UFP Technologies Announces Q3 2024 Results

Newburyport, MA, November 5, 2024 – UFP Technologies, Inc. (Nasdaq: UFPT), an innovative designer and custom manufacturer of comprehensive solutions for medical devices, sterile packaging and other highly engineered custom products, today reported that net income increased 40% to $16.4 million in the third quarter of 2024 from $11.7 million in the third quarter of 2023. Sales for the third quarter increased 44% to $145.2 million compared to 2023 third quarter sales of $100.8 million. Net income increased 28% to $42.6 million for the nine-month period ended September 30, 2024 from $33.3 million in the same period of 2023. Sales for the nine-month period ended September 30, 2024 increased 21% to $360.4 million compared to sales of $298.6 million in the same period in 2023. Throughout this news release, reference is made to Non-GAAP measures including adjusted operating income, adjusted SG&A, adjusted net income, and adjusted EBITDA. Please see “Non-GAAP Financial Information” at the end of this news release.

“I am extremely pleased with our Q3 results and the performance of our recent acquisitions,” said R. Jeffrey Bailly, Chairman & CEO. “Overall sales grew 44% to $145.2 million. Organic sales grew 9.7%, fueled by continued strength in the robotic surgery and infection prevention markets. Collectively, our four recent acquisitions are operating at volumes well above original expectations. In Q3 they were accretive to EPS by approximately $0.17 after absorbing approximately $3.1 million in increased interest expenses. Gross margins increased to 28.6% despite over $1 million in purchase accounting-related costs associated with our acquisitions. GAAP operating income and net income grew 65% and 40% respectively while adjusted operating income, net income, and EBITDA grew by 69%, 46%, and 61%, respectively.”

“Our strategy of acquiring businesses that increase the value we bring to our market leading client base is proceeding well. With each of our recent acquisitions, we have added capabilities and technologies that support the growth and innovation initiatives of key customers,” Bailly said. “All of these integrations are proceeding well, and we continue to identify new growth opportunities and synergies related to shared best practices. In addition, we continue to expand our Dominican Republic operations to accommodate the growth of our existing business as well as new programs we have won with our low-cost country manufacturing capabilities.”

“Looking forward, we remain bullish about our future,” Bailly said. “We will continue to execute on our growth initiatives, further integrate our recent acquisitions, and strengthen our platform with additional talent and new capabilities that increase our value to customers and position us for future success.”

Financial Highlights for Q3 and YTD 2024

• Sales for the third quarter increased 44.0% to $145.2 million, from $100.8 million in the same period of 2023. Year-to-date sales through September increased 20.7% to $360.4 million, from $298.6 million in the same period of 2023. Organic sales growth for the three- and nine-month periods ended September 30, 2024, was 9.7% and 9.1%, respectively.
• Third quarter sales to the medical market increased 52.2% to $132.6 million. Sales to all other markets decreased 8.2% to $12.5 million, largely due to a 21.0% decline in sales to the automotive market. Year-to-date sales to the medical market increased 23.7% to $318.1 million. Sales to all other markets increased 1.9% to $42.3 million, largely due to a 27.9% increase in sales to the aerospace and defense market.
• Gross profit as a percentage of sales (“gross margin”) increased to 28.6% for the third quarter, from 27.5% in the same quarter of 2023. Gross margin for the nine-month period ended September 30, 2024, increased to 29.0% from 28.8% in the same period of 2023. Both the three- and nine-month periods of 2024 include approximately $1.1 million in purchase accounting one-time costs associated with the acquisitions.
• Selling, general and administrative (“SG&A”) expenses increased 26.6% to $15.8 million and 15.4% to $43.6 million for the three- and nine-months periods ended September 30, 2024. Adjusted SG&A for the third quarter of 2024 increased to $13.8 million, from $11.4 million in the same quarter of 2023. For the nine-month period ended September 30, 2024, Adjusted SG&A increased to $39.4 million from $34.5 million in the same period of 2023. As a percentage of sales, adjusted SG&A decreased to 9.5% from 11.3% and to 10.9% from 11.5% for the three- and nine-month periods ended September 30, 2024, respectively.
• Operating income increased 64.6% to $24.8 million, and 30.5% to $58.6 million for the three- and nine-month periods ended September 30, 2024, respectively. Adjusted operating income for the third quarter of 2024 increased 69.3% to $27.7 million from $16.4 million in the same period of 2023. Adjusted operating income for the nine months ended September 30, 2024 increased 26.4% to $65.2 million from $51.6 million in the same period of 2023. .
• Net income increased 39.9% to $16.4 million, and 27.9% to $42.6 million for the three- and nine-month periods ended September 30, 2024, respectively. Adjusted net income increased 46.5% to $18.6 million in the third quarter of 2024 from $12.7 million in the third quarter of 2023. Adjusted net income increased 24.0% to $47.6 million for the nine months ended September 30, 2024 from $38.4 million in the same period of 2023. .
• Adjusted EBITDA increased 61.4% to $31.2 million in the third quarter of 2024 from $19.3 million in the same period of 2023. Adjusted EBITDA increased 26.0% to $75.9 million for the nine-month period ended September 30, 2024 from $60.2 million in the same period of 2023.

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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.

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; statements of the Company’s position in the marketplace; 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, including that such acquisitions will be accretive to the Company’s revenue, income and EBITDA; 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 related to our indebtedness and compliance with covenants contained in our financing arrangements, and whether any available financing may be sufficient to address our needs; risks relating to delayed payments by our customers and the potential for reduced or canceled orders; risks related to customer concentration; 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.