3] - Two acquisitions, Universal Plastics & Engineering (UNIPEC) and Techno Plastics Industries (TPI), were completed in Q2, expanding capabilities in specialty film components and thermoplastic molding for medical devices[3] - Expansion plans are progressing in Santiago and La Romana, Dominican Republic, to support anticipated growth in safe patient handling and robotic-assisted surgery markets[3] - The pipeline of new growth opportunities, both internal and through acquisition, remains strong and expanding[3] Company Overview This section provides a concise description of UFP Technologies' core business as a CDMO specializing in medical devices Business Description UFP Technologies operates as a CDMO, specializing in single-use and single-patient medical devices for leading manufacturers - UFP Technologies operates as a contract development and manufacturing organization (CDMO), specializing in single-use and single-patient medical devices[6] - The company serves as a vital link in the medical device supply chain and a valued outsourcing partner to top medical device manufacturers[6] - Devices and components are utilized across various applications, including minimally invasive surgery, infection prevention, wound care, wearables, and orthopedic products[6] GAAP Financial Statements This section presents UFP Technologies' consolidated GAAP financial statements, including income statements and balance sheets Consolidated Condensed Statements of Income Consolidated statements of income reflect substantial year-over-year growth in net sales, gross profit, and net income Consolidated Condensed Statements of Income (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $151,176 | $110,177 | $299,324 | $215,186 | | Cost of sales | $107,633 | $77,146 | $213,629 | $152,072 | | Gross profit | $43,543 | $33,031 | $85,695 | $63,114 | | SG&A | $18,679 | $13,900 | $37,405 | $27,812 | | Acquisition costs | $283 | $943 | $320 | $943 | | Change in fair value of contingent consideration | $263 | $238 | $526 | $476 | | (Gain) loss on disposal of fixed assets | $(11) | $(1) | $(11) | $7 | | Operating income | $24,329 | $17,951 | $47,455 | $33,876 | | Interest expense, net | $2,671 | $577 | $5,480 | $1,208 | | Other expense (income) | $32 | $2 | $68 | $(39) | | Income before income taxes | $21,626 | $17,372 | $41,907 | $32,707 | | Income taxes | $4,446 | $3,820 | $7,543 | $6,462 | | Net income | $17,180 | $13,552 | $34,364 | $26,245 | | Net income per share | $2.23 | $1.77 | $4.46 | $3.43 | | Net income per diluted share | $2.21 | $1.75 | $4.42 | $3.38 | | Weighted average common shares outstanding | 7,709 | 7,672 | 7,698 | 7,662 | | Weighted average diluted common shares outstanding | 7,773 | 7,753 | 7,783 | 7,756 | Consolidated Condensed Balance Sheets Balance sheets show increased total assets and decreased liabilities, resulting in an improved equity position as of June 30, 2025 Consolidated Condensed Balance Sheets (in thousands) | Asset/Liability/Equity | June 30, 2025 | December 31, 2024 | | :--------------------- | :------------ | :---------------- | | Assets: | | | | Cash and cash equivalents | $14,892 | $13,450 | | Receivables, net | $84,931 | $84,677 | | Inventories | $85,200 | $87,536 | | Other current assets | $6,367 | $9,282 | | Net property, plant, and equipment | $73,917 | $70,564 | | Goodwill | $192,968 | $189,657 | | Intangible assets, net | $141,974 | $144,252 | | Other assets | $34,410 | $29,577 | | Total assets | $634,659 | $628,995 | | Liabilities and equity: | | | | Accounts payable | $22,666 | $24,269 | | Current installments, net of long-term debt | $12,500 | $12,500 | | Other current liabilities | $34,029 | $39,526 | | Long-term debt, excluding current installments | $151,125 | $176,875 | | Other liabilities | $28,848 | $33,065 | | Total liabilities | $249,168 | $286,235 | | Total equity | $385,491 | $342,760 | | Total liabilities and stockholders' equity | $634,659 | $628,995 | Non-GAAP Financial Information This section provides reconciliations and explanations for UFP Technologies' non-GAAP financial measures, offering performance insights Explanation of Non-GAAP Measures This section explains the company's non-GAAP financial measures, used for internal decision-making and investor insights - Non-GAAP measures encompass organic sales growth, Adjusted SG&A, Adjusted Operating Income, Adjusted Net Income and EPS, EBITDA, and Adjusted EBITDA[16] - Management utilizes these non-GAAP measures for financial and operational decision-making and to evaluate historical operating results[16] - These measures are deemed useful for evaluating operating performance, align with those reported by publicly listed U.S. competitors, and are used by analysts and investors[16] Organic Sales Growth Rate Reconciliation This reconciliation details organic sales growth rates for Q2 and YTD 2025, separating sales from acquired operations Organic Sales Growth Rate Reconciliation (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Overall Net Sales | $151,176 | $110,177 | $299,324 | $215,186 | | Net Sales from Acquired Operations | $(35,665) | $(15) | $(76,343) | $(15) | | Organic Sales | $115,511 | $110,162 | $222,981 | $215,171 | | Organic Growth Sales Rate | 4.9% | - | 3.6% | - | Adjusted Selling, General and Administrative Expenses (SG&A) Reconciliation Adjusted SG&A, excluding amortization, decreased as a percentage of sales for Q2 and YTD 2025, indicating improved efficiency Adjusted Selling, General and Administrative Expenses (SG&A) Reconciliation (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | SG&A (GAAP) | $18,679 | $13,900 | $37,405 | $27,812 | | Amortization of Intangible Assets | $(2,411) | $(1,098) | $(4,798) | $(2,198) | | Adjusted SG&A | $16,268 | $12,802 | $32,607 | $25,614 | | Adjusted SG&A as a % of Sales | 10.8% | 11.6% | 10.9% | 11.9% | Adjusted Operating Income Reconciliation Adjusted operating income, after various adjustments, demonstrated strong growth for both Q2 and YTD 2025 Adjusted Operating Income Reconciliation (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating Income (GAAP) | $24,329 | $17,951 | $47,455 | $33,876 | | Adjustments: | | | | | | Acquisition Costs | $283 | $943 | $320 | $943 | | Change in fair value of contingent consideration | $263 | $238 | $526 | $476 | | Amortization of Intangible Assets | $2,411 | $1,098 | $4,798 | $2,198 | | (Gain)/Loss on disposal of fixed assets | $(11) | $(1) | $(11) | $7 | | Adjusted operating income (Non GAAP) | $27,275 | $20,229 | $53,088 | $37,500 | Adjusted Net Income and Diluted Common Share Outstanding Reconciliation Adjusted net income and diluted EPS showed significant growth for Q2 and YTD 2025, reflecting enhanced profitability Adjusted Net Income and Diluted Common Share Outstanding Reconciliation (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (GAAP) | $17,180 | $13,552 | $34,364 | $26,245 | | Adjustments (net of taxes): | | | | | | Acquisition Costs | $283 | $943 | $320 | $943 | | Change in fair value of contingent consideration | $263 | $238 | $526 | $476 | | Amortization of Intangibles | $2,411 | $1,098 | $4,798 | $2,198 | | (Gain)/Loss on disposal of fixed assets | $(11) | $(1) | $(11) | $7 | | Taxes on adjustments | $(729) | $(564) | $(1,394) | $(897) | | Adjusted net income (Non-GAAP) | $19,397 | $15,266 | $38,603 | $28,972 | | Adjusted Net Income per diluted share outstanding (Non-GAAP) | $2.50 | $1.97 | $4.96 | $3.74 | | Weighted average diluted common shares outstanding | 7,773 | 7,753 | 7,783 | 7,756 | EBITDA Reconciliation Adjusted EBITDA demonstrated robust operational cash flow growth, increasing significantly for both Q2 and YTD 2025 EBITDA Reconciliation (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (GAAP) | $17,180 | $13,552 | $34,364 | $26,245 | | Income tax expense | $4,446 | $3,820 | $7,543 | $6,462 | | Interest expense, net | $2,671 | $577 | $5,480 | $1,208 | | Depreciation | $2,308 | $1,934 | $4,555 | $3,833 | | Amortization of intangible assets | $2,411 | $1,098 | $4,798 | $2,198 | | EBITDA (Non-GAAP) | $29,016 | $20,981 | $56,740 | $39,946 | | Adjustments: | | | | | | Share based compensation | $2,285 | $1,736 | $4,497 | $3,249 | | Acquisition costs | $283 | $943 | $320 | $943 | | Change in fair value of contingent consideration | $263 | $238 | $526 | $476 | | (Gain)/loss on disposal of fixed assets | $(11) | $(1) | $(11) | $7 | | Adjusted EBITDA (Non-GAAP) | $31,836 | $23,897 | $62,072 | $44,621 | Additional Information This section provides conference call details and disclosures regarding forward-looking statements and associated risks Conference Call Details Details for the Q2 2025 earnings conference call, including dial-in and webcast access, are provided - A conference call is scheduled for Tuesday, August 5, 2025, at 8:30 AM Eastern time[12] - Participants can join via toll-free (1-888-243-4451) or international (1-412-542-4135) dial-in numbers[12][14] - A live webcast and accompanying materials will be available at www.ufpt.com, with a replay accessible on the Company's Investor Relations website[12] Forward-Looking Statements This section outlines inherent risks and uncertainties associated with forward-looking statements, referencing factors in SEC filings - Statements in the press release may be considered "forward-looking statements" under Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934[13] - Forward-looking statements are subject to inherent risks, uncertainties, and factors that could cause actual results to differ materially from projections[15] - Key risk factors include industry conditions, governmental regulations, AI technology risks, indebtedness, customer concentration, new product launches, acquisition risks, and supply chain/labor force disruptions, as detailed in SEC filings[15]