UFP Technologies Announces Q1 2024 Results

Newburyport, MA, May 1, 2024 – UFP Technologies, Inc. (Nasdaq: UFPT), a designer and custom manufacturer of comprehensive solutions for medical devices, sterile packaging, and other highly engineered custom products, today reported net income of $12.7 million or $1.64 per diluted common share outstanding for its first quarter ended March 31, 2024, compared to net income of $9.7 million or $1.27 per diluted common share outstanding for the first quarter of 2023. Net Sales for the first quarter were $105.0 million compared to 2023 first quarter sales of $97.8 million.

“I am very pleased with our financial results and continued progress on a number of key strategic fronts,” said R. Jeffrey Bailly, Chairman & CEO. “In Q1 we generated 7.4% organic sales growth in both our MedTech and Advanced Components businesses. Operating income and net income grew 24% and 30%, respectively. Our growth in the MedTech space was primarily attributable to an increase in robotic surgery and infection prevention revenue. This more than offset continued softness in other segments such as orthopedics and patient surfaces, where multiple important customers are still taking below-normal levels of product as they work through excess inventory.”

“We strengthened our platform and positioned ourselves for future growth with the addition of new talent and the completion of large long-term customer and vendor agreements,” Bailly said. “Our expansion in the Dominican Republic is largely complete, with most of the start-up inefficiencies related to equipment validation and operator training behind us. This allowed us to revert to a more efficient 2-shift operation, helping to enhance gross margins, which have improved sequentially from our second half of 2023. In addition, our Mexico operation, where sales grew 47% over the prior year, is now a solid contributor to profitability.”

“We also have an exciting pipeline of active acquisition opportunities, with multiple projects already in the due diligence phase,” Bailly said.  “Given this, combined with our continued growth, progress on strategic initiatives, and strong balance sheet with only around $34 million in debt, I remain very bullish about our future.”

Financial Highlights:

• Sales for the first quarter increased 7.4% to $105.0 million, from $97.8 million in the first quarter of 2023. First quarter sales to the medical market increased 7.4% to $90.0 million from $83.8 million in the first quarter of 2023. First quarter sales to all other markets increased 7.4% to $15.0 million from $13.9 million in the first quarter of 2023.
• Gross profit as a percentage of sales (“gross margin”) decreased to 28.6% for the first quarter of 2024, from 29.4% in the first quarter of 2023.
• Selling, general, and administrative expenses (“SG&A”) for the first quarter increased 7.0% to $13.9 million compared to $13.0 million in the first quarter of 2023. As a percentage of sales, SG&A decreased to 13.2% in the first quarter of 2024 compared to 13.3% in the first quarter of 2023.
• Operating income for the first quarter of 2024 increased 24.0% to $15.9 million, from $12.8 million in the first quarter of 2023. Adjusted operating income for the first quarter increased 3.0% to $16.2 million from $15.7 million in the first quarter of 2023. 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 30.3% to $12.7 million in the first quarter of 2024, from $9.7 million in the first quarter of 2023. Adjusted net income increased 8.6% to $12.9 million in the first quarter of 2024, from $11.9 million in the first quarter of 2023. See the reconciliation provided in Table 2. Adjusted Net Income is a Non-GAAP financial measure. Please see “Non-GAAP Financial Information” at the end of this news release.
• Earnings per share increased to $1.64 per diluted share outstanding in the first quarter of 2024, from $1.27 in the first quarter of 2023.
• Adjusted EBITDA increased 5% to $20.7 million from $19.5 million in the first quarter of 2023. See the reconciliation provided in Table 3. EBITDA and adjusted EBITDA are Non-GAAP Financial Measures. Please see “Non-GAAP Financial Information” at the end of this news release.

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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.

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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.