UFP Technologies Announces Q3 Results
November 03 2020 - 08:50AM
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 $3.0 million or $0.40 per diluted common share
outstanding for its third quarter ended September 30, 2020,
compared to net income of $5.6 million or $0.75 per diluted
common share outstanding for the same period in 2019. Sales for the
third quarter were $43.3 million compared to third quarter
sales of $49.4 million in 2019. Net income for the nine-month
period ended September 30, 2020 was $9.2 million or $1.22 per
diluted common share outstanding compared to $14.0 million or $1.87
per diluted common share outstanding for the same period in 2019.
Sales for the nine-month period ended September 30, 2020 were
$134.2 million compared to sales of $148.1 million for the same
period in 2019.
"I am pleased with our results and progress in
Q3. We made some key strategic moves in response to market
conditions related to Covid-19 and to position UFP for long-term
profitable growth," said R. Jeffrey Bailly, Chairman & CEO. “We
completed a series of cost-saving initiatives, including a
difficult but necessary reduction of our workforce which alone will
bring $5 million in annualized savings. Today, all of our factories
are up and running safely, our safety protocols have helped reduce
the number of Covid-positive cases, and attendance levels have
stabilized.”
"Although quarterly revenue was down 12.3% vs.
the prior year, it was up 1.5% vs. Q2 of this year," Bailly added.
"July was our lowest revenue month of the year, and since then we
have seen steady progress on both the top and bottom lines. Our
Advanced Components group, which includes Automotive, Aerospace
& Defense, Consumer, Electronics, and Industrial, rebounded
strongly. It grew a combined 50% vs. Q2 of 2020. This was offset by
a Covid-related decline in our Medical business and the dramatic
reduction in elective surgeries. In Q2, many of our medical
customers continued to order parts to create an inventory safety
stock. Although elective procedures have begun to increase, those
customers are still working through their excess inventory."
"I remain very optimistic about our future,”
Bailly said. “We continue to make progress in identifying accretive
strategic acquisition candidates that can increase our value to
customers and strengthen our position in the marketplace. With our
reduced cost structure and gradually improving market conditions,
combined with our strong balance sheet – $20 million in cash and
zero debt – we are well positioned to capitalize on both internal
and external growth opportunities."
Financial Highlights for Q3 and YTD 2020:
- Sales for the third
quarter this year decreased 12.3% to $43.3 million, from $49.4
million in the same period of 2019. Year-to-date sales through
September decreased 9.4% to $134.2 million, from $148.1 million in
the same period of 2019.° Third quarter sales to the medical market
decreased 16.6%. Sales to the aerospace & defense and
automotive markets increased 3.4% and decreased 9.6%, respectively.
All other sales (consumer, electronics, and industrial) decreased
4.5%.° Year-to-date sales to the medical market decreased 2.1%.
Sales to the aerospace & defense and automotive markets
decreased 16.4% and 32.7%, respectively. All other sales (consumer,
electronics, and industrial) decreased 18.4%.
- Gross profit as a
percentage of sales (“gross margin”) decreased to 24.3% for the
third quarter, from 27.0% in the same quarter of 2019. Gross margin
for the nine-month period ended September 30, 2020 decreased to
24.8%, from 27.1% in the same period of 2019.
- Selling, general
and administrative expenses (“SG&A”) for the third quarter
decreased 5.5% to $6.8 million compared to $7.2 million in the same
quarter of 2019. For the nine-month period ended September 30,
2020, SG&A decreased 4.6% to $21.2 million, from $22.2 million
in the same period of 2019.
- For the third
quarter, operating income decreased to $3.7 million, from $6.1
million in the same quarter of 2019. For the nine-month period
ended September 30, 2020, operating income decreased to $11.8
million, from $18.0 million in the same period of 2019.
- Net income
decreased to $3.0 million in the third quarter, from $5.6 million
in the same period of 2019. For the nine-month period ended
September 30, 2020 net income decreased to $9.2 million, from
$14.0 million in the same period of 2019.
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, UFP converts raw materials
through laminating, molding, radio frequency welding and
fabricating techniques. The Company is 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
the anticipated effects on the Company of the COVID-19 pandemic,
including with respect to the different markets in which the
Company participates, demand for the Company’s products, the
Company’s product development efforts, the well-being and
availability of the Company’s employees, the continuing operation
of the Company’s locations, the effects of cost-cutting measures
(including direct and indirect labor costs) and any anticipated
savings therefrom, the effects of employee reductions, and the
effectiveness of the Company’s safety protocols; statements
regarding general market conditions and any anticipated
improvements; statements about the Company’s acquisition strategies
and opportunities (as well as any anticipated benefits and results
from such acquisitions); statements regarding anticipated trends in
the different markets in which the Company competes or the
Company’s position in the marketplace; statements regarding
expectations on customer demand; expectations regarding the
manufacturing capacity and efficiencies of the Company;
expectations regarding the Company’s liquidity; statements about
the Company’s participation and growth in multiple markets, its
business opportunities and the Company’s ability to capitalize on
any such opportunities; statements about the Company’s growth
potential and strategies for growth, in the long or short-term;
statements about the Company’s anticipated revenues and the timing
of such revenues, and any statements implying that the Company may
be able to sustain or increase its sales, earnings and earnings per
share or sales, earnings, earnings per share growth rates or
profitability. Investors are cautioned that such forward-looking
statements involve risks and uncertainties that could adversely
affect the Company’s 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 the Company participates,
including its impact on the Company’s 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 employee reductions; 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 relating
to the success of our safety protocols; risks relating to operating
with a decreased labor force; risks relating to the general market
conditions; risks relating to the identification of suitable
acquisition candidates and the successful, efficient execution of
acquisition transactions and integration of any acquisition
candidates; risks that revenue from our product development
business may not result in future manufacturing revenue; risks and
uncertainties associated with maintaining and increasing sales,
earnings and earnings per share, as well as other risks and
uncertainties that are detailed in the documents filed by the
Company with the SEC. Accordingly, actual results may differ
materially. Readers are referred to the documents filed by the
Company with the SEC, specifically the last reports on Forms 10-K
and 10-Q. The forward-looking statements contained herein speak
only of the Company’s expectations as of the date of this press
release. 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.
Consolidated Condensed Statements of
Income(in thousands, except per share data)(unaudited)
|
Three Months Ended |
|
Nine Months Ended |
|
September 30 |
|
September 30 |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
Net sales |
$ |
43,299 |
|
$ |
49,394 |
|
$ |
134,220 |
|
$ |
148,120 |
Cost of sales |
|
32,771 |
|
|
36,073 |
|
|
100,919 |
|
|
107,932 |
Gross profit |
|
10,528 |
|
|
13,321 |
|
|
33,301 |
|
|
40,188 |
Selling, general and
administrative expenses |
|
6,791 |
|
|
7,183 |
|
|
21,208 |
|
|
22,226 |
Loss on disposal of fixed
assets |
|
12 |
|
|
- |
|
|
298 |
|
|
- |
Operating income |
|
3,725 |
|
|
6,138 |
|
|
11,795 |
|
|
17,962 |
Interest expense |
|
17 |
|
|
165 |
|
|
66 |
|
|
590 |
Other expense |
|
- |
|
|
24 |
|
|
362 |
|
|
461 |
Income before income tax expense |
|
3,708 |
|
|
5,949 |
|
|
11,367 |
|
|
16,911 |
Income tax expense |
|
720 |
|
|
308 |
|
|
2,170 |
|
|
2,938 |
Net income |
$ |
2,988 |
|
$ |
5,641 |
|
$ |
9,197 |
|
$ |
13,973 |
|
|
|
|
|
|
|
|
Net income per share
outstanding |
$ |
0.40 |
|
$ |
0.76 |
|
$ |
1.23 |
|
$ |
1.88 |
Net income per diluted share
outstanding |
$ |
0.40 |
|
$ |
0.75 |
|
$ |
1.22 |
|
$ |
1.87 |
|
|
|
|
|
|
|
|
Weighted average shares
outstanding |
|
7,495 |
|
|
7,432 |
|
|
7,480 |
|
|
7,419 |
Weighted average diluted
shares outstanding |
|
7,555 |
|
|
7,493 |
|
|
7,547 |
|
|
7,476 |
Consolidated Condensed Balance
Sheets(in thousands)(unaudited)
|
September 30, |
|
December 31, |
|
2020 |
|
2019 |
|
|
|
|
Assets: |
|
|
|
Cash and cash equivalents |
$ |
17,435 |
|
$ |
3,743 |
Receivables, net |
|
27,364 |
|
|
28,648 |
Inventories |
|
19,488 |
|
|
18,276 |
Other current assets |
|
4,276 |
|
|
2,583 |
Net property, plant, and equipment |
|
54,351 |
|
|
56,739 |
Goodwill |
|
51,838 |
|
|
51,838 |
Intangible assets, net |
|
20,032 |
|
|
20,975 |
Other assets |
|
5,880 |
|
|
5,956 |
Total assets |
$ |
200,664 |
|
$ |
188,758 |
Liabilities and equity: |
|
|
|
Accounts payable |
|
4,547 |
|
|
4,577 |
Other current liabilities |
|
11,516 |
|
|
12,207 |
Other liabilities |
|
12,162 |
|
|
9,983 |
Total liabilities |
|
28,225 |
|
|
26,767 |
Total equity |
|
172,439 |
|
|
161,991 |
Total liabilities and stockholders' equity |
$ |
200,664 |
|
$ |
188,758 |
Contact: Ron Lataille978-234-0926 rlataille@ufpt.com
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