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1. Company Snapshot

1.a. Company Description

UFP Technologies, Inc.designs and custom manufactures components, subassemblies, products, and packaging utilizing specialized foams, films, and plastics primarily for the medical market.Its single-use and single-patient devices and components are used in a range of medical devices, disposable wound care products, infection prevention, minimally invasive surgery, wearables, orthopedic soft goods, and orthopedic implant packaging.


The company also provides engineered products and components to customers in the automotive, aerospace and defense, consumer, electronics, and industrial markets, which are applied in military uniform and gear components, automotive interior trim, athletic padding, environmentally protective packaging, air filtration, abrasive nail files, and protective cases and inserts.It markets and sells its products in the United States principally through a direct sales force, as well as independent manufacturer representatives.The company was founded in 1963 and is headquartered in Newburyport, Massachusetts.

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1.b. Last Insights on UFPT

UFP Technologies' recent performance was negatively impacted by softer demand and broad-based pricing pressures, as evident in its Q4 2024 earnings miss. The company's revenue growth was hindered by falling lumber prices, which reduced profitability. Additionally, reduced demand in the market led to a decline in sales, further exacerbating the negative trend. Despite a strong net cash position and relative valuation advantages, the company's financial performance has fallen short of expectations.

1.c. Company Highlights

2. UFP Technologies' Q3 2025 Earnings: Navigating Labor Inefficiencies

UFP Technologies reported a solid Q3 2025 with revenues growing 6.5% to $154.6 million, driven by a 7.3% increase in MedTech business, while Advanced Components declined 2.7%. The company's adjusted operating margin was 17% of sales, within the target range, despite absorbing $3 million in extra labor costs due to inefficiency at its AJR Illinois facility. Earnings per share (EPS) came in at $2.39, beating estimates of $2.22. The company's robotic surgery business saw revenue growth of 5.1% in Q3, with new programs expected to launch in 2026.

Publication Date: Nov -20

📋 Highlights
  • Title: Description with figures
  • Q3 Sales Growth: Total sales rose 6.5% to $154.6M, with MedTech up 7.3% and Advanced Components down 2.7%.
  • AJR Labor Costs: Labor inefficiencies cost $3M in gross profit, but revenue recovery is expected in Q4 2025–Q1 2026.
  • Robotic Surgery Momentum: 5.1% revenue growth and two new programs projected to add $10M in 2026, with potential contract expansion.
  • Cash and Margin Strength: Generated $35.9M in operating cash flow, reduced debt by $17.5M, and maintained 17% adjusted operating margin.
  • Acquisition Performance: UNIPEC and TPI exceeded expectations, delivering immediate EBITDA accretion and boosting long-term growth prospects.

Operational Challenges and Progress

The AJR facility faced labor challenges due to the e-verify process, resulting in a $3 million reduction in gross profit and operating income. However, the company has made significant progress in hiring and training new associates, with July being the low point of inefficiency and September returning to solid profitability. The company expects to recapture much of the delayed revenue in the coming months.

Business Outlook and Guidance

UFP Technologies expects the inefficiency at AJR to impact a couple more quarters but believes the greatest impact is now behind them. The company is working to reduce the $16 million backlog and expects AJR to return to growth as efficiencies improve. Gross margins are expected to trend upward as the company laps the labor headwinds and implements efficiency improvements. The company remains bullish about its long-term future in robotic surgery, with a potential contract extension and expansion with its largest customer.

Valuation and Growth Prospects

With a P/E Ratio of 25.2 and EV/EBITDA of 16.24, the market seems to be pricing in moderate growth expectations. Analysts estimate next year's revenue growth at 5.4%. The company's return on equity (ROE) stands at 17.99%, indicating a relatively healthy profitability profile. The Net Debt / EBITDA ratio is 1.14, suggesting a manageable debt burden. As the company navigates one-time issues and continues to launch new programs, investors' patience is likely to be rewarded in the long term.

3. NewsRoom

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UFP Technologies Announces CEO Succession Plan

Dec -02

Source: globenewswire.com

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UFP Technologies to Present and Host 1X1 Investor Meetings at the Piper Sandler 37th Annual Healthcare Conference

Nov -25

Source: globenewswire.com

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UFP Industries' Plunge Offers A Renewed Opportunity For Upside

Nov -20

Source: seekingalpha.com

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Is the Options Market Predicting a Spike in UFP Industries Stock?

Nov -17

Source: zacks.com

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Introducing BRAWN™ — Structural Solutions for Stronger Factory-Built Products

Nov -07

Source: businesswire.com

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UFP Technologies, Inc. (UFPT) Q3 2025 Earnings Call Transcript

Nov -04

Source: seekingalpha.com

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UFP Technologies Announces Strong Q3 2025 Results

Nov -03

Source: globenewswire.com

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D.A. Davidson & CO. Sells 530 Shares of UFP Industries, Inc. $UFPI

Oct -30

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (14.01%)

6. Segments

Components, Subassemblies, Products and Packaging

Expected Growth: 14.0%

UFP Technologies, Inc.'s 14.0% growth is driven by increasing demand for medical devices and orthotics, growth in the aerospace and defense industries, and rising adoption of sustainable packaging solutions. The company's diversified product portfolio, including components, subassemblies, and custom packaging, positions it for continued growth.

Engineering Services

Expected Growth: 15.0%

UFP Technologies' Engineering Services segment growth of 15.0% is driven by increasing demand for custom packaging solutions, expansion into new markets, and strategic acquisitions. Additionally, the company's focus on innovation, quality, and customer service has led to strong customer retention and repeat business, contributing to the segment's growth.

Tooling and Machinery

Expected Growth: 13.0%

UFP Technologies' Tooling and Machinery segment growth of 13.0% is driven by increasing demand for custom fabrications, precision machining, and assembly services from the medical, aerospace, and defense industries. Additionally, strategic acquisitions and investments in new technologies have expanded the company's capabilities, further contributing to the segment's growth.

7. Detailed Products

Die-Cut Components

Custom die-cut components for medical devices, aerospace, and industrial applications

Molded Fiber Products

Custom molded fiber products for packaging, filtration, and acoustical applications

Foam Fabrication

Custom foam fabrication for medical devices, aerospace, and industrial applications

RF Ablation

Custom RF ablation components for medical devices

Catheter Components

Custom catheter components for medical devices

Bio-Based Materials

Custom bio-based materials for medical devices, packaging, and industrial applications

Cleanroom Manufacturing

Cleanroom manufacturing services for medical devices and aerospace applications

8. UFP Technologies, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for UFP Technologies, Inc. is medium because while there are some substitutes available, they are not highly attractive to customers.

Bargaining Power Of Customers

The bargaining power of customers for UFP Technologies, Inc. is low because customers have limited options and the company has a strong brand presence.

Bargaining Power Of Suppliers

The bargaining power of suppliers for UFP Technologies, Inc. is medium because while suppliers have some bargaining power, the company has a diversified supply chain.

Threat Of New Entrants

The threat of new entrants for UFP Technologies, Inc. is high because the industry has low barriers to entry and new entrants can easily enter the market.

Intensity Of Rivalry

The intensity of rivalry for UFP Technologies, Inc. is high because the industry is highly competitive and companies are constantly competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 10.96%
Debt Cost 8.40%
Equity Weight 89.04%
Equity Cost 8.40%
WACC 8.40%
Leverage 12.31%

11. Quality Control: UFP Technologies, Inc. passed 8 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Growth: 5.6

Quality: 6.0

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Momentum: 10.0

Volatility: 0.3

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UFP Technologies

A-Score: 4.0/10

Value: 3.1

Growth: 9.2

Quality: 6.6

Yield: 0.0

Momentum: 1.0

Volatility: 4.3

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Growth: 6.7

Quality: 3.8

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Sensus Healthcare

A-Score: 3.4/10

Value: 7.5

Growth: 6.6

Quality: 4.2

Yield: 0.0

Momentum: 0.5

Volatility: 1.7

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

217.14$

Current Price

217.14$

Potential

-0.00%

Expected Cash-Flows