UFP Technologies Announces Record Q2 Results
UFP Technologies, Inc. (Nasdaq: UFPT) Reports Strong Q2 2023 Results with Net Income of $11.9M and Sales of $100M. The company's Q2 sales increased by 6.0%, with a significant 15.9% growth in sales to the medical market. Gross margin improved to 29.6% from 25.8% last year, driving a 40% increase in operating income. The company also highlighted the outperformance of its recently acquired businesses and strategic acquisition opportunities.
Positive
UFP Technologies, Inc. achieved a 6.0% increase in sales for Q2 2023, reaching $100.0 million, compared to $94.3 million in the same period of 2022.
Sales to the medical market experienced a notable 15.9% growth during the second quarter.
The company's gross margin improved to 29.6% from 25.8% in Q2 of last year, driving a 40% increase in operating income.
UFP Technologies, Inc. highlighted the strong performance of its recently acquired businesses – DAS, Contech, and Advant Medical.
The company remains committed to identifying additional strategic acquisition opportunities to increase its value to customers and maximize the success of each potential transaction.
08/01/2023 - 09:04 AM
NEWBURYPORT, Mass., Aug. 01, 2023 (GLOBE NEWSWIRE) -- UFP Technologies, Inc. (Nasdaq: UFPT), an innovative designer and custom manufacturer of components, subassemblies, products, and packaging primarily for the medical market, today reported net income of $11.9 million or $1.55 per diluted common share outstanding for its second quarter ended June 30, 2023, compared to net income of $8.9 million or $1.17 per diluted common share outstanding for the same quarter in 2022. Sales for the second quarter were $100.0 million compared to sales of $94.3 million in the second quarter of 2022. Net income for the six-month period ended June 30, 2023 was $21.6 million or $2.81 per diluted common share outstanding compared to $13.8 million or $1.81 per diluted common share outstanding for the same period in 2022. Sales for the six-month period ended June 30, 2023 were $197.8 million compared to sales of $165.6 million for the same period in 2022.
“I am very pleased with our second quarter results,” said R. Jeffrey Bailly, Chairman & CEO. “After adjusting prior-year sales for the divestment of our Molded Fiber business in July 2022, organic sales in Q2 grew 13% . MedTech sales grew 16% . Gross margins improved to 29.6% from 25.8% in Q2 of last year. These factors combined to drive a 40% improvement in operating income.”
“Each of our recently acquired businesses – DAS, Contech, and Advant Medical – continues to perform ahead of expectations,” Bailly said. “Together, they have brought both new sales opportunities and cost-saving opportunities for us and our customers. For example, medical packaging that was previously shipped to Mexico from Rhode Island and Galway, Ireland will now be produced in our new Tijuana facility. This will lower customers’ freight bills while also reducing our manufacturing costs. This greenfield facility, which has already transitioned from startup losses to profitability, is proving to be a valuable strategic location for several key customers.”
“As we continue to identify additional strategic acquisition opportunities, we remain committed to our disciplined process of carefully vetting candidates for both cultural and strategic fit. The goal, as always, is to increase our value to customers and maximize the success of each potential transaction,” Bailly said. “We also continue to add talent; our team is highly engaged and now numbers approximately 3,000 associates globally. Going forward, we believe our strong platform, including top technical talent, key customer and vendor partnerships, and a network of strategically located factories, leaves us in a great competitive position to capitalize on a range of growing market opportunities.”
Financial Highlights for Q2 and YTD 2023
Sales for the second quarter increased 6.0% to $100.0 million , from $94.3 million in the same period of 2022. Year-to-date sales through June increased 19.4% to $197.8 million , from $165.6 million in the same period of 2022. Second quarter sales to the medical market increased 15.9% . Sales to the aerospace & defense market increased 12.9% and sales to the automotive market decreased 5.9% . All other sales (consumer, electronics, and industrial) decreased 53.4% . Year-to-date sales to the medical market increased 34.0% . Sales to the aerospace & defense market increased 12.6% and sales to the automotive market decreased 3.0% . All other sales (consumer, electronics, and industrial) decreased 51.4% . Gross profit as a percentage of sales (“gross margin”) increased to 29.6% for the second quarter, from 25.8% in the same quarter of 2022. Gross margin for the six-month period ended June 30, 2023 increased to 29.5% from 25.0% in the same period of 2022. Selling, general and administrative expenses (“SG&A”) for the second quarter increased 1.8% to $12.3 million in 2023 compared to $12.1 million in the same quarter of 2022. As a percentage of sales, SG&A decreased to 12.3% in the second quarter of 2023, from 12.8% in the same period of 2022. For the six-month period ended June 30, 2023, SG&A increased 14.6% to $25.3 million from $22.1 million in the same period of 2022. As a percentage of sales, SG&A decreased to 12.8% in the six-month period ended June 30, 2023, from 13.3% in the same period of 2022. For the second quarter, operating income increased to $17.0 million , from $12.2 million in the same quarter of 2022. Adjusted operating income for the second quarter increased 41.6% to $17.3 million from $12.2 million in the second quarter of 2022. For the six-month period ended June 30, 2023, operating income increased to $29.9 million , from $18.6 million in the same period of 2022. Adjusted operating income for the six-month period ended June 30, 2023 increased 70.6% to $33.0 million from $19.4 million in the same period of 2022. See the reconciliation provided in Table 1. Adjusted operating income is a financial measure not presented in accordance with generally accepted accounting principles (“GAAP”) (a “Non-GAAP Financial Measure”). Please see “Non-GAAP Financial Information at the end of this news release. Net income increased to $11.9 million in the second quarter of 2023, from $8.9 million in the same period of 2022. For the six-month period ended June 30, 2023, net income increased to $21.6 million , from $13.8 million in the same period of 2022. EBITDA for the second quarter of 2023 increased 27.0% to $19.9 million from $15.7 million in the second quarter of 2022. Adjusted EBITDA for the second quarter increased 29.7% to $21.4 million from $16.5 million in the second quarter of 2022. EBITDA for the six-month period ended June 30, 2023 increased 41.2% to $35.4 million from $25.1 million in the same period of 2022. Adjusted EBITDA for the six-month period ended June 30, 2023 increased 49.2% to $40.8 million from $27.4 million in the same period of 2022. See the reconciliation provided in Table 2. EBITDA and adjusted EBITDA are Non-GAAP Financial Measures. Please see "Non-GAAP Financial Information" at the end of this news release. About UFP Technologies, Inc.
UFP Technologies is a designer and custom manufacturer of comprehensive solutions for medical devices, sterile packaging, and other highly engineered custom products. UFP is an important link in the medical device supply chain and a valued outsource partner to many of the top medical device manufacturers in the world. The Company’s single-use and single-patient devices and components are used in a wide range of medical devices and packaging for minimally invasive surgery, infection prevention, wound care, wearables, orthopedic soft goods, and orthopedic implants.
Consolidated Condensed Statements of Income (in thousands, except per share data) Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Net sales $ 100,037 $ 94,343 $ 197,790 $ 165,585 Cost of sales 70,392 70,019 139,444 124,128 Gross profit 29,645 24,324 58,346 41,457 SG&A 12,299 12,078 25,306 22,088 Change in fair value of contingent consideration 198 6,002 3,051 6,002 Loss (gain) on disposal of fixed assets 106 (6,197 ) 107 (6,209 ) Acquisition costs - 242 - 1,017 Operating income 17,042 - 12,199 29,882 18,559 Interest expense, net 1,089 733 1,958 1,060 Other (income) expense (20 ) (157 ) 56 (209 ) Income before income taxes 15,973 11,623 27,868 17,708 Income taxes 4,090 2,694 6,246 3,921 Net income $ 11,883 $ 8,929 $ 21,622 $ 13,787 Net income per share $ 1.56 $ 1.18 $ 2.84 $ 1.83 Net income per diluted share $ 1.55 $ 1.17 $ 2.81 $ 1.81 Weighted average common shares outstanding 7,625 7,563 7,608 7,554 Weighted average diluted common shares outstanding 7,690 7,608 7,689 7,618
Consolidated Condensed Balance Sheets (in thousands) June 30, December 31, 2023 2022 Assets: Cash and cash equivalents $ 5,291 $ 4,451 Receivables, net 64,090 55,117 Inventories 63,049 53,536 Other current assets 4,641 3,242 Net property, plant, and equipment 59,839 58,072 Goodwill 113,168 113,028 Intangible assets, net 66,253 68,361 Other assets 21,661 22,385 Total assets $ 397,992 $ 378,192 Liabilities and equity: Accounts payable 25,125 19,961 Current installments, net of long-term debt 4,000 4,000 Other current liabilities 23,712 32,000 Long-term debt, excluding current installments 53,000 51,000 Other liabilities 31,870 33,686 Total liabilities 137,707 140,647 Total stockholders' equity 260,285 237,545 Total liabilities and stockholders' equity $ 397,992 $ 378,192
Forward-Looking Statements
Certain statements in this press release may be considered “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements generally relate to future events or the Company’s future financial or operating performance and may be identified by words such as “may,” “should,” “expect,” “intend,” “will,” “estimate,” “anticipate,” “believe,” “predict,” or similar words. Such statements include, but are not limited to, statements about the Company’s future financial or operating performance; the continuing operation of the Company’s locations, the maintenance of its facilities and the sufficiency of the Company’s supply chain, inventory, liquidity and capital resources, including increased costs in connection with such efforts; statements about the effects of cost-cutting measures and any anticipated savings therefrom; statements of the Company’s position in the marketplace; statements about the Company’s geographic footprint and its ability to retain key personnel, key customers and vendor partnerships; statements about the Company’s acquisition strategies and opportunities and the Company’s growth potential and strategies for growth; statements about the integration and performance of recent acquisitions; statements about the Company’s ability to realize the benefits expected from our recently completed acquisitions, including any related synergies; expectations regarding customer demand; and any indication that the Company may be able to sustain or increase its sales, earnings or earnings per share, or its sales, earnings or earnings per share growth rates. Such forward-looking statements are based upon assumptions made by the Company as of the date hereof and are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, but are not limited to: the Company's general ability to execute its business plans; industry conditions, including fluctuations in supply, demand and prices for the Company's products and services due to inflation or otherwise; risks relating to the Company’s ability to achieve anticipated benefits of acquisitions and other risks and uncertainties set forth in the sections entitled "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" in the Company's filings with the Securities and Exchange Commission ("SEC"), which are available on the SEC's website at www.sec.gov. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statement to reflect any change in the Company’s expectations or any change in events, conditions, or circumstances on which any such statement is based. Forward-looking statements are also subject to the risks and other issues described above under “Use of Non-GAAP Financial Information,” which could cause actual results to differ materially from current expectations included in the Company’s forward-looking statements included in this press release.
Non-GAAP Financial Information
This news release includes non-generally accepted accounting principles (“GAAP”) performance measures. Management considers Adjusted Operating Income, EBITDA and Adjusted EBITDA, non-GAAP measures. The Company uses these non-GAAP financial measures to facilitate management's financial and operational decision-making, including evaluation of the Company’s historical operating results. The Company’s management believes these non-GAAP measures are useful in evaluating the Company’s operating performance and are similar measures reported by publicly listed U.S. competitors, and regularly used by securities analysts, institutional investors, and other interested parties in analyzing operating performance and prospects. These non-GAAP financial measures reflect an additional way of viewing aspects of the Company's operations that, when viewed with GAAP results and the reconciliations to corresponding GAAP financial measures, may provide a more complete understanding of factors and trends affecting the Company’s business. By providing these non-GAAP measures, the Company’s management intends to provide investors with a meaningful, consistent comparison of the Company’s performance for the periods presented. These non-GAAP financial measures should be considered supplemental to, and not a substitute for, financial information prepared in accordance with GAAP. The Company's definition of these non-GAAP measures may differ from similarly titled measures of performance used by other companies in other industries or within the same industry.
Contact: Ron Lataille
Table 1: Adjusted Operating Income Reconciliation (in thousands) Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Operating income (GAAP) $ 17,042 $ 12,199 $ 29,882 $ 18,559 Adjustments: Acquisition Costs - 242 - 1,017 Change in fair value of contingent consideration 198 6,002 3,051 6,002 Loss (gain) on disposal of fixed assets 106 (6,197 ) 107 (6,209 ) Adjusted operating income (Non-GAAP) $ 17,346 $ 12,246 $ 33,040 $ 19,369
Table 2: EBITDA Reconciliation (in thousands) Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Net income (GAAP) $ 11,883 $ 8,929 $ 21,622 $ 13,787 Income tax expense 4,090 2,694 6,246 3,921 Interest expense, net 1,089 733 1,958 1,060 Depreciation 1,731 2,190 3,402 4,185 Amortization of intangible assets 1,099 1,118 2,205 2,148 EBITDA (Non-GAAP) $ 19,892 $ 15,664 $ 35,433 $ 25,101 Adjustments: Share based compensation 1,197 781 2,253 1,473 Acquisition Costs - 242 - 1,017 Change in fair value of contingent consideration 198 6,002 3,051 6,002 Loss (gain) on disposal of fixed assets 106 (6,197 ) 107 (6,209 ) Adjusted EBITDA (Non-GAAP) $ 21,393 $ 16,492 $ 40,844 $ 27,384
UFPT Q2 2023 EARNINGS RELEASE
What is UFP Technologies, Inc.'s stock ticker symbol?
UFP Technologies, Inc.'s stock ticker symbol is Nasdaq: UFPT.
What were UFP Technologies, Inc.'s Q2 2023 net income and sales?
UFP Technologies, Inc. reported net income of $11.9 million and sales of $100.0 million for the second quarter of 2023.
How much did UFP Technologies, Inc.'s Q2 2023 sales increase by?
UFP Technologies, Inc.'s sales for the second quarter of 2023 increased by 6.0%.
What was the percentage increase in sales to the medical market for UFP Technologies, Inc. in Q2 2023?
Sales to the medical market increased by 15.9% during the second quarter of 2023 for UFP Technologies, Inc.
What was the percentage increase in UFP Technologies, Inc.'s operating income for Q2 2023?
UFP Technologies, Inc.'s operating income increased by 40% for the second quarter of 2023.
