UFP Technologies Announces Q2 2023 Results

Newburyport, Mass., August 1, 2023 — 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.

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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 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.