UFP Technologies(UFPT) - 2025 Q3 - Quarterly Results

Financial Performance - Net income for Q3 2025 was $16.4 million, maintaining the same level as Q3 2024, with adjusted earnings per diluted share at $2.39[3] - Sales for Q3 2025 increased by 6.5% to $154.6 million, compared to $145.2 million in Q3 2024; year-to-date sales rose 26.0% to $453.9 million from $360.4 million[5] - Operating income for Q3 2025 decreased by 5.6% to $23.4 million, while adjusted operating income fell by 8.8% to $26.3 million[5] - Adjusted net income for Q3 2025 was $18.6 million, with adjusted net income per diluted share at $2.39, compared to $19.4 million and $2.49 per share in Q3 2024[26] - EBITDA for Q3 2025 was reported at $28.3 million, slightly down from $28.7 million in Q3 2024, while adjusted EBITDA for the nine months was $92.8 million, up from $77.0 million in 2024[28] Sales and Market Performance - Medical market sales grew by 7.3% to $142.4 million in Q3 2025, while non-medical sales decreased by 2.7% to $12.2 million[5] - Overall net sales for Q3 2025 reached $154.6 million, a slight increase from $145.2 million in Q3 2024, with organic sales remaining stable at $145.1 million[18] - Organic sales growth for the nine-month period ended September 30, 2025, was approximately 2.2%[5] - The organic sales growth rate for the nine months ended September 30, 2025, was 2.2%, compared to a flat growth rate in the same period of 2024[18] Cost and Margin Analysis - Gross margin for Q3 2025 decreased to 27.7% from 28.6% in Q3 2024; without the $3 million labor cost, gross margin would have been 29.6%[5] - SG&A expenses increased by 20.8% to $19.1 million in Q3 2025, representing 12.3% of sales, up from 10.9% in Q3 2024[5] - Adjusted gross margin for Q3 2025 was 27.8%, down from 29.4% in Q3 2024, while the nine-month adjusted gross margin was 28.3%, slightly lower than 29.3% in the previous year[20] - Adjusted operating income for Q3 2025 was $26.3 million, compared to $28.8 million in Q3 2024, with a nine-month total of $79.4 million versus $66.3 million in 2024[24] Future Outlook and Growth Strategies - The company expects significant revenue generation from two new large robotic surgery programs launching by year-end 2025[4] - Recent acquisitions, UNIPEC and TPI, are performing ahead of expectations, with integrations on track[4] - The company anticipates long-term growth in its robotic surgery platform and plans to continue expansion in the Dominican Republic[4] - The company anticipates increased revenue from new robotic programs and favorable terms negotiated with its largest customer, which may enhance product demand[15] Operational Challenges and Risks - The company is focused on improving profitability at its Illinois facility and successfully transferring programs to the Dominican Republic[15] - Risks include potential delays in customer payments, reliance on two major customers for a significant portion of annual revenues, and challenges in executing acquisition strategies[15] Financial Reporting and Measures - The company emphasizes the importance of non-GAAP financial measures for evaluating operational performance, which may differ from GAAP results[16]