UFP Technologies(US:UFPT)2025-11-07 12:55Financial Performance - Net sales for the nine months ended September 30, 2025, increased 26.0% to $453.9 million from $360.4 million in the same period last year, driven by a 31.1% growth in sales to the medical market [116]. - Net sales for the three months ended September 30, 2025, increased approximately 6.5% to $154.6 million from $145.2 million for the same period in 2024, despite over $8 million of unfulfilled orders due to the AJR Labor Issue [120]. - Organic sales growth was 2.2% for the nine months ended September 30, 2025, compared to the same period in 2024, impacted by the AJR Labor Issue [121]. Acquisitions and Sales Contributions - Sales from acquisitions in 2024 and 2025 contributed approximately $114.9 million in sales during the nine months ended September 30, 2025, compared to $34.6 million in the same period last year [116]. - SG&A for the nine months ended September 30, 2025, increased approximately 29.5% to $56.5 million from $43.6 million for the same period in 2024, primarily due to acquisitions and increased headcount [125]. - The company plans to enhance manufacturing capacity and may consider additional acquisitions to support growth [143]. Labor and Operational Issues - Gross margin decreased to 27.7% for the three months ended September 30, 2025, from 28.6% for the same period in 2024, with the AJR Labor Issue adding approximately $3.0 million in incremental labor costs [122]. - The company anticipates gradual improvement in labor efficiencies beginning in the fourth quarter of 2025 following significant workforce turnover due to the AJR Labor Issue [117]. Expenses and Interest - Selling, general, and administrative expenses (SG&A) increased approximately 20.8% to $19.1 million for the three months ended September 30, 2025, from $15.8 million for the same period in 2024 [124]. - Net interest expense decreased to approximately $2.4 million for the three months ended September 30, 2025, compared to $3.5 million for the same period in 2024, primarily due to lower average debt [127]. - Net interest expense increased to approximately $7.9 million for the nine months ended September 30, 2025, compared to $4.7 million in 2024, primarily due to higher average debt [128]. Cash Flow and Financing - Net cash provided by operations for the nine months ended September 30, 2025, was approximately $75.1 million, driven by net income of approximately $50.7 million [134]. - Net cash used in investing activities was approximately $23.7 million for the nine months ended September 30, 2025, mainly for manufacturing machinery and acquisitions [135]. - Net cash used for financing activities was approximately $47.3 million during the nine months ended September 30, 2025, primarily for payments on the revolving line of credit [136]. - As of September 30, 2025, the company had approximately $146.1 million in outstanding borrowings under the Third Amended and Restated Credit Agreement [140]. - The weighted average interest rate on outstanding debt was approximately 5.5% as of September 30, 2025 [140]. Tax and Future Outlook - The effective tax rate for the nine months ended September 30, 2025, was approximately 19.4%, down from 21.0% in 2024, due to changes in income allocation and discrete tax benefits [132]. - Future liquidity is contingent upon operating performance and the availability of draws on the revolving credit facility [142]. - The company generated cash of approximately $75.1 million from operations during the nine months ended September 30, 2025, but future cash generation cannot be guaranteed [142].