UFP Technologies(US:UFPT)2023-03-16 20:34Financial Performance - Net sales increased by 71.5% to $353.8 million for the year ended December 31, 2022, from $206.3 million in 2021, driven by a 116.0% increase in sales to the Medical market and an organic sales increase of approximately 24.0%[95][98]. - Gross margin improved to 25.5% for the year ended December 31, 2022, up from 24.8% in 2021, despite a 5.5% increase in material and labor costs[95][99]. - Operating income and net income for the year ended December 31, 2022, increased by 161.1% and 163.1%, respectively, despite challenges such as raw material and labor shortages[95]. Expenses and Costs - Selling, General, and Administrative Expenses (SG&A) rose approximately 55.3% to $45.8 million for the year ended December 31, 2022, but decreased as a percentage of sales to 12.9% from 14.3% in 2021[100]. - The Company incurred approximately $1.0 million in acquisition-related costs for the year ended December 31, 2022[102]. - The fair value of contingent consideration liabilities recognized at December 31, 2022, totaled approximately $14.6 million, with an expense of approximately $9.8 million recorded for the year[103]. - Net interest expense increased to approximately $2.8 million for the year ended December 31, 2022, primarily due to interest on funds drawn for acquisitions[106]. Cash Flow and Investments - Net cash provided by operations for the year ended December 31, 2022, was approximately $17.7 million, driven by net income of approximately $41.8 million[118]. - Net cash provided by investing activities was approximately $1.3 million, primarily from the sale of Molded Fiber and the Georgetown manufacturing facility[120]. - Net cash used for financing activities was approximately $25.9 million, primarily due to payments on the revolving line of credit of approximately $60 million and principal payments of long-term debt of approximately $4 million[121]. - The Company generated cash of approximately $17.7 million from operations during the year ended December 31, 2022, but future cash generation cannot be guaranteed[131]. Debt and Financing - As of December 31, 2022, the Company had approximately $55 million in borrowings outstanding under the Second Amended and Restated Credit Agreement, with an applicable interest rate of approximately 5.2%[125]. - The Second Amended and Restated Credit Agreement matures on December 21, 2026, and includes a secured term loan of $40 million and a revolving credit facility of up to $90 million[123]. - Future maturities of long-term debt total approximately $55 million, with $4 million due in 2023 and $24 million due in 2026[127]. - The Company uses interest-rate-related derivative instruments to manage exposure to changes in interest rates on variable-rate debt instruments[128]. - The Company is subject to a minimum fixed-charge coverage financial covenant and a maximum total funded debt to EBITDA financial covenant under the Second Amended and Restated Credit Agreement[124]. Future Plans - The Company plans to continue adding capacity to enhance operating efficiencies in its manufacturing plants throughout fiscal 2023[132]. - The Company anticipates that future business expansion will be financed through existing resources, cash flow from operations, and the revolving credit facility[133]. - At December 31, 2022, the Company had approximately $9.4 million available for future repurchases of its common stock under the stock repurchase program[134]. Asset Sales - The Company sold Molded Fiber Technology for approximately $31.5 million, resulting in a net gain of approximately $15.7 million recorded in 2022[104].