UFP Technologies, Inc. Q1 FY2026 earnings call

• Revenue growth: 4.1% overall, medical sales up 5.9%, non-medical down 15%. Growth in robotic surgery, patient services and support, interventional and surgical segments.
• Strategic growth initiatives: Four simultaneous program launches, three customers asked to double capacity on new programs. Adding buildings in Santiago DR and La Romana DR. Planning capacity in APAC region. New product development labs performing well. Reviewing multiple acquisition opportunities.
• Financials: Gross margin improved despite labor inefficiencies, SG&A expenses increased due to various factors, adjusted operating margin and earnings per share had certain figures.

Revenue grew 4.1%. Medical sales grew 5.9%, with robotic surgery up 7%, patient services and support up 11%, interventional and surgical up 15%. Non-medical sales declined 15%. Gross margin increased to 28.8% from 28.5%. SG&A expenses increased by $2.2 million to $21 million. Adjusted operating margin was 16.7% of sales, adjusted earnings per diluted share was $2.48. Cash from operations was $3.2 million. Capital expenditures were $1.7 million, leverage ratio was ~1.14 times.

• Anticipate new program revenue growth to accelerate in second half.
• Three of four large programs expected to be meaningful contributors in second half.
• Startup costs related to program launches will be absorbed as volume ramps up.
• Acquisition growth expected to be 50% of overall growth over next multiple years, but timing is hard.

• Non-medical business softening, automotive market phasing out, aerospace and defense softening.
• Labor inefficiencies at HAR still impacting cost of sales.
• Uncertainty in impact of raw material cost increases from Iran conflict.
• Cyber attack and CEO transition related non-recurring legal expenses.
• Slowdown in wound care due to customer inventory issues, which may have a three-quarter impact.

Q: Discuss robotics segment growth, new products ramping, and customer base diversity.

A: 7% growth was blend of anchor programs, new programs in infancy but will contribute. Business becoming more diverse with intuitive and additional customers.

Q: Impact of four large programs on profitability and startup costs.

A: Startup costs relate to team preparation, will be absorbed as volume ramps, robust contributions expected in second half.

Q: Wound care drag magnitude and normalization.

A: Three-quarter impact from slowdown, long-term bullish on wound care.

Q: AJR business transition, labor headwinds.

A: Transfers in progress for programs, labor headwinds subsiding as overtime decreases and efficient employees stay.

Q: M&A landscape.

A: Quiet now, disciplined process, looking at medium-sized deals, acquisition growth expected to be 50% of overall growth over next multiple years