United-Guardian Reports First Quarter Results

Rhea-AI Summary

United-Guardian (NASDAQ:UG) reported its Q1 2025 financial results, showing a significant decline in performance. Net sales decreased by 23.8% to $2.48M from $3.25M in Q1 2024, while net income dropped by 39.4% to $560,895 ($0.12 per share) from $925,442 ($0.20 per share). The decline was primarily attributed to a 63% decrease in cosmetic ingredients sales, mainly due to reduced orders from Ashland Specialty Ingredients (ASI) caused by excess inventory in China. However, there were positive developments in other segments, with medical lubricant sales increasing by 43% and pharmaceutical sales growing by 23%. The company expressed concerns about potential impacts from U.S. tariffs on imports from various countries.

Positive

• Medical lubricant sales increased by 43% in Q1 2025
• Pharmaceutical sales grew by 23% compared to Q1 2024
• ASI confirmed no significant loss of business or customers despite reduced orders

Negative

• Net sales decreased 23.8% to $2.48M in Q1 2025
• Net income dropped 39.4% to $560,895 ($0.12 per share)
• Cosmetic ingredients sales declined 63% due to excess inventory in China
• Potential negative impact from U.S. tariffs on imports remains uncertain

Insights

Financial Analyst

United-Guardian reports significant Q1 decline with revenue down 23.8% and EPS dropping 40% to $0.12, driven by temporary cosmetic inventory issues despite growth in other segments.

United-Guardian's Q1 2025 results reveal a substantial performance decline compared to the same period last year. Revenue decreased 23.8% year-over-year to $2.48 million, while net income fell more dramatically by 39.4% to $560,895, resulting in earnings per share of $0.12 compared to $0.20 in Q1 2024.

The results show a stark contrast between business segments. Medical lubricant sales increased impressively by 43% and pharmaceutical products grew by 23%, demonstrating strong momentum in these divisions. However, these gains were completely overshadowed by a precipitous 63% drop in cosmetic ingredient sales, which appears to be the company's largest revenue segment given its outsized impact on overall performance.

Management attributes this cosmetic segment decline primarily to inventory adjustments with their key distributor, Ashland Specialty Ingredients (ASI). Specifically, excess inventory in China needed to be worked through, creating a temporary order reduction. The company maintains this represents a timing issue rather than customer loss, suggesting potential normalization in future quarters.

From a profitability perspective, there are some positive indicators. The gross profit margin actually improved from 52.2% to 54.7%, showing better cost management despite lower volume. However, operating expenses increased by 11.2% year-over-year despite the sales decline, which presents concerns about operational efficiency and expense control.

The company also highlighted uncertainty regarding potential tariffs on imports from various countries, adding a layer of geopolitical risk to future performance. Management indicates difficulty in determining the potential impact on operations or financial condition.

The key question remains whether the cosmetic ingredient business will rebound in coming quarters as inventory levels normalize, or if there are deeper market challenges ahead. The strong performance in medical lubricants and pharmaceuticals provides some business diversification benefits during this transitional period.

HAUPPAUGE, N.Y., May 08, 2025 (GLOBE NEWSWIRE) -- United-Guardian, Inc. (NASDAQ:UG) announced today the financial results for the first quarter of 2025. First quarter sales decreased from $3,254,944 in 2024 to $2,481,127 in 2025, with net income decreasing from $925,442 ($0.20 per share) to $560,895 ($0.12 per share).

Donna Vigilante, President of United-Guardian, stated, “We are experiencing a slow start to 2025 compared to the beginning of 2024. While we saw positive performance from our medical lubricant and pharmaceutical businesses, the main reason for the decrease in sales and earnings was due to a decrease in our cosmetic ingredient business. Medical lubricant and pharmaceutical sales increased in the first quarter of 2025 compared to the same period in 2024 by 43% and 23%, respectively. Cosmetic ingredients sales decreased by 63% in the first quarter of 2025, with the majority of the decrease due a reduction in orders from Ashland Specialty Ingredients (“ASI”). Based on our conversations with ASI, the decreased orders were primarily due to excess inventory being held in China that had to be worked off and the timing of product orders. ASI has confirmed that currently there has been no significant loss of business or customers. Tariff announcements by the executive branch of the U.S. federal government on imports from various countries remain a concern for our business. As the situation remains uncertain, it is difficult for us to determine the impact this may have on our operations or financial condition at this time.”

United-Guardian is a manufacturer of cosmetic ingredients, pharmaceuticals, medical lubricants, and sexual wellness ingredients.

Contact:	Donna Vigilante
	(631) 273-0900
	dvigilante@u-g.com

NOTE: This press release contains both historical and "forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements about the company’s expectations or beliefs concerning future events, such as financial performance, business prospects, and similar matters, are being made in reliance upon the “safe harbor” provisions of that Act. Such statements are subject to a variety of factors that could cause our actual results or performance to differ materially from the anticipated results or performance expressed or implied by such forward-looking statements. For further information about the risks and uncertainties that may affect the company’s business please refer to the company's reports and filings with the Securities and Exchange Commission.

Financial Results for the Three Months Ended March 31, 2025 and 2024
UNITED-GUARDIAN, INC. STATEMENTS OF INCOME (UNAUDITED)
		THREE MONTHS ENDED MARCH 31,
			2025			2024
Net sales		$	2,481,127		$	3,254,944
Costs and expenses:
Cost of sales			1,123,076			1,556,490
Operating expenses			632,735			568,865
Research and development			114,394			102,982
Total costs and expenses			1,870,205			2,228,337
Income from operations			610,922			1,026,607
Other income:
Investment income			84,687			98,073
Net gain on marketable securities			12,350			41,496
Total other income			97,037			139,569
Income before provision for income taxes			707,959			1,166,176
Provision for income taxes			147,064			240,734
Net income		$	560,895		$	925,442
Earnings per common share (basic and diluted)		$	0.12		$	0.20
Weighted average shares – basic and diluted			4,594,319			4,594,319

FAQ

What were United-Guardian's (UG) Q1 2025 earnings results?

United-Guardian reported Q1 2025 net income of $560,895 ($0.12 per share), down from $925,442 ($0.20 per share) in Q1 2024, with net sales decreasing to $2.48M from $3.25M.

Why did United-Guardian (UG) stock sales decline in Q1 2025?

The decline was primarily due to a 63% decrease in cosmetic ingredients sales, caused by reduced orders from Ashland Specialty Ingredients due to excess inventory in China.

Which segments performed well for United-Guardian (UG) in Q1 2025?

Medical lubricant sales increased by 43% and pharmaceutical sales grew by 23% compared to Q1 2024.

What are the main challenges facing United-Guardian (UG) in 2025?

The company faces challenges from excess inventory in China affecting cosmetic ingredient orders and potential impacts from U.S. tariffs on imports from various countries.

How much did United-Guardian's (UG) earnings per share decrease in Q1 2025?

Earnings per share decreased from $0.20 in Q1 2024 to $0.12 in Q1 2025, representing a 40% decline.