UFP Technologies Announces Q3 2021 Results

Rhea-AI Summary

UFP Technologies, Inc. (Nasdaq: UFPT) reported a notable increase in Q3 2021 financial performance. Net income reached $3.8 million ($0.50 per share), up from $3.0 million ($0.40 per share) in Q3 2020. Sales surged 17.1% to $50.7 million year-over-year, with sales to the medical market climbing 20.5%. Year-to-date net income stood at $12.7 million, a 38% increase from 2020. However, gross margin decreased to 23.7% from 24.3% in Q3 2020. The CEO highlighted challenges including labor shortages and supply chain issues but expressed optimism about future growth and ongoing acquisitions.

Positive

• Q3 net income increased to $3.8 million from $3.0 million YoY.
• Q3 sales rose 17.1% to $50.7 million compared to $43.3 million in Q3 2020.
• Year-to-date net income for 2021 was $12.7 million, up 38% from $9.2 million in 2020.
• Sales to medical market increased 20.5% in Q3 2021.
• Operating income for Q3 increased to $5.1 million from $3.7 million in Q3 2020.

Negative

• Gross margin decreased to 23.7% in Q3 2021 from 24.3% in Q3 2020.
• Labor and supply chain issues resulted in $4 million in unfulfilled orders.
• Limited raw material supplies and increased prices affecting gross margins.

NEWBURYPORT, Mass., Nov. 03, 2021 (GLOBE NEWSWIRE) -- 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 $3.8 million or $0.50 per diluted common share outstanding for its third quarter ended September 30, 2021, compared to net income of $3.0 million or $0.40 per diluted common share outstanding for the same quarter in 2020. Sales for the third quarter were $50.7 million compared to 2020 third quarter sales of $43.3 million. Net income for the nine-month period ended September 30, 2021 was $12.7 million or $1.67 per diluted common share outstanding compared to $9.2 million or $1.22 per diluted common share outstanding for the same period in 2020. Sales for the nine-month period ended September 30, 2021 were $150.0 million compared to sales of $134.2 million for the same period in 2020.   

"I am pleased with our third quarter results," said R. Jeffrey Bailly, Chairman & CEO. "Sales increased 17%, operating income rose 36%, and we saw double-digit growth in all markets except automotive, which remains down due to the microchip shortage. We also made substantial progress on our long-term strategic initiatives to expand our footprint and capabilities, and increase our value to customers. We continued to advance our expansion into Mexico, with facility build-out and equipment qualifications. We recently completed our acquisition of Contech Medical, the first step in a larger acquisition strategy to help us better serve our key medical customers and their growth plans. We are also pursuing additional acquisition candidates to provide low-cost manufacturing in locations where we currently ship millions of dollars of product."

"The team has done a good job navigating significant labor and supply chain issues, which have led to abnormally high overtime and $4 million in unfulfilled orders," Bailly added. "We continue to experience limited supplies of raw materials, along with increased prices. However, after completing supplier negotiations and reviewing alternate sourcing options, we believe we can mitigate the impact of these issues with planned pass-through price increases to our customers. Still, in the near term gross margins will remain below our target levels."

"With our solid pipeline of new opportunities, strong balance sheet, and proven customer-focused strategy, we remain very excited and bullish about our future," Bailly said.

Financial Highlights for Q3 and YTD 2021

• Sales for the third quarter increased 17.1% to $50.7 million, from $43.3 million in the same period of 2020. Year-to-date sales through September increased 11.7% to $150.0 million, from $134.2 million in the same period of 2020.
• Third quarter sales to the medical market increased 20.5%. Sales to the aerospace & defense and automotive markets increased 14.3% and decreased 13.9%, respectively. All other sales (consumer, electronics, and industrial) increased 23.9%.
• Year-to-date sales to the medical market increased 3.2%. Sales to the aerospace & defense and automotive markets increased 36.9% and 14.6%, respectively. All other sales (consumer, electronics, and industrial) increased 35.4%.
• Gross profit as a percentage of sales (“gross margin”) decreased to 23.7% for the third quarter, from 24.3% in the same quarter of 2020. Gross margin for the nine-month period ended September 30, 2021 increased to 25.4% from 24.8% in the same period of 2020.
• Selling, general and administrative expenses (“SG&A”) for the third quarter was consistent at $6.8 million in 2021 compared to $6.8 million in the same quarter of 2020. For the nine-month period ended September 30, 2021, SG&A increased slightly to $21.3 million from $21.2 million in the same period of 2020.
• For the third quarter, operating income increased to $5.1 million, from $3.7 million in the same quarter of 2020. For the nine-month period ended September 30, 2021, operating income increased to $16.6 million, from $11.8 million in the same period of 2020.
• Net income increased to $3.8 million in the third quarter of 2021, from $3.0 million in the same period of 2020. For the nine-month period ended September 30, 2021 net income increased to $12.7 million, from $9.2 million in the same period of 2020.

About UFP Technologies, Inc.
UFP Technologies is an innovative designer and custom manufacturer of components, subassemblies, products, and packaging primarily for the medical market. Utilizing highly specialized foams, films, and plastics, we convert raw materials through laminating, molding, radio frequency welding and fabricating techniques. We are diversified by also providing highly engineered solutions to customers in the aerospace & defense, automotive, consumer, electronics, and industrial markets.

Forward Looking Statements
This news release contains statements relating to expected financial performance and/or future business prospects, events and plans that are forward-looking statements. Such statements include, but are not limited to: statements regarding anticipated trends in the different markets in which we compete and expectations regarding customer demand; 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, including without limitation: the severity and duration of the COVID-19 pandemic and its impact on the markets in which we participate, including its impact on our customers, suppliers and employees, as well as the U.S. and worldwide economies; the timing, scope and effect of further governmental, regulatory, fiscal, monetary and public health responses to the COVID-19 pandemic; risks relating to decreased, including substantially decreased, demand for our products; risks relating to the potential closure of any of our facilities or the unavailability of key personnel or other employees; risks that our inventory or cash reserves may be insufficient; 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 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.

 

Consolidated Condensed Statements of Income
(in thousands, except per share data)
(Unaudited)

	Three Months Ended							Nine Months Ended
	September 30,							September 30,
		2021				2020			2021				2020
Net sales	$	50,723			$	43,299		$	149,977			$	134,220
Cost of sales		38,707				32,771			111,938				100,919
Gross profit		12,016				10,528			38,039				33,301
SG&A		6,806				6,791			21,343				21,208
Acquisition costs		154				-			154				-
(Gain) Loss on sale of fixed assets		(21	)			12			(42	)			298
Operating income		5,077		-		3,725			16,584				11,795
Interest expense, net		16				17			11				66
Other expense (income)		4				-			(2	)			362
Income before income taxes		5,057				3,708			16,575				11,367
Income taxes		1,268				720			3,908				2,170
Net income	$	3,789			$	2,988		$	12,667			$	9,197
Net income per share	$	0.50			$	0.40		$	1.68			$	1.23
Net income per diluted share	$	0.50			$	0.40		$	1.67			$	1.22
Weighted average common shares outstanding		7,531				7,495			7,522				7,480
Weighted average diluted common shares outstanding		7,596				7,555			7,585				7,547

Consolidated Condensed Balance Sheets
(in thousands)
(Unaudited)

	September 30,			December 31,
	2021			2020
Assets:
Cash and cash equivalents	$	33,094		$	24,234
Receivables, net		32,456			26,428
Inventories		21,674			18,642
Other current assets		3,909			2,560
Net property, plant, and equipment		52,982			53,755
Goodwill		51,838			51,838
Intangible assets, net		18,776			19,718
Other assets		5,957			6,029
Total assets	$	220,686		$	203,204
Liabilities and equity:
Accounts payable		7,556			4,121
Other current liabilities		11,204			11,016
Other liabilities		11,173			11,174
Total liabilities		29,933			26,311
Total stockholders' equity		190,753			176,893
Total liabilities and stockholders' equity	$	220,686		$	203,204

Contact: Ron Lataille
978-234-0926

FAQ

What were the Q3 2021 financial results for UFP Technologies (UFPT)?

In Q3 2021, UFP Technologies reported a net income of $3.8 million and sales of $50.7 million.

How did UFP Technologies' sales perform compared to the previous year?

Sales increased by 17.1% in Q3 2021 compared to Q3 2020.

What challenges did UFP Technologies face recently?

UFP Technologies faced labor shortages, supply chain issues, and an increase in raw material costs.

What is the gross margin for UFP Technologies in Q3 2021?

The gross margin was 23.7% in Q3 2021, down from 24.3% in Q3 2020.

What growth strategies is UFP Technologies pursuing?

UFP Technologies is expanding into Mexico and pursuing additional acquisitions to enhance production capabilities.