UFP Technologies Announces Record 2023 Results
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Insights
The reported financial results of UFP Technologies, Inc. indicate a robust fiscal performance with a year-over-year increase in net income and net sales. The company's net income growth from $41.8 million to $44.9 million, alongside a rise in diluted earnings per share from $5.45 to $5.83, suggests a strong profitability trajectory. This performance is underscored by a significant 13.1% increase in annual net sales and an even more substantial growth rate in the fourth quarter. Such figures are indicative of effective operational management and may positively influence investor sentiment.
Furthermore, the organic growth rate of 15.7% points to the company's ability to expand its revenue streams without relying solely on acquisitions. The emphasis on integrating recent acquisitions and realizing synergies could lead to improved margins and operational efficiency. The expansion of production capacity, particularly the 70% increase in the Dominican Republic, is a strategic move to cater to the growing demand in robotic surgery, a high-growth sector within the medical market. This expansion, combined with the financial health indicated by the strong balance sheet and available capital, positions UFP Technologies favorably for future growth and potential acquisitions, which could further bolster its market position.
The medical market, which UFP Technologies primarily serves, is known for its stringent quality requirements and ongoing innovation, especially in robotic surgery. The company's investment in new clean rooms and increased production capacity is a strategic response to the evolving needs of this market. By adding 450 new associates focused on direct labor and technical resources, UFP Technologies is poised to meet the increasing demand for engineered solutions in healthcare.
Despite the reported softening in demand due to customer inventory adjustments, the management's optimistic outlook suggests that this is a temporary setback. The ability to quickly adapt to market changes is crucial and the company's readiness to capitalize on new opportunities as they arise could lead to sustained revenue growth. The medical devices sector is competitive and UFP Technologies' reported growth and strategic investments may capture the attention of stakeholders looking for companies with a clear growth trajectory and resilience in the face of market fluctuations.
The expansion of production facilities in key international locations, such as Ireland, Costa Rica and the Dominican Republic, not only enhances UFP Technologies' global footprint but also diversifies its operational risk. The 70% capacity increase for servicing robotic surgery customers is particularly noteworthy, given the exponential growth expected in minimally invasive surgical technologies. This move aligns with industry trends towards automation and precision in surgical procedures, which are anticipated to drive demand for specialized engineered solutions.
Additionally, the company's focus on quality and safety standardization is critical in the medical industry, which could lead to stronger partnerships with healthcare providers and medical device companies. By leveraging its increased production capacity and technical expertise, UFP Technologies is well-positioned to take advantage of the growing opportunities within the medical sector, especially in the high-tech subset of robotic surgery. The reported financial results and strategic initiatives indicate a company that is not only growing in terms of revenue but also investing in the right areas to support sustainable long-term growth.
NEWBURYPORT, Mass., Feb. 21, 2024 (GLOBE NEWSWIRE) -- UFP Technologies, Inc. (Nasdaq: UFPT), a designer and custom manufacturer of engineered solutions primarily for the medical market, today reported net income of
For its fourth quarter ended December 31, 2023, the Company reported net income of
“I am very pleased with our fourth quarter and full year 2023 results,” said R. Jeffrey Bailly, Chairman & CEO. “Sales for the quarter and the year grew
“We continue to make great progress strengthening our platform and further integrating our three most recent acquisitions,” Bailly added. “We’ve captured synergies by sharing best practices, moving business to best-fit manufacturing locations, and standardizing systems for information technology, quality, and safety. We have also increased our production capacity significantly, adding new clean rooms in Ireland, Costa Rica, and most notably the Dominican Republic. In that location, our investments in infrastructure, equipment, and talent have increased our capacity to service robotic surgery customers by
“Our revenue growth was strong despite some softening in demand in the latter part of the year due to excess inventory held by some of our customers,” Bailly said. “However, they are indicating that the rightsizing of inventory will be short-term in nature and releases will return to normal levels in the near future. Given our growing pipeline of new opportunities, ample capacity for internal growth, and a strong balance sheet with available capital for new acquisitions, we remain very bullish about our future.”
Financial Highlights:
- Sales for the fourth quarter increased
11.2% to$101.5 million , from$91.2 million in the same period of 2022. Sales for the full year of 2023 increased13.1% to$400.1 million from$353.8 million in the same period of 2022. - Fourth quarter MedTech sales increased
14.9% to$89.3 million . Sales to all other markets decreased9.5% to$12.2 million . Full year MedTech sales increased21.0% to$346.4 million while sales to all other markets decreased20.6% to$53.7 million . - Gross profit as a percentage of sales (“gross margin”) increased to
25.7% for the fourth quarter, from25.5% in the same quarter of 2022. Gross margin for the full year of 2023 increased to28.1% , from25.5% in the same period of 2022. - Selling, general and administrative expenses (“SG&A”) for the fourth quarter increased
10.3% to$13.1 million compared to$11.9 million in the same quarter of 2022. Full year 2023 SG&A increased11.1% to$50.9 million , from$45.8 million in the same period of 2022. As a percentage of sales, SG&A decreased to12.7% in 2023 from12.9% in 2022. - For the fourth quarter, adjusted operating income increased
14.2% to$13.0 million , from$11.4 million in the same quarter of 2022. Full year 2023 adjusted operating income increased37.9% to$61.3 million , from$44.5 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. - Adjusted net income in the fourth quarter increased
33.5% to$11.8 million , from$8.8 million in the same period of 2022. Full year 2023 adjusted net income increased41.6% to$47.7 million , from$33.7 million in the same period of 2022. See the reconciliation provided in Table 2. Adjusted Net 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. - Adjusted EBITDA for the year ended December 31, 2023, increased
29.6% to$77.3 million from$59.6 million . See the reconciliation provided in Table 3. Adjusted EBITDA is a Non-GAAP Financial Measure. 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 December 31 | Twelve Months Ended December 31 | ||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||
| Net sales | $ | 101,498 | $ | 91,237 | $ | 400,072 | $ | 353,792 | |||||||||
| Cost of sales | 75,369 | 67,957 | 287,847 | 263,532 | |||||||||||||
| Gross profit | 26,129 | 23,280 | 112,225 | 90,260 | |||||||||||||
| Selling, general and administrative expenses | 13,118 | 11,888 | 50,889 | 45,796 | |||||||||||||
| Acquisition Costs | - | - | - | 1,027 | |||||||||||||
| Change in fair value of contingent consideration | 238 | 489 | 3,527 | 9,837 | |||||||||||||
| Gain on sale of Molded Fiber | - | (29 | ) | - | (15,651 | ) | |||||||||||
| Loss (gain) on disposal of fixed assets | 37 | 56 | 145 | (6,149 | ) | ||||||||||||
| Operating income | 12,736 | 10,876 | 57,664 | 55,400 | |||||||||||||
| Interest expense, net | (755 | ) | (872 | ) | (3,645 | ) | (2,763 | ) | |||||||||
| Other (expense) income | (89 | ) | (233 | ) | (117 | ) | 81 | ||||||||||
| Income before income tax expense | 11,892 | 9,771 | 53,902 | 52,718 | |||||||||||||
| Income tax expense | 285 | 1,309 | 8,978 | 10,929 | |||||||||||||
| Net income | $ | 11,607 | $ | 8,462 | $ | 44,924 | $ | 41,789 | |||||||||
| Net income per share outstanding | $ | 1.52 | $ | 1.12 | $ | 5.89 | $ | 5.52 | |||||||||
| Net income per diluted share outstanding | $ | 1.51 | $ | 1.10 | $ | 5.83 | $ | 5.45 | |||||||||
| Weighted average shares outstanding | 7,639 | 7,580 | 7,624 | 7,564 | |||||||||||||
| Weighted average diluted shares outstanding | 7,712 | 7,689 | 7,701 | 7,663 | |||||||||||||
| Consolidated Condensed Balance Sheets (in thousands) (unaudited) | ||||||
| December 31, 2023 | December 31, 2022 | |||||
| Assets: | ||||||
| Cash and cash equivalents | 5,263 | $ | 4,451 | |||
| Receivables, net | 64,449 | 55,117 | ||||
| Inventories | 70,191 | 53,536 | ||||
| Other current assets | 4,730 | 3,242 | ||||
| Net property, plant, and equipment | 62,137 | 58,072 | ||||
| Goodwill | 113,263 | 113,028 | ||||
| Intangible assets, net | 64,116 | 68,361 | ||||
| Other assets | 19,987 | 22,385 | ||||
| Total assets | $ | 404,136 | $ | 378,192 | ||
| Liabilities and equity: | ||||||
| Accounts payable | 22,286 | 19,961 | ||||
| Current portion of long-term debt | 4,000 | 4,000 | ||||
| Other current liabilities | 31,923 | 32,000 | ||||
| Long-term debt, less current portion | 28,000 | 51,000 | ||||
| Other liabilities | 31,836 | 33,686 | ||||
| Total liabilities | 118,045 | 140,647 | ||||
| Total equity | 286,091 | 237,545 | ||||
| Total liabilities and stockholders' equity | $ | 404,136 | $ | 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; statements about customer expectations regarding inventory levels; expectations regarding customer demand; and any indication that the Company may be able to sustain or increase its sales, earnings or earnings per share, its sales, earnings or earnings per share growth rates, or available capital for acquisitions. 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; risks relating to customer concentration; risks relating to the Company’s ability to achieve anticipated benefits of recent 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, Adjusted Net Income, Adjusted Net Income per diluted shares outstanding, 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 December 31, | Twelve Months Ended December 31, | ||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||
| Operating income (GAAP) | $ | 12,736 | $ | 10,876 | $ | 57,664 | $ | 55,400 | |||||||||
| Adjustments: | |||||||||||||||||
| Acquisition Costs | - | - | - | 1,027 | |||||||||||||
| Change in fair value of contingent consideration | 238 | 489 | 3,527 | 9,837 | |||||||||||||
| Gain on sale of Molded Fiber | - | (29 | ) | - | (15,651 | ) | |||||||||||
| Loss (gain) on disposal of fixed assets | 37 | 56 | 145 | (6,149 | ) | ||||||||||||
| Adjusted operating income (Non-GAAP) | $ | 13,011 | $ | 11,392 | $ | 61,336 | $ | 44,464 | |||||||||
| Table 2: Adjusted Net Income and Diluted Common Share Outstanding Reconciliation (in thousands, except per share data) | |||||||||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||
| Net income (GAAP) | $ | 11,607 | $ | 8,462 | $ | 44,924 | $ | 41,789 | |||||||||
| Adjustments (net of taxes): | |||||||||||||||||
| Acquisition Costs | - | - | - | 763 | |||||||||||||
| Change in fair value of contingent consideration | 177 | 363 | 2,621 | 7,309 | |||||||||||||
| Gain on sale of Molded Fiber | - | (22 | ) | - | (11,629 | ) | |||||||||||
| Loss (gain) on disposal of fixed assets | 27 | 42 | 108 | (4,569 | ) | ||||||||||||
| Adjusted net income (Non-GAAP) | $ | 11,811 | $ | 8,845 | $ | 47,653 | $ | 33,663 | |||||||||
| Adjusted Net Income per diluted share outstanding (Non-GAAP) | $ | 1.53 | $ | 1.15 | $ | 6.19 | $ | 4.39 | |||||||||
| Weighted average diluted common shares outstanding | 7,712 | 7,689 | 7,701 | 7,663 | |||||||||||||
| Table 3: EBITDA and Adjusted EBITDA Reconciliation (in thousands) | |||||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||||
| December 31, | December 31, | ||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||
| Net income (GAAP) | $ | 11,607 | $ | 8,462 | $ | 44,924 | $ | 41,789 | |||||||||
| Income tax expense | 285 | 1,309 | 8,978 | 10,929 | |||||||||||||
| Interest expense, net | 755 | 872 | 3,645 | 2,763 | |||||||||||||
| Depreciation | 1,862 | 1,632 | 7,004 | 7,505 | |||||||||||||
| Amortization of intangible assets | 1,098 | 1,117 | 4,403 | 4,380 | |||||||||||||
| EBITDA (Non-GAAP) | $ | 15,607 | $ | 13,392 | $ | 68,954 | $ | 67,366 | |||||||||
| Adjustments: | |||||||||||||||||
| Share based compensation | 1,191 | 838 | 4,641 | 3,208 | |||||||||||||
| Acquisition Costs | - | - | - | 1,027 | |||||||||||||
| Change in fair value of contingent consideration | 238 | 489 | 3,527 | 9,837 | |||||||||||||
| Gain on sale of Molded Fiber | - | (29 | ) | - | (15,651 | ) | |||||||||||
| Loss (gain) on disposal of fixed assets | 37 | 56 | 145 | (6,149 | ) | ||||||||||||
| Adjusted EBITDA (Non-GAAP) | $ | 17,073 | $ | 14,746 | $ | 77,267 | $ | 59,638 | |||||||||
Contact: Ron Lataille
978-234-0926, rlataille@ufpt.com
FAQ
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