UFP Technologies Announces Record Q2 Results
01 Août 2023 - 3:04PM
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.
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.
Consolidated
Condensed Statements of Income(in thousands, except per
share data)(Unaudited) |
|
|
Three Months
Ended |
|
Six Months
Ended |
|
June 30, |
|
June 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
|
Net
sales |
$ |
100,037 |
|
|
$ |
94,343 |
|
|
$ |
197,790 |
|
$ |
165,585 |
|
Cost of
sales |
|
70,392 |
|
|
|
70,019 |
|
|
|
139,444 |
|
|
124,128 |
|
Gross profit |
|
29,645 |
|
|
|
24,324 |
|
|
|
58,346 |
|
|
41,457 |
|
SG&A |
|
12,299 |
|
|
|
12,078 |
|
|
|
25,306 |
|
|
22,088 |
|
Change in
fair value of contingent consideration |
|
198 |
|
|
|
6,002 |
|
|
|
3,051 |
|
|
6,002 |
|
Loss (gain)
on disposal of fixed assets |
|
106 |
|
|
|
(6,197 |
) |
|
|
107 |
|
|
(6,209 |
) |
Acquisition
costs |
|
- |
|
|
|
242 |
|
|
|
- |
|
|
1,017 |
|
Operating income |
|
17,042 |
|
- |
|
12,199 |
|
|
|
29,882 |
|
|
18,559 |
|
Interest
expense, net |
|
1,089 |
|
|
|
733 |
|
|
|
1,958 |
|
|
1,060 |
|
Other
(income) expense |
|
(20 |
) |
|
|
(157 |
) |
|
|
56 |
|
|
(209 |
) |
Income before income taxes |
|
15,973 |
|
|
|
11,623 |
|
|
|
27,868 |
|
|
17,708 |
|
Income
taxes |
|
4,090 |
|
|
|
2,694 |
|
|
|
6,246 |
|
|
3,921 |
|
Net income |
$ |
11,883 |
|
|
$ |
8,929 |
|
|
$ |
21,622 |
|
$ |
13,787 |
|
|
|
|
|
|
|
|
|
Net income
per share |
$ |
1.56 |
|
|
$ |
1.18 |
|
|
$ |
2.84 |
|
$ |
1.83 |
|
Net income
per diluted share |
$ |
1.55 |
|
|
$ |
1.17 |
|
|
$ |
2.81 |
|
$ |
1.81 |
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding |
|
7,625 |
|
|
|
7,563 |
|
|
|
7,608 |
|
|
7,554 |
|
Weighted
average diluted common shares outstanding |
|
7,690 |
|
|
|
7,608 |
|
|
|
7,689 |
|
|
7,618 |
|
|
|
|
|
|
|
|
|
Consolidated
Condensed Balance Sheets(in thousands)(Unaudited) |
|
|
June
30, |
|
December
31, |
|
|
2023 |
|
|
2022 |
|
|
|
|
Assets: |
|
|
|
Cash and cash equivalents |
$ |
5,291 |
|
$ |
4,451 |
Receivables, net |
|
64,090 |
|
|
55,117 |
Inventories |
|
63,049 |
|
|
53,536 |
Other current assets |
|
4,641 |
|
|
3,242 |
Net property, plant, and equipment |
|
59,839 |
|
|
58,072 |
Goodwill |
|
113,168 |
|
|
113,028 |
Intangible assets, net |
|
66,253 |
|
|
68,361 |
Other assets |
|
21,661 |
|
|
22,385 |
Total assets |
$ |
397,992 |
|
$ |
378,192 |
Liabilities
and equity: |
|
|
|
Accounts payable |
|
25,125 |
|
|
19,961 |
Current installments, net of long-term debt |
|
4,000 |
|
|
4,000 |
Other current liabilities |
|
23,712 |
|
|
32,000 |
Long-term debt, excluding current installments |
|
53,000 |
|
|
51,000 |
Other liabilities |
|
31,870 |
|
|
33,686 |
Total liabilities |
|
137,707 |
|
|
140,647 |
Total stockholders' equity |
|
260,285 |
|
|
237,545 |
Total liabilities and stockholders' equity |
$ |
397,992 |
|
$ |
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 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.
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.
Contact: Ron Lataille978-234-0926
Table 1:
Adjusted Operating Income Reconciliation(in
thousands) |
|
|
Three Months
Ended |
|
Six Months
Ended |
|
June 30, |
|
June 30, |
|
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
|
Operating
income (GAAP) |
$ |
17,042 |
|
$ |
12,199 |
|
|
$ |
29,882 |
|
$ |
18,559 |
|
Adjustments: |
|
|
|
|
|
|
|
Acquisition Costs |
|
- |
|
|
242 |
|
|
|
- |
|
|
1,017 |
|
Change in fair value of contingent consideration |
|
198 |
|
|
6,002 |
|
|
|
3,051 |
|
|
6,002 |
|
Loss (gain) on disposal of fixed assets |
|
106 |
|
|
(6,197 |
) |
|
|
107 |
|
|
(6,209 |
) |
Adjusted
operating income (Non-GAAP) |
$ |
17,346 |
|
$ |
12,246 |
|
|
$ |
33,040 |
|
$ |
19,369 |
|
|
|
|
|
|
|
|
|
Table 2:
EBITDA Reconciliation(in thousands) |
|
|
Three Months
Ended |
|
Six Months
Ended |
|
June 30, |
|
June 30, |
|
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
|
Net income
(GAAP) |
$ |
11,883 |
|
$ |
8,929 |
|
|
$ |
21,622 |
|
$ |
13,787 |
|
Income tax
expense |
|
4,090 |
|
|
2,694 |
|
|
|
6,246 |
|
|
3,921 |
|
Interest
expense, net |
|
1,089 |
|
|
733 |
|
|
|
1,958 |
|
|
1,060 |
|
Depreciation |
|
1,731 |
|
|
2,190 |
|
|
|
3,402 |
|
|
4,185 |
|
Amortization
of intangible assets |
|
1,099 |
|
|
1,118 |
|
|
|
2,205 |
|
|
2,148 |
|
EBITDA (Non-GAAP) |
$ |
19,892 |
|
$ |
15,664 |
|
|
$ |
35,433 |
|
$ |
25,101 |
|
Adjustments: |
|
|
|
|
|
|
|
Share based compensation |
|
1,197 |
|
|
781 |
|
|
|
2,253 |
|
|
1,473 |
|
Acquisition Costs |
|
- |
|
|
242 |
|
|
|
- |
|
|
1,017 |
|
Change in fair value of contingent consideration |
|
198 |
|
|
6,002 |
|
|
|
3,051 |
|
|
6,002 |
|
Loss (gain) on disposal of fixed assets |
|
106 |
|
|
(6,197 |
) |
|
|
107 |
|
|
(6,209 |
) |
Adjusted
EBITDA (Non-GAAP) |
$ |
21,393 |
|
$ |
16,492 |
|
|
$ |
40,844 |
|
$ |
27,384 |
|
|
|
|
|
|
|
|
|
UFPT Q2 2023 EARNINGS RELEASE
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