UFP Technologies(UFPT) - 2022 Q3 - Quarterly Report

Sales Performance - Sales for the nine-month period ended September 30, 2022 increased 75.1% to $262.6 million from $150.0 million in the same period last year, driven by acquisitions and an organic sales increase of approximately 16.5%[97] - Sales for the three-month period ended September 30, 2022 increased approximately 91.2% to $97.0 million from $50.7 million for the same period in 2021, primarily due to a 152.0% increase in sales to customers in the Medical market[98] Financial Metrics - Gross margin for the three-month period ended September 30, 2022 increased to 26.3% from 23.7% for the same period in 2021, attributed to organic sales growth and decreased overhead costs[100] - Net interest expense for the nine-month period ended September 30, 2022 was approximately $1.9 million, significantly higher than $11 thousand in the same period of 2021, due to interest on funds drawn for acquisitions[110] - The effective tax rate for the nine-month period ended September 30, 2022 was approximately 22.4%, a decrease from 23.6% in the same period of 2021, primarily due to lower statutory rates on foreign taxable income[113] Expenses and Costs - Selling, general, and administrative expenses (SG&A) increased approximately 73.7% to $11.8 million for the three-month period ended September 30, 2022, primarily due to additional SG&A from recent acquisitions[102] - The Company incurred approximately $1.0 million in acquisition-related costs for the nine-month period ended September 30, 2022, primarily for legal and valuation services[104] - The fair value of contingent consideration payments for the DAS Medical and Contech Medical acquisitions totaled approximately $19.1 million as of September 30, 2022, with an expense of approximately $9.3 million recognized for the nine-month period[105] Cash Flow and Financing - Net cash used for operating activities for the nine-month period ended September 30, 2022 was approximately $144 thousand, with net income generated of approximately $33.3 million[115] - Net cash provided by investing activities during the same period was approximately $4.3 million, primarily from the sale of Molded Fiber and the Georgetown manufacturing facility[117] - Net cash used for financing activities was approximately $5.2 million, mainly due to payments on the revolving line of credit of approximately $45 million[118] - As of September 30, 2022, the Company had approximately $71 million in borrowings outstanding under the Second Amended and Restated Credit Agreement[122] - The Company had total long-term debt of approximately $71 million, with a current portion of $4 million[124] - The applicable interest rate under the Second Amended and Restated Credit Agreement was approximately 4.6% as of September 30, 2022[122] Future Plans and Investments - The Company plans to fund its operating expenses and growth through internally generated cash and bank credit facilities[114] - The Company plans to continue adding capacity to enhance operating efficiencies in its manufacturing plants throughout fiscal 2022[130] - The Company anticipates that future expansion will be financed through existing resources, cash flow from operations, and the revolving credit facility[131] - Approximately $9.4 million was available for future repurchases of the Company's common stock under the stock repurchase program as of September 30, 2022[132] - The Company used cash of approximately $144 thousand for operations during the nine months ended September 30, 2022, and cannot guarantee future cash generation[129] Other Financial Activities - The Company recorded a net gain on the sale of its molded fiber business of approximately $15.6 million, with proceeds used to pay down debt[106]