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UFP TECHNOLOGIES INC (UFPT)·Q1 2025 Earnings Summary

Executive Summary

  • Record quarter: Revenue $148.1M (+41% YoY), GAAP diluted EPS $2.21 (+35% YoY), and Adjusted EPS $2.47; MedTech sales surged to $135.4M (+50% YoY) driven by Safe Patient Handling .
  • Beat vs consensus: Revenue beat by ~$8.2M ($148.1M vs $139.9M*) and Primary EPS beat by ~$0.59 ($2.47 vs $1.88*); EBITDA was slightly below ($27.7M vs $28.3M*) .
  • Gross margin dipped 10 bps to 28.5% (from 28.6% YoY); SG&A leverage supported adjusted operating income growth (+49.5% YoY to $25.8M) .
  • Strategic catalysts: Exclusive Safe Patient Handling manufacturing rights through June 2030, rapid DR capacity expansion (Santiago doubled; 5th building at La Romana), and two robotic surgery programs slated for 2H25 with meaningful 2026 revenue .
  • Balance sheet: Cash from operations $13.8M, ~$7M debt repaid, leverage ratio below ~1.5x; capex $2.8M .

Values retrieved from S&P Global for consensus items (*).

What Went Well and What Went Wrong

What Went Well

  • MedTech outperformance: “Our MedTech business grew 50%, driven by strong demand in the Safe Patient Handling space… Interventional and Surgical, Infection Prevention, Orthopedics, and Advanced Wound Care… each growing more than 25%” .
  • Secured long-term contract and footprint expansion: “Exclusive manufacturing rights for a significant portion of our Safe Patient Handling business through June 2030… roughly doubled the size of our Santiago… committed to a fifth building at our La Romana Robotic Surgery campus” .
  • Operating leverage and adjusted metrics: Adjusted operating income +49.5% to $25.8M; adjusted EPS +39.5% to $2.47; adjusted EBITDA +45.9% to $30.2M .

What Went Wrong

  • Margins and inefficiencies: Gross margin edged down to 28.5% (from 28.6% YoY) and AJR onboarding caused temporary direct labor inefficiency, likely persisting through Q2 .
  • Segment headwind: Advanced Components declined 15% as resources shifted to faster-growing MedTech opportunities .
  • Robotic surgery softness: Segment declined 6% YoY in Q1; 2025 outlook “low single-digit” as inventory build at the largest customer in 2024 weighs on growth .

Financial Results

Consolidated Results (GAAP)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$145.2 $144.1 $148.1
Gross Margin %28.6% 29.2% 28.5%
Operating Income ($USD Millions)$24.8 $22.3 $23.1
Net Income ($USD Millions)$16.4 $16.4 $17.2
Diluted EPS (GAAP)$2.11 $2.10 $2.21

Adjusted Metrics (Non-GAAP)

MetricQ3 2024Q4 2024Q1 2025
Adjusted Operating Income ($USD Millions)$27.7 $26.0 $25.8
Adjusted Net Income ($USD Millions)$18.6 $19.2 $19.2
Adjusted EPS$2.39 $2.46 $2.47
Adjusted EBITDA ($USD Millions)$31.2 $30.4 $30.2

Segment Sales Breakdown

SegmentQ3 2024Q4 2024Q1 2025
MedTech Sales ($USD Millions)$132.6 $132.7 $135.4
All Other Markets ($USD Millions)$12.5 $11.4 $12.7

KPIs and Operating Metrics

KPIQ1 2025
Cash from Operations ($USD Millions)$13.8
Capital Expenditures ($USD Millions)$2.8
Debt Repayment ($USD Millions)~$7.0
Leverage Ratio<1.5x
SG&A as % of Sales (GAAP)12.6%
Adjusted SG&A as % of Sales11.0%
Organic Sales Growth (Total)2.3%
MedTech Organic Growth5.4%
Robotic Surgery YoY Growth-6%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Normalized Effective Tax RateFY 2025N/A21%–23% Introduced
Tariffs Impact (direct)2025N/A~$8M shipments subject to 10% tariff; expect majority of ~$0.8M to be passed through; demand impact unknown New commentary
Robotic Surgery Growth2025Prior years: 20%+ growth Low single-digit growth expected in 2025 Lower vs prior cadence
Safe Patient Handling Pricing2025–2027N/A~15%–20% price reductions as programs transfer to DR; margins expected to improve on efficiency New framework
DR Capacity Expansion2025Ongoing Santiago doubled; 5th La Romana building in progress; 2 RS programs launch 2H25 Maintained/Expanded
Dividends2025N/ANot discussedN/A

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Safe Patient HandlingStrength post AJR; acquisitions accretive; DR expansion underway Exclusive mfg rights to 2030; Santiago doubled; strong demand Improving
Robotic SurgeryContinued strength; DR expansion to support programs -6% YoY; low-single-digit growth in 2025; 2 new programs launch 2H25 Moderating near-term
Tariffs/MacroGeneral risk language in releases Minimal direct impact expected; pass-through likely; demand/material inflation uncertain Watchful
Supply Chain/FootprintDR expansion to meet safety stock and demand DR expansions accelerating; Asia Pacific capacity under evaluation (possible JV) Expanding
Acquisitions/IntegrationFour recent acquisitions ahead of expectations Additional fold-in for space/talent; pipeline active incl. injection molding targets Active
R&D/Program LaunchesCapacity investments for growth New equipment qualified; 2 RS programs approved and launching 2H25 Building

Management Commentary

  • “In Q1, revenue grew 41%, operating income grew 45%, and net income grew 35%… MedTech business grew 50%, driven by strong demand in Safe Patient Handling” — R. Jeffrey Bailly, CEO .
  • “Executed an agreement… exclusive manufacturing rights… through June 2030… doubled the size of our Santiago… committed to a fifth building at our La Romana Robotic Surgery campus” .
  • “We do not anticipate a material impact from the tariffs… approximately $8 million of sales… subject to the 10% tariffs; management is confident most of the resulting $800,000 will be passed on” — CFO Ron Lataille .
  • “Adjusted operating income… increased 49.5%… we were able to leverage SG&A” — CFO .

Q&A Highlights

  • Robotic surgery outlook: Low-single-digit 2025 growth for both largest customer and segment; Q1 decline partly due to prior-year equipment sales; unit volumes roughly flat to modest growth .
  • Share dynamics at largest customer: UFPT estimates ~two-thirds share; customer maintains two-supplier mandate; cooperative relationship supports long-term supply chain .
  • Destocking behind them: Infection prevention, interventional/surgical, ortho, wound care demand normalizing; no pockets of excess customer inventory observed .
  • AJR inefficiencies: Onboarding/training of direct labor impacting cost of sales; expected to normalize after Q2 .
  • Pricing and margin effect in Safe Patient Handling: ~15%–20% price reductions upon DR transfers, but margin % expected to rise due to efficiencies; revenue optics may be offset by market growth .
  • Footprint strategy: DR expansion remains core; evaluating Asia Pacific capacity (potential JV) to serve regional demand .

Estimates Context

MetricActual Q1 2025Consensus (S&P Global)Beat/Miss
Revenue ($USD Millions)$148.1 $139.9*Bold beat (+$8.2M)
EPS (Primary/Adjusted)$2.47 $1.88*Bold beat (+$0.59)
EBITDA (Non-GAAP) ($USD Millions)$27.7 $28.3*Slight miss (~$0.6M)

Values retrieved from S&P Global for consensus items (*). Note: S&P Global’s Primary EPS actual appears to align with UFPT’s adjusted diluted EPS.

Key Takeaways for Investors

  • Demand strength in Safe Patient Handling and multiple MedTech segments supports sustained top-line growth; exclusive contract through 2030 de-risks capacity investments .
  • The company delivered significant beats vs consensus on revenue and EPS; SG&A leverage and acquisitions contributed meaningfully to profitability; EBITDA modestly below consensus merits monitoring .
  • Near-term robotic surgery growth is muted due to 2024 inventory build, but 2H25 program launches set up 2026 revenue ramps, supporting medium-term thesis .
  • Temporary AJR onboarding inefficiencies pressured gross margin; normalization expected after Q2 suggests margin trajectory improvement in 2H25 .
  • Balance sheet strengthening with leverage <1.5x and debt repayment enhances optionality for targeted M&A (e.g., injection molding capabilities) .
  • Tariffs present limited direct P&L risk given pass-through, but watch for potential demand or raw material inflation effects; UFPT’s balanced U.S./DR footprint is a competitive advantage .
  • Tactical: Favorable narrative around exclusive contracts, DR expansion, and MedTech momentum are catalysts; monitor sequential margins and robotic surgery execution to gauge sustainability of beats .