UFP Technologies, Inc. (Nasdaq: UFPT), a designer and custom
manufacturer of comprehensive solutions primarily for the medical
market, today reported net income of $9.7 million or $1.27 per
diluted common share outstanding for its first quarter ended March
31, 2023, compared to net income of $4.9 million or $0.64 per
diluted common share outstanding for the first quarter of 2022. Net
Sales for the first quarter were $97.8 million compared to 2022
first quarter sales of $71.2 million.
“I am extremely pleased with our Q1 results, as
sales grew 37.2% and EPS nearly doubled,” said R. Jeffrey Bailly,
Chairman & CEO. “Our MedTech business once again led the way.
It grew 59.5% in Q1, driven by 112% growth in robotic surgery. With
our powerful combination of precision molded components, great
supply chain partners, and highly efficient low-cost manufacturing
in the Dominican Republic, we are increasing our customer value and
market share in this fast-growing segment. Other markets, including
interventional and surgical, orthopedic, and infection prevention,
are also growing rapidly as elective procedures continue to
rebound.”
“The improvement in our bottom-line results,
driven by a 530-basis-point increase in gross margins to 29.4% from
24.1% in Q1 2022, was even more substantial,” Bailly said. “Many
key challenges of 2022, including the limited availability and high
cost of raw materials and direct labor, and the integration of
three acquisitions and a greenfield plant start-up, have become
less pressing. We are also benefitting from improved operating
efficiency and price adjustments that followed our raw material and
labor cost increases. All of these factors are helping us to
realize higher margins.”
“It is also important to note we achieved these
results after absorbing a $2.85 million charge for increased
contingent consideration related to our DAS acquisition,” Bailly
said. “This reflects the growing likelihood their outstanding
performance will earn them their final contingent payments. Absent
that charge, operating income increased 147%. Looking ahead, I
believe our recent investments will continue to bring additional
synergies and increase the value we can deliver to customers. This,
combined with our strong balance sheet and exciting pipeline of new
internal and external growth opportunities, positions us well to
continue growing our business and leaves us very bullish about our
future.”
Financial Highlights:
- Sales for the first
quarter increased 37.2% to $97.8 million, from $71.2 million in the
first quarter of 2022. First quarter sales to the medical market
increased 59.5% to $83.8 million from $52.6 million in the first
quarter of 2022. First quarter sales to all other markets declined
25.4% to $13.9 million from $18.7 million in the first quarter of
2022 primarily due to the Company’s disposition of its molded fiber
business in July, 2022.
- Gross profit as a
percentage of sales (“gross margin”) increased to 29.4% for the
first quarter, from 24.1% in the first quarter of 2022.
- Selling, general
and administrative expenses (“SG&A”) for the first quarter
increased 29.9% to $13.0 million compared to $10.0 million in the
first quarter of 2022. As a percentage of sales, SG&A decreased
0.7% to 13.3% in the first quarter of 2023 compared to 14.0% in the
first quarter of 2022.
- Operating income
for the first quarter increased 101.9% to $12.8 million, from $6.4
million in the first quarter of 2022. Adjusted operating income for
the first quarter increased 120.3% to $15.7 million from $7.1
million in the first quarter 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 100.5% to $9.7 million in the first quarter of 2023, from
$4.9 million in the first quarter of 2022.
- Earnings per share
increased 98.4% to $1.27 per diluted share outstanding in the first
quarter of 2023, from $0.64 in the first quarter of 2022.
- EBITDA for the
first quarter of 2023 increased 64.8% to $15.5 million from $9.4
million in the first quarter of 2022. Adjusted EBITDA increased
78.7% to $19.5 million from $10.9 million in the first quarter 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.
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.
Contact: Ron Lataille978-234-0926,
rlataille@ufpt.com
Consolidated Condensed Statements of
Income(in thousands, except per share data)(unaudited)
|
Three Months
Ended |
|
March, 31 |
|
2023 |
|
2022 |
Net sales |
$ |
97,753 |
|
$ |
71,242 |
|
Cost of
sales |
|
69,052 |
|
|
54,108 |
|
Gross profit |
|
28,701 |
|
|
17,134 |
|
Selling,
general and administrative expenses |
|
13,006 |
|
|
10,011 |
|
Acquisition
Costs |
|
- |
|
|
775 |
|
Change in
fair value of contingent consideration |
|
2,853 |
|
|
- |
|
Loss (gain)
on disposal of fixed assets |
|
1 |
|
|
(12 |
) |
Operating income |
|
12,841 |
- |
|
6,360 |
|
Interest
expense, net |
|
869 |
|
|
327 |
|
Other
expense (income) |
|
77 |
|
|
(52 |
) |
Income before income tax expense |
|
11,895 |
|
|
6,085 |
|
Income tax
expense |
|
2,156 |
|
|
1,227 |
|
Net income |
$ |
9,739 |
|
$ |
4,858 |
|
|
|
|
|
Net income
per share outstanding |
$ |
1.28 |
|
$ |
0.64 |
|
Net income
per diluted share outstanding |
$ |
1.27 |
|
$ |
0.64 |
|
|
|
|
|
Weighted
average shares outstanding |
|
7,592 |
|
|
7,544 |
|
Weighted
average diluted shares outstanding |
|
7,681 |
|
|
7,630 |
|
|
|
|
|
Consolidated Condensed Balance Sheets
(in thousands)(unaudited)
|
March
31, |
|
December
31, |
|
2023 |
|
2022 |
Assets: |
|
|
|
Cash and cash equivalents |
$ |
6,503 |
|
$ |
4,451 |
Receivables, net |
|
60,142 |
|
|
55,117 |
Inventories |
|
56,649 |
|
|
53,536 |
Other current assets |
|
3,622 |
|
|
3,242 |
Net property, plant, and equipment |
|
59,027 |
|
|
58,072 |
Goodwill |
|
113,159 |
|
|
113,028 |
Intangible assets, net |
|
67,346 |
|
|
68,361 |
Other assets |
|
24,334 |
|
|
22,385 |
Total assets |
$ |
390,782 |
|
$ |
378,192 |
Liabilities
and equity: |
|
|
|
Accounts payable |
$ |
20,454 |
|
$ |
19,961 |
Current installments, net of long-term debt |
|
4,000 |
|
|
4,000 |
Other current liabilities |
|
27,738 |
|
|
32,000 |
Long-term debt, excluding current installments |
|
56,000 |
|
|
51,000 |
Other liabilities |
|
36,106 |
|
|
33,686 |
Total liabilities |
|
144,298 |
|
|
140,647 |
Total equity |
|
246,484 |
|
|
237,545 |
Total liabilities and stockholders' equity |
$ |
390,782 |
|
$ |
378,192 |
|
|
|
|
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
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, the war in
Ukraine, 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.
Non-GAAP Financial Information
This news release includes non-generally
accepted accounting principles (“GAAP”) performance measures.
Management considers Adjusted Operating Income, EBITDA and Adjusted
EBITDA, non-GAAP measures. The Company uses these non-GAAP
financial measures to facilitate management's financial and
operational decision-making, including evaluation of the Company’s
historical operating results. The Company’s management believes
these non-GAAP measures are useful in evaluating the Company’s
operating performance and are similar measures reported by publicly
listed U.S. competitors, and regularly used by securities analysts,
institutional investors, and other interested parties in analyzing
operating performance and prospects. These non-GAAP financial
measures reflect an additional way of viewing aspects of the
Company's operations that, when viewed with GAAP results and the
reconciliations to corresponding GAAP financial measures, may
provide a more complete understanding of factors and trends
affecting the Company’s business. By providing these non-GAAP
measures, the Company’s management intends to provide investors
with a meaningful, consistent comparison of the Company’s
performance for the periods presented. These non-GAAP financial
measures should be considered supplemental to, and not a substitute
for, financial information prepared in accordance with GAAP. The
Company's definition of these non-GAAP measures may differ from
similarly titled measures of performance used by other companies in
other industries or within the same industry.
Table 1: Adjusted Operating Income
Reconciliation(in thousands)
|
Three Months
Ended |
|
March 31, |
|
2023 |
|
2022 |
Operating income (GAAP) |
$ |
12,841 |
|
$ |
6,360 |
|
Adjustments: |
|
|
|
Acquisition Costs |
|
- |
|
|
775 |
|
Change in fair value of contingent consideration |
|
2,853 |
|
|
- |
|
Loss (gain) on disposal of fixed assets |
|
1 |
|
|
(12 |
) |
Adjusted
operating income (Non-GAAP) |
$ |
15,695 |
|
$ |
7,123 |
|
|
|
|
|
Table 2: EBITDA
Reconciliation(in thousands)
|
Three Months
Ended |
|
March 31, |
|
2023 |
|
2022 |
Net income (GAAP) |
$ |
9,739 |
|
$ |
4,858 |
|
Income tax
expense |
|
2,156 |
|
|
1,227 |
|
Interest
expense, net |
|
869 |
|
|
327 |
|
Depreciation |
|
1,671 |
|
|
1,987 |
|
Amortization
of intangible assets |
|
1,106 |
|
|
1,029 |
|
EBITDA (Non-GAAP) |
$ |
15,541 |
|
$ |
9,428 |
|
Adjustments: |
|
|
|
Share based compensation |
|
1,056 |
|
|
692 |
|
Acquisition Costs |
|
- |
|
|
775 |
|
Change in fair value of contingent consideration |
|
2,853 |
|
|
- |
|
Loss (gain) on disposal of fixed assets |
|
1 |
|
|
(12 |
) |
Adjusted
EBITDA (Non-GAAP) |
$ |
19,451 |
|
$ |
10,883 |
|
|
|
|
|
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