UFP Technologies Announces Strong Q3 2023 Results
01 Novembre 2023 - 2:00PM
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 adjusted net income increased 13.8% to $11.9
million in the third quarter of 2023 from $10.4 million in the
third quarter of 2022. Sales for the third quarter were $100.8
million compared to 2022 third quarter sales of $97.0 million.
Adjusted net income increased 44.4% to $35.8 million for the
nine-month period ended September 30, 2023 from $24.8 million in
the same period of 2022. Sales for the nine-month period ended
September 30, 2023 were $298.6 million compared to sales of
$262.6 million in the same period in 2022. Adjusted net income
is a non-GAAP term. Please see “Non-GAAP Financial Information” at
the end of this news release.
“I am pleased with our Q3 results and progress on our growth
initiatives, particularly our expansion plans in our low-cost
country facilities,” said R. Jeffrey Bailly, Chairman & CEO.
“For example, in the Dominican Republic we are adding 40,000 square
feet, including 10,000 square feet of new clean room manufacturing
space. We are adding new equipment and hiring additional employees
with the goal of increasing our capacity to make robotic drapes by
60% to support both new programs and strong anticipated growth of
current programs. While the start-up costs and related
inefficiencies have reduced gross margins, we expect improved
operating efficiencies when new equipment comes online and new
employees are fully trained. We are also adding 15,000 square feet
in Costa Rica to meet increasing demand. In Mexico, we completed
the qualification process to begin producing catheter and guidewire
packaging that was previously manufactured in Ireland and Rhode
Island and shipped to Mexico, another cost cutting initiative.”
“After adjusting for the sale of our Molded Fiber unit in Q3 of
2022, organic revenue growth in Q3 was 5.6%, with Medical sales up
6.8%,” Bailly added. “Our growth was impacted by multiple customers
delaying releases due to excess inventory in their systems. Due to
Covid-related caution, many customers ordered safety stock
inventory, which is reaching levels they feel are excessive. We
anticipate this softness will be short-term in nature as they work
down their inventories, and our growth should accelerate as we
enter next year.”
“We are excited about our growth potential in 2024, which should
benefit from the significant investments mentioned above,” Bailly
said. “We are also continuing our efforts to identify strategic
acquisition candidates that will increase our value to customers.
High interest rates have slowed deal flow, but have increased our
competitiveness against private equity buyers who typically rely on
higher leverage than UFP does.” Financial
Highlights for Q3 and YTD 2023
- Sales for the third quarter increased
3.9% to $100.8 million, from $97.0 million in the same period of
2022. Year-to-date sales through September increased 13.7% to
$298.6 million, from $262.6 million in the same period of 2022.
Organic sales growth for the three- and nine-month periods ended
September 30 was 5.6% and 16.9%, respectively.
- Third quarter sales to the medical
market increased 6.8% to $87.1 million. Sales to all other markets
decreased 11.2% to $13.7 million, largely due to the sale of Molded
Fiber in the third quarter of 2022. Year-to-date sales to the
medical market increased 23.3% to $257.1 million. Sales to all
other markets decreased 23.3% to $41.5 million, largely due to the
sale of Molded Fiber in the third quarter of 2022.
- Gross profit as a percentage of sales
(“gross margin”) increased to 27.5% for the third quarter, from
26.3% in the same quarter of 2022. Gross margin for the nine-month
period ended September 30, 2023 increased to 28.8% from 25.5% in
the same period of 2022.
- Selling, general and administrative
expenses (“SG&A”) for the third quarter increased to $12.5
million in 2023 compared to $11.8 million in the same quarter of
2022. For the nine-month period ended September 30, 2023, SG&A
increased to $37.8 million from $33.9 million in the same period of
2022.
- Adjusted operating income grew 11.5%
and 46.1% for the three- and nine-month periods ended September 30,
2023 when compared to the respective periods of 2022. GAAP
operating income for the third quarter decreased to $15.0 million,
from $26.0 million in the same quarter of 2022. For the nine-month
period ended September 30, 2023, operating income increased to
$44.9 million, from $44.5 million in the same period of
2022. Adjusted operating income is a non-GAAP term.
Please see “Non-GAAP Financial Information” at the end of this news
release.
- Adjusted net income
increased 13.8% to $11.9 million in the third quarter of 2023 from
$10.4 million in the third quarter of 2022. Adjusted net income
increased 44.4% to $35.8 million for the nine months ended
September 30, 2023 from $24.8 million in the same period of 2022.
GAAP net income decreased to $11.7 million in the third quarter of
2023, from $19.5 million in the same period of 2022. GAAP net
income of $33.3 million was consistent for the nine-month periods
ended September 30, 2023 and 2022. Adjusted net income is a
non-GAAP term. Please see “Non-GAAP Financial Information” at the
end of this news release.
-
Adjusted EBITDA increased to $19.3 million in the third quarter of
2023 from $17.5 million in the same period of 2022. Adjusted EBITDA
increased to $60.2 million for the nine-month period ended
September 30, 2023 from $44.9 million in the same period of 2022.
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.
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.
Consolidated
Condensed Statements of Income |
(in thousands,
except per share data) |
(Unaudited) |
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
September 30, |
|
September 30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Net sales |
$ |
100,784 |
|
|
$ |
96,970 |
|
|
$ |
298,575 |
|
$ |
262,555 |
|
Cost of
sales |
|
73,034 |
|
|
|
71,447 |
|
|
|
212,479 |
|
|
195,575 |
|
Gross profit |
|
27,750 |
|
|
|
25,523 |
|
|
|
86,096 |
|
|
66,980 |
|
SG&A |
|
12,467 |
|
|
|
11,822 |
|
|
|
37,771 |
|
|
33,909 |
|
Change in
fair value of contingent consideration |
|
238 |
|
|
|
3,346 |
|
|
|
3,289 |
|
|
9,348 |
|
Gain on sale
of Molded Fiber Technology |
|
- |
|
|
|
(15,623 |
) |
|
|
- |
|
|
(15,623 |
) |
Loss (Gain)
on sale of fixed assets |
|
- |
|
|
|
3 |
|
|
|
108 |
|
|
(6,206 |
) |
Acquisition
costs |
|
- |
|
|
|
10 |
|
|
|
- |
|
|
1,027 |
|
Operating income |
|
15,045 |
|
|
|
25,965 |
|
|
|
44,928 |
|
|
44,525 |
|
Interest
expense, net |
|
933 |
|
|
|
830 |
|
|
|
2,890 |
|
|
1,891 |
|
Other
(income) expense |
|
(29 |
) |
|
|
(104 |
) |
|
|
28 |
|
|
(313 |
) |
Income before income taxes |
|
14,141 |
|
|
|
25,239 |
|
|
|
42,010 |
|
|
42,947 |
|
Income
taxes |
|
2,447 |
|
|
|
5,699 |
|
|
|
8,694 |
|
|
9,620 |
|
Net income |
$ |
11,694 |
|
|
$ |
19,540 |
|
|
$ |
33,316 |
|
$ |
33,327 |
|
Net Income
per share |
$ |
1.53 |
|
|
$ |
2.58 |
|
|
$ |
4.37 |
|
$ |
4.41 |
|
Net income
per diluted share |
$ |
1.52 |
|
|
$ |
2.56 |
|
|
$ |
4.33 |
|
$ |
4.37 |
|
Weighted
average common shares outstanding |
|
7,639 |
|
|
|
7,570 |
|
|
|
7,619 |
|
|
7,559 |
|
Weighted
average diluted common shares outstanding |
|
7,709 |
|
|
|
7,638 |
|
|
|
7,697 |
|
|
7,629 |
|
|
|
|
|
|
|
|
|
Consolidated
Condensed Balance Sheets |
(in thousands) |
(Unaudited) |
|
|
|
|
|
|
September
30, |
|
December
31, |
|
|
2023 |
|
2022 |
|
Assets: |
|
|
|
|
Cash and cash equivalents |
$ |
6,376 |
|
$ |
4,451 |
|
Receivables, net |
|
60,968 |
|
|
55,117 |
|
Inventories |
|
69,777 |
|
|
53,536 |
|
Other current assets |
|
3,346 |
|
|
3,242 |
|
Net property, plant, and equipment |
|
60,687 |
|
|
58,072 |
|
Goodwill |
|
112,968 |
|
|
113,028 |
|
Intangible assets, net |
|
65,020 |
|
|
68,361 |
|
Other assets |
|
20,668 |
|
|
22,385 |
|
Total assets |
$ |
399,810 |
|
$ |
378,192 |
|
Liabilities
and equity: |
|
|
|
|
Accounts payable |
$ |
26,948 |
|
$ |
19,961 |
|
Current installments, net of long-term debt |
|
4,000 |
|
|
4,000 |
|
Other current liabilities |
|
25,640 |
|
|
32,000 |
|
Long-term debt, excluding current installments |
|
39,000 |
|
|
51,000 |
|
Other liabilities |
|
31,839 |
|
|
33,686 |
|
Total liabilities |
|
127,427 |
|
|
140,647 |
|
Total stockholders' equity |
|
272,383 |
|
|
237,545 |
|
Total liabilities and stockholders' equity |
$ |
399,810 |
|
$ |
378,192 |
|
|
|
|
|
|
Forward Looking StatementsCertain 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.
Non-GAAP Financial Information
This news release includes non-generally
accepted accounting principles (“GAAP”) performance measures.
Management considers Adjusted Operating Income, Adjusted Net
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 |
|
Nine Months
Ended |
|
September 30, |
|
September 30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Operating income (GAAP) |
$ |
15,045 |
|
$ |
25,965 |
|
|
$ |
44,928 |
|
$ |
44,525 |
|
Adjustments: |
|
|
|
|
|
|
|
Acquisition Costs |
|
- |
|
|
10 |
|
|
|
- |
|
|
1,027 |
|
Change in fair value of contingent consideration |
|
238 |
|
|
3,346 |
|
|
|
3,289 |
|
|
9,348 |
|
Gain on sale of Molded Fiber |
|
- |
|
|
(15,623 |
) |
|
|
- |
|
|
(15,623 |
) |
Loss (gain) on disposal of fixed assets |
|
- |
|
|
3 |
|
|
|
108 |
|
|
(6,206 |
) |
Adjusted
operating income (Non-GAAP) |
$ |
15,283 |
|
$ |
13,701 |
|
|
$ |
48,325 |
|
$ |
33,071 |
|
|
|
|
|
|
|
|
|
Table 2:
Adjusted Net Income and Diluted Common Share Outstanding
Reconciliation |
(in thousands,
except per share data) |
|
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
September 30, |
|
September 30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Net income (GAAP) |
$ |
11,694 |
|
$ |
19,540 |
|
|
$ |
33,316 |
|
$ |
33,327 |
|
Adjustments
(net of taxes): |
|
|
|
|
|
|
|
Acquisition Costs |
|
- |
|
|
7 |
|
|
|
- |
|
|
763 |
|
Change in fair value of contingent consideration |
|
177 |
|
|
2,485 |
|
|
|
2,442 |
|
|
6,942 |
|
Gain on sale of Molded Fiber |
|
- |
|
|
(11,602 |
) |
|
|
- |
|
|
(11,602 |
) |
Loss (gain) on disposal of fixed assets |
|
- |
|
|
2 |
|
|
|
80 |
|
|
(4,609 |
) |
Adjusted net
income (Non-GAAP) |
$ |
11,871 |
|
$ |
10,432 |
|
|
$ |
35,838 |
|
$ |
24,821 |
|
|
|
|
|
|
|
|
|
Adjusted Net
Income per diluted share outstanding (Non-GAAP) |
$ |
1.54 |
|
$ |
1.37 |
|
|
$ |
4.66 |
|
$ |
3.25 |
|
Weighted
average diluted common shares outstanding |
|
7,709 |
|
|
7,638 |
|
|
|
7,697 |
|
|
7,629 |
|
|
|
|
|
|
|
|
|
Table 3:
Adjusted EBITDA Reconciliation |
(in thousands) |
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
September 30, |
|
September 30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Net income (GAAP) |
$ |
11,694 |
|
$ |
19,540 |
|
|
$ |
33,316 |
|
$ |
33,327 |
|
Income tax
expense |
|
2,447 |
|
|
5,699 |
|
|
|
8,694 |
|
|
9,620 |
|
Interest
expense, net |
|
933 |
|
|
830 |
|
|
|
2,890 |
|
|
1,891 |
|
Depreciation |
|
1,741 |
|
|
1,696 |
|
|
|
5,142 |
|
|
5,874 |
|
Amortization
of intangible assets |
|
1,099 |
|
|
1,116 |
|
|
|
3,304 |
|
|
3,264 |
|
EBITDA (Non-GAAP) |
$ |
17,914 |
|
$ |
28,881 |
|
|
$ |
53,346 |
|
$ |
53,976 |
|
Adjustments: |
|
|
|
|
|
|
|
Share based compensation |
|
1,197 |
|
|
897 |
|
|
|
3,450 |
|
|
2,370 |
|
Acquisition Costs |
|
- |
|
|
10 |
|
|
|
- |
|
|
1,027 |
|
Change in fair value of contingent consideration |
|
238 |
|
|
3,346 |
|
|
|
3,289 |
|
|
9,348 |
|
Gain on sale of Molded Fiber |
|
- |
|
|
(15,623 |
) |
|
|
- |
|
|
(15,623 |
) |
Loss (gain) on disposal of fixed assets |
|
- |
|
|
3 |
|
|
|
108 |
|
|
(6,206 |
) |
Adjusted
EBITDA (Non-GAAP) |
$ |
19,349 |
|
$ |
17,514 |
|
|
$ |
60,193 |
|
$ |
44,892 |
|
Q3 2023 EARNINGS RELEASE
Ufp Technologies (NASDAQ:UFPT)
Graphique Historique de l'Action
De Mai 2024 à Juin 2024
Ufp Technologies (NASDAQ:UFPT)
Graphique Historique de l'Action
De Juin 2023 à Juin 2024