UFP Technologies Announces 2023 Results

Newburyport, Mass., February 21, 2024 – UFP Technologies, Inc. (Nasdaq: UFPT), a designer and custom manufacturer of engineered solutions primarily for the medical market, today reported net income of $44.9 million or $5.83 per diluted common share outstanding for its year ended December 31, 2023, compared to net income of $41.8 million or $5.45 per diluted common share outstanding for 2022. Net sales for 2023 were $400.1 million, 13.1% higher than 2022 sales of $353.8 million.

For its fourth quarter ended December 31, 2023, the Company reported net income of $11.6 million or $1.51 per diluted common share outstanding, compared to $8.5 million or $1.10 per diluted common share outstanding in the same period of 2022. Sales for the fourth quarter 2023 were $101.5 million, 11.2% higher than 2022 fourth-quarter sales of $91.2 million.

“I am very pleased with our fourth quarter and full-year 2023 results,” said R. Jeffrey Bailly, Chairman & CEO. “Sales for the quarter and the year grew 11.2% and 13.1%, respectively. Organic growth for the year was even stronger at 15.7% and adjusted net income per diluted share for the fourth quarter and full year grew by an impressive 33.0% and 41.0%, respectively.”

“We continue to make great progress strengthening our platform and further integrating our three most recent acquisitions,” Bailly added. “We’ve captured synergies by sharing best practices, moving business to best-fit manufacturing locations, and standardizing systems for information technology, quality, and safety. We have also increased our production capacity significantly, adding new clean rooms in Ireland, Costa Rica, and most notably the Dominican Republic. In that location, our investments in infrastructure, equipment, and talent have increased our capacity to service robotic surgery customers by 70%. During this process, we added 450 new associates, primarily direct labor and technical resources.”

“Our revenue growth was strong despite some softening in demand in the latter part of the year due to excess inventory held by some of our customers,” Bailly said. “However, they are indicating that the rightsizing of inventory will be short-term in nature and releases will return to normal levels in the near future. Given our growing pipeline of new opportunities, ample capacity for internal growth, and a strong balance sheet with available capital for new acquisitions, we remain very bullish about our future.”

Financial Highlights:

• Sales for the fourth quarter increased 11.2% to $101.5 million, from $91.2 million in the same period of 2022. Sales for the full year of 2023 increased 13.1% to $400.1 million from $353.8 million in the same period of 2022.
• Fourth quarter MedTech sales increased 14.9% to $89.3 million. Sales to all other markets decreased 9.5% to $12.2 million. Full-year MedTech sales increased 21.0% to $346.4 million while sales to all other markets decreased 20.6% to $53.7 million.
• Gross profit as a percentage of sales (“gross margin”) increased to 25.7% for the fourth quarter, from 25.5% in the same quarter of 2022. Gross margin for the full year of 2023 increased to 28.1%, from 25.5% in the same period of 2022.
• Selling, general and administrative expenses (“SG&A”) for the fourth quarter increased 10.3% to $13.1 million compared to $11.9 million in the same quarter of 2022. Full-year 2023 SG&A increased 11.1% to $50.9 million, from $45.8 million in the same period of 2022. As a percentage of sales, SG&A decreased to 12.7% in 2023 from 12.9% in 2022.
• For the fourth quarter, adjusted operating income increased 14.2% to $13.0 million, from $11.4 million in the same quarter of 2022. Full-year 2023 adjusted operating income increased 37.9% to $61.3 million, from $44.5 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.
• Adjusted net income in the fourth quarter increased 33.5% to $11.8 million, from $8.8 million in the same period of 2022. Full-year 2023 adjusted net income increased 41.6% to $47.7 million, from $33.7 million in the same period of 2022. See the reconciliation provided in Table 2. Adjusted Net 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.
• Adjusted EBITDA for the year ended December 31, 2023, increased 29.6% to $77.3 million from $59.6 million. See the reconciliation provided in Table 3. Adjusted EBITDA is a Non-GAAP Financial Measure. Please see “Non-GAAP Financial Information” at the end of this news release.

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About UFP Technologies, Inc.
UFP Technologies is an innovative 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.

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Forward-Looking Statements
Certain statements in this press release may be considered “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. In some cases, the reader can identify forward-looking statements by words such as “may,” “should,” “expect,” “intend,” “will,” “estimate,” “anticipate,” “believe,” “predict,” or similar words. Forward-looking statements relate to expected financial or operating performance and/or future business prospects, events, and plans.  Such statements include, but are not limited to: statements regarding our capital expenditure plans and hiring plans and the anticipated benefits to be realized as a result thereof; statements regarding production expectations and improving our operating efficiencies, customer order activity and capacity; statements regarding human capital; expectations regarding our liquidity and business opportunities; statements about our growth potential and strategies for growth; and any statements implying that we may be able to sustain or increase sales, earnings and earnings per share or sales, earnings and earnings per share growth rates.  Investors are cautioned that such forward-looking statements involve risks and uncertainties that could adversely affect our business and prospects, and otherwise cause actual results to differ materially from those anticipated by such forward-looking statements, or otherwise.  These risks include, without limitation: risks relating to our ability to realize expected advantages of capital expenditures; risks relating to our ability to maintain increased levels of production, or to continue to increase production rates; risks relating to disruptions and delays in our supply chain; risks relating to onboarding, training and retaining new talent; risks relating to maintaining demand for our products; risks relating to the identification of suitable acquisition candidates and the successful, efficient execution of acquisition transactions and integration of any acquisition candidates; risks and uncertainties associated with increasing sales, earnings and earnings per share, as well as other risks and uncertainties that are detailed in the documents we file with the Securities and Exchange Commission (“SEC”).  Accordingly, actual results may differ materially.  Readers are referred to the documents we file with the SEC, specifically the last report on Form 10-K.  The forward-looking statements contained herein speak only of our expectations as of the date of this press release.  We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any such statement to reflect any change in our expectations or any change in events, conditions, or circumstances on which any such statement is based, except as otherwise required by law.