UNITED GUARDIAN INC (UG)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 revenue declined 16.3% YoY to $2,838,225 and EPS fell to $0.14 from $0.21, but results improved sequentially versus Q1 as net sales rose 14% and net income rose 12% .
• Cosmetics ingredient demand remained weak due to reduced purchases by Ashland Specialty Ingredients (ASI) tied to softer Asia demand and distributor inventory overhang; management expects 2H improvement as inventories normalize .
• Strategic focus: accelerate Renacidin formulary inclusion to expand the addressable market; medical lubricants and pharma categories both grew in 1H 2025 vs 1H 2024 (+12% and +11% respectively) .
• Capital returns: a $0.25 cash dividend was declared on July 15, paid Aug 1, 2025; Board highlighted balancing near‑term capital returns with funding 2H growth initiatives .
• Stock reaction catalysts: resolution of ASI inventory and visible rebound in cosmetics orders, tangible progress on Renacidin formulary listings, and steady dividend support .

What Went Well and What Went Wrong

• What Went Well

  • Sequential recovery: Q2 net sales +14% and net income +12% vs Q1, indicating momentum into 2H despite YoY pressure .
  • Category strength ex‑cosmetics: 1H 2025 medical lubricants +12% and pharmaceuticals +11% YoY, offsetting part of cosmetics weakness .
  • Strategic pharma push: “We are… initiating a new project to have Renacidin… included in additional drug formularies” to “significantly increase sales… over the coming years.” — Donna Vigilante, President .

• What Went Wrong

  • Cosmetics ingredient weakness: ASI reduced purchases due to softer Asia demand and inventory overstock, driving the YoY decline in sales and earnings .
  • YoY contraction: Revenue fell 16.3% YoY to $2.84M; net income declined to $0.63M from $0.96M; EPS to $0.14 from $0.21 .
  • Macro/trade uncertainty: Management flagged tariff risk and potential margin trade‑offs to preserve market share amid pricing sensitivity (Q1 shareholder/analyst call) .

Financial Results

Revenue, EPS, and profit vs prior periods (oldest → newest):

Profitability and margins (sequential view):

Values with * retrieved from S&P Global.

Segment/category indicators and KPIs:

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• Category performance and ASI overhang: “Sales of our medical lubricants increased by 12% and pharmaceutical product sales increased by 11%… Those increases were offset by a decrease of sales of our cosmetic ingredients… attributable to reduced purchases by [ASI]… softer demand in Asia… inventory overstock… We are working closely with ASI and are hopeful that cosmetic sales will improve in the second half of the year…” — Donna Vigilante, President .
• Renacidin growth plan: “We are… initiating a new project to have Renacidin… included in additional drug formularies. If this project is successful, we should be able to significantly increase sales of Renacidin over the coming years.” — Donna Vigilante .
• Strategic priorities (May shareholder/analyst call): “We’ll be allocating additional resources to the growth of our U.S. market for Renacidin later this year… continue to focus on brand awareness for our Lubrajel products… improve customer interactions and provide marketing support to our distributors.” — Donna Vigilante .

Q&A Highlights

• Share repurchases: Management reiterated a long‑standing stance against buybacks given a very small public float and preference to deploy capital into product development rather than “artificial” price support — Kenneth Globus .
• Listing rules/venue: Clarified the company is listed on NASDAQ in response to a shareholder question (context from May call) .
• ASI relationship/contracting: Ongoing, constructive engagement to ensure contract terms and relationship remain appropriate for the business; confidence in the relationship’s strength — Donna Vigilante .
• Tariffs: Management remains vigilant regarding tariff uncertainties and indicated willingness to flex margins to protect share if necessary (May call remarks) .

Estimates Context

• S&P Global consensus estimates for Q2 2025 were unavailable; therefore, no formal beat/miss can be established against Street numbers. Values retrieved from S&P Global.

Comparison table:

Values retrieved from S&P Global.

Key Takeaways for Investors

• Sequential momentum emerged despite YoY pressure; watch for sustained order normalization into Q3/Q4 as ASI inventory clears — the primary near‑term catalyst .
• Pharma and medical lubricants are growing and provide ballast; tangible wins on Renacidin formulary inclusion could structurally lift the revenue base over a multi‑year horizon .
• Cosmetics remains the swing factor; visibility improves if Asia demand stabilizes and ASI restocking resumes as indicated .
• Dividend continuity ($0.25 on Aug 1) underpins shareholder returns while management preserves flexibility to fund 2H initiatives .
• Macro/trade policy is a watch item; management has a mitigation playbook (pricing/margin trade‑offs, supplier/distributor engagement) to protect share if tariffs escalate .
• With no formal guidance or Street consensus, investor focus should be on sequential trends, category mix (cosmetics recovery vs. resilient pharma/med lubes), and execution milestones on Renacidin market access .

Appendix: Full Income Statement Detail (from company press materials)

• Q2 2025 income statement highlights: Revenue $2,838,225; Cost of sales $1,340,854; Operating expenses $694,050; R&D $107,868; Income from operations $695,453; Other income $95,149; Net income $626,826; EPS $0.14; Shares 4,594,319 .
• Q1 2025 summary: Revenue $2,481,127; Income from operations $610,922; Net income $560,895; EPS $0.12 .
• Q2 2024 comparables: Revenue $3,390,205; Income from operations $1,114,678; Net income $956,225; EPS $0.21 .