UFP TECHNOLOGIES INC

Previous wording

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: our financial condition and results of operations, including risks relating to substantially decreased demand for the Company’s products; risks relating to the potential closure of any of the Company’s facilities or the unavailability of key personnel or other employees; risks that the Company’s inventory, cash reserves, liquidity or capital resources may be insufficient; risks relating to delayed payments by our customers and the potential for reduced or canceled orders; risks related to customer concentration; risks related to global conflict or civil unrest to the efficacy of our manufacturing process; risks associated with the identification of suitable acquisition candidates and the successful, efficient execution of acquisition transactions, the integration of any such acquisition candidates, the value of those acquisitions to our customers and shareholders, and the financing of such acquisitions; risks related to our indebtedness and compliance with covenants contained in our financing arrangements, and whether any available financing may be sufficient to address our needs; risks associated with efforts to shift the Company’s book of business to higher-margin, longer-run opportunities; risks associated with the Company’s entry into and growth in certain markets; risks and uncertainties associated with seeking and implementing manufacturing efficiencies and implementing new production equipment; risks associated with governmental regulations and/or sanctions affecting the import and export of products, including global trade barriers, additional taxes, tariff increases or uncertainties, cash repatriation restrictions, retaliations and boycotts between the U.S. and other countries; risks associated with the usage of artificial intelligence technologies; risks associated with domestic, regional and global political risks and uncertainties; risks associated with the U.S. and Iran conflict; risks and uncertainties associated with growth of the Company’s business and increases to sales, earnings and earnings per share; risks relating to cybersecurity, including cyber-attacks on the Company’s information technology infrastructure, products, suppliers, customers and partners, and cybersecurity-related regulations, and the potential consequences of the Cyber Incident (as defined in Item 1C, Cybersecurity in our Annual Report on Form 10-K for the year ended December 31, 2025) could result in data or financial loss, reputational harm, business disruption, damage to our relationships with customers, consumers, employees and third parties on which we rely, litigation, regulatory investigations, enforcement actions or other negative impacts …

Excerpt shortened here; the source contains the full paragraph.

Current wording

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: our financial condition and results of operations, including risks relating to substantially decreased demand for the Company’s products; risks relating to the potential closure of any of the Company’s facilities or the unavailability of key personnel or other employees; risks that the Company’s inventory, cash reserves, liquidity or capital resources may be insufficient; risks relating to delayed payments by our customers and the potential for reduced or canceled orders; risks related to customer concentration; risks related to global conflict or civil unrest to the efficacy or cost of our manufacturing process and supply chain; risks associated with the identification of suitable acquisition candidates and the successful, efficient execution of acquisition transactions, the integration of any such acquisition candidates, the value of those acquisitions to our customers and shareholders, and the financing of such acquisitions; risks related to our indebtedness and compliance with covenants contained in our financing arrangements, and whether any available financing may be sufficient to address our needs; risks associated with efforts to shift the Company’s book of business to higher-margin, longer-run opportunities; risks associated with the Company’s entry into and growth in certain markets; risks and uncertainties associated with seeking and implementing manufacturing efficiencies and implementing new production equipment; risks associated with governmental regulations and/or sanctions affecting the import and export of products, including tariffs, global trade barriers, additional taxes, tariff increases or uncertainties, cash repatriation restrictions, retaliations and boycotts between the U.S. and other countries; risks associated with domestic, regional and global political risks and uncertainties; risks associated with the U.S. and Iran conflict; risks and uncertainties associated with growth of the Company’s business and increases to sales, earnings and earnings per share; risks relating to cybersecurity, including cyber-attacks on the Company’s information technology infrastructure, products, suppliers, customers and partners, and cybersecurity-related regulations, and the potential consequences of the Cyber Incident (as defined in Item 1C, Cybersecurity in our Annual Report on Form 10-K for the year ended December 31, 2025) could result in data or financial loss, reputational harm, business disruption, damage to our relationships with customers, consumers, employees and third parties on which we rely, litigation, regulatory investigations, enforcement actions or other negative impacts under cybersecurity related regulations…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “potential,” and similar expressions intended to identify forward-looking statements. Our actual results could be different from the results described in or anticipated by our forward-looking statements due to the inherent uncertainty of estimates, forecasts, and projections, and may be materially better or worse than anticipated. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Forward-looking statements represent our current beliefs, estimates and assumptions and are only as of the date of this Report. We expressly disclaim any duty to provide updates to forward-looking statements, and the estimates and assumptions associated with them, after the date of this Report, in order to reflect changes in circumstances or expectations, or the occurrence of unanticipated events, except to the extent required by applicable securities laws. All of the forward-looking statements are qualified in their entirety by reference to the factors discussed above and under “Risk Factors” set forth in Part I Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025, as well as the risks and uncertainties discussed elsewhere in this Report. We qualify all of our forward-looking statements by these cautionary statements. We caution you that these risks are not exhaustive. We operate in a continually changing business environment and new risks emerge from time to time.

Current wording

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “potential,” and similar expressions intended to identify forward-looking statements. Our actual results could be different from the results described in or anticipated by our forward-looking statements due to the inherent uncertainty of estimates, forecasts, and projections, and may be materially better or worse than anticipated. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Forward-looking statements represent our current beliefs, estimates and assumptions and are only as of the date of this Report. We expressly disclaim any duty to provide updates to forward-looking statements, and the estimates and assumptions associated with them, after the date of this Report, in order to reflect changes in circumstances or expectations, or the occurrence of unanticipated events, except to the extent required by applicable securities laws. All of the forward-looking statements are qualified in their entirety by reference to the factors discussed above and under “Risk Factors” set forth in Part I Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025, as well as the risks and uncertainties discussed elsewhere in this Report and our filings with the Securities and Exchange Commission. We qualify all of our forward-looking statements by these cautionary statements. We caution you that these risks are not exhaustive. We operate in a continually changing business environment and new risks emerge from time to time.

Previous wording

Net sales for the three months ended March 31, 2026 increased 4.1% to $154.2 million from $148.1 million in the same period last year. The increase was primarily attributable to 5.9% growth in sales to customers in the medical market, which was largely due to growth in sales to customers in the Robotic Surgery, Patient Surfaces and Support and Interventional and Surgical sub-markets. Net sales from our largest two customers, Stryker and Intuitive Surgical SARL, were 24.8% and 22.1% of our total net sales in the three months ended March 31, 2026, respectively, compared to 24.0% and 21.4% in the same period last year.

Current wording

Net sales for the six months ended June 30, 2026 increased 9.6% to $328.2 million from $299.3 million in the same period last year. The increase was largely due to growth in sales in our Surfaces and Support, Cardiovascular, Infection Control, and Orthopedics sub-markets. Organic sales growth for the three and six months ended June 30, 2026 was 12.4% and 6.8%, respectively. Net sales from our largest two customers were 26.2% and 21.0% of our total net sales during the three months ended June 30, 2026, respectively, and 25.5% and 21.5% of our total net sales during the six months ended June 30, 2026, respectively.

Previous wording

In 2025, the United States imposed increased tariffs on foreign imports into the United States, including all the countries in which we manufacture goods outside the United States and also the countries in which our customers operate. Although agreements have been made with various countries, the tariff policy environment remains dynamic, particularly in light of recent Supreme Court decisions. In February 2026, the U.S. Supreme Court ruled that these tariffs levied under the International Emergency Economic Powers Act (“IEEPA”) are unconstitutional. As a result of this ruling, the U.S. Court of International Trade issued an order directing the U.S. Customs and Border Protection (“CBP”) agency to begin formalizing a process for refunds. On April 20, 2026, the CBP launched an online portal that can be used to submit IEEPA tariff refund requests. All requests will be reviewed by the CBP to determine validity prior to the issuance of refunds. During the three months ended March 31, 2026, we have experienced a decreased effect of tariffs on our business as compared to the second half of 2025. In the coming quarters, we expect to receive reimbursement of tariff costs in the form of vendor credits, from suppliers who have previously passed through tariffs to us either directly or through price increases.

Current wording

In 2025, the United States imposed increased tariffs on foreign imports, including all the countries in which we manufacture goods outside the United States and also the countries in which our customers operate. In February 2026, the U.S. Supreme Court ruled that these tariffs levied under the International Emergency Economic Powers Act (“IEEPA”) are unconstitutional. As a result of this ruling, the U.S. Court of International Trade issued an order directing the U.S. Customs and Border Protection (“CBP”) agency to begin formalizing a process for refunds. On April 20, 2026, the CBP launched an online portal that can be used to submit IEEPA tariff refund requests. Since then, the U.S. has launched tariffs under different authorities. Given that the tariff landscape created by the current administration remains dynamic, we continue to adapt to the changes and manage new requirements. We believe this will remain dynamic in the near future and we will continue to monitor and manage.

Previous wording

On or about February 14, 2026, we detected the Cyber Incident (as defined in Item 1C, Cybersecurity in our Annual Report on Form 10-K for the year ended December 31, 2025). As of the date hereof, the incident has not had a material impact on our financial systems, operations or financial condition. While our investigation and assessment of this incident is ongoing, as of the date of this filing, our IT systems are operational in all material respects and we do not believe the incident is reasonably likely to materially impact our financial condition or results of operations. There can be no assurance that the Cyber Incident or any future cybersecurity incidents will not have a material impact on our future operations, financial systems or financial condition. See Item 1A “Risk Factors” within our Annual Report on Form 10-K for the year ended December 31, 2025 within our Annual Report on Form 10-K for the year ended December 31, 2025 under the headings “Security breaches, including cybersecurity incidents and other disruptions could compromise our information, expose us to liability and harm our reputation and business” and “We experienced a material information technology (“IT”) systems incident in February 2026, which could result in a number of potentially unknown outcomes, including but not limited to, litigation, regulatory investigations or enforcement actions, or reputational harm, any of which could have a material impact on our business operations, financial condition, or results of operations,” and the discussion in Item 1C, Cybersecurity, within our Annual Report on Form 10-K for the year ended December 31, 2025.

Current wording

On or about February 14, 2026, we detected the Cyber Incident (as defined in Item 1C, Cybersecurity in our Annual Report on Form 10-K for the year ended December 31, 2025). As of the date hereof, the incident has not had a material impact on our financial systems, operations or financial condition. While our investigation and assessment of this incident is ongoing, as of the date of this filing, our IT systems are operational in all material respects and we do not believe the incident is reasonably likely to materially impact our financial condition or results of operations. There can be no assurance that the Cyber Incident or any future cybersecurity incidents will not have a material impact on our future operations, financial systems or financial condition. See Item 1A “Risk Factors” within our Annual Report on Form 10-K for the year ended December 31, 2025 under the headings “Security breaches, including cybersecurity incidents and other disruptions could compromise our information, expose us to liability and harm our reputation and business” and “We experienced a material information technology (“IT”) systems incident in February 2026, which could result in a number of potentially unknown outcomes, including but not limited to, litigation, regulatory investigations or enforcement actions, or reputational harm, any of which could have a material impact on our business operations, financial condition, or results of operations,” and the discussion in Item 1C, Cybersecurity, within our Annual Report on Form 10-K for the year ended December 31, 2025.

Previous wording

Gross margin increased slightly to 28.8% for the three months ended March 31, 2026, from 28.5% for the same period in 2025, driven by increased efficiencies primarily in the Robotic Surgery sub-market.

Current wording

Gross margin increased to 29.0% for the six months ended June 30, 2026, from 28.6% for the same period in 2025, driven primarily by increased operating efficiencies.

Previous wording

Selling, general, and administrative expenses (“SG&A”) increased approximately 12.3% to $21.0 million for the three months ended March 31, 2026, from $18.7 million for the same period in 2025. The increase is primarily attributable to increased headcount and other back-office resources of approximately $0.8 million, legal expenses of approximately $0.5 million most of which will not recur, and an increase in RSU stock compensation expense of approximately $0.6 million for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. As a percentage of sales, SG&A increased to 13.6% for the three months ended March 31, 2026, from 12.6% for the same three months in 2025.

Current wording

SG&A increased approximately 21.8% to $22.8 million for the three months ended June 30, 2026, from $18.7 million for the same period in 2025. The increase is primarily attributable to increased headcount and other back-office resources, including variable compensation, of approximately $1.9 million and an increase in share-based compensation expense of approximately $1.0 million, partially due to CEO transition costs. As a percentage of sales, SG&A increased to 13.1% for the three months ended June 30, 2026, from 12.4% for the same three months in 2025.

Previous wording

Net interest expense was approximately $1.7 million and $2.8 million for the three months ended March 31, 2026, and 2025, respectively. The decrease in net interest expense for the three months ended March 31, 2026, was primarily due to lower average debt in the three months ended March 31, 2026 as compared to the same period in 2025. Interest income was immaterial.

Current wording

Interest expense, net was approximately $1.7 million and $2.7 million for the three months ended June 30, 2026, and 2025, respectively. The decrease for the three months ended June 30, 2026 was primarily due to lower average debt in the three months ended June 30, 2026 as compared to the same period in 2025. Interest income was immaterial.

Previous wording

Other expense was less than $0.1 million for the three months ended March 31, 2026 and 2025. Changes in other expense are primarily generated by equity method investment income and foreign currency transaction gains.

Current wording

Other income was less than $0.1 million and other expense was less than $0.1 million for the three months ended June 30, 2026 and 2025, respectively. Changes in other (income) expense are primarily generated by equity method investment income and foreign currency transaction gains and losses.

Previous wording

We recorded tax expense of approximately 19.0% and 15.3% of income before income tax expense, for the three months ended March 31, 2026 and 2025, respectively. The increase in the effective tax rate is due to large favorable discrete items in the first quarter of 2025 associated with equity compensation and a state tax refund.

Current wording

We recorded tax expense of approximately 20.2% and 18.0% of income before income tax expense, for the six months ended June 30, 2026 and 2025, respectively. The increase in the effective tax rate for the current period as compared to the prior period is largely due to higher anticipated income from domestic operations, along with large favorable discrete items in the first quarter of 2025 associated with equity compensation and a state tax refund.

Previous wording

Net cash provided by operations for the three months ended March 31, 2026 was approximately $3.2 million and was primarily a result of net income generated of approximately $17.5 million, depreciation and amortization of approximately $4.9 million, and share-based compensation of approximately $2.7 million for the three months ended March 31, 2026, offset by changes in operating assets and liabilities of approximately $24.5 million, primarily driven by a $15.7 million increase in receivables, net due to increased sales volume in March 2026 as compared to December 2025.

Current wording

Net cash provided by operations for the six months ended June 30, 2026 was approximately $18.8 million and was primarily a result of net income generated of approximately $38.3 million, depreciation and amortization of approximately $9.9 million, and share-based compensation of approximately $6.0 million for the six months ended June 30, 2026. This was offset by changes in operating assets and liabilities of approximately $40.1 million, primarily driven by a $30.5 million increase in accounts receivables, net due to increased sales volume in the second quarter of 2026 as compared to the fourth quarter of 2025.

Previous wording

Net cash used in investing activities during the three months ended March 31, 2026 was approximately $1.7 million and was comprised of additions of manufacturing machinery and equipment and various building improvements.

Current wording

Net cash used for investing activities during the six months ended June 30, 2026 was approximately $2.8 million and was primarily comprised of additions of manufacturing machinery and equipment and various building improvements.

Previous wording

Net cash used for financing activities was approximately $1.6 million during the three months ended March 31, 2026 and was primarily the result of payments on the revolving line of credit of approximately $28.1 million and principal payments of long-term debt of approximately $3.1 million, partially offset by proceeds from advances on revolving line of credit of $33.4 million.

Current wording

Net cash used for financing activities was approximately $27.0 million during the six months ended June 30, 2026 and was primarily the result of debt payments of approximately $18.2 million.

Previous wording

On June 27, 2024, we, as the borrower, entered into a secured $275 million Amended and Restated Credit Agreement (the “Third Amended and Restated Credit Agreement”) with certain of the our subsidiaries (the “Subsidiary Guarantors”) and Bank of America, N.A., in its capacity as the initial lender, Administrative Agent, Swingline Lender and L/C Issuer, and certain other lenders from time-to-time party thereto. The Third Amended and Restated Credit Agreement amends and restates our prior credit agreement, originally dated as of December 22, 2021.

Current wording

On June 27, 2024, we, as the borrower, entered into a secured $275 million Amended and Restated Credit Agreement (the “Third Amended and Restated Credit Agreement”) with certain of our subsidiaries (the “Subsidiary Guarantors”) and Bank of America, N.A., in its capacity as the initial lender, Administrative Agent, Swingline Lender and L/C Issuer, and certain other lenders from time-to-time party thereto. The Third Amended and Restated Credit Agreement amends and restates our prior credit agreement, originally dated as of December 22, 2021.

Previous wording

At March 31, 2026, we had approximately $137.6 million in outstanding borrowings under the Third Amended and Restated Credit Agreement and also had approximately $0.7 million in standby letters of credit outstanding, drawable as a financial guarantee on worker’s compensation insurance policies. At March 31, 2026, the weighted average interest rate was approximately 5.0% and we were in compliance with all covenants under the Third Amended and Restated Credit Agreement.

Current wording

At June 30, 2026, we had approximately $117.3 million in outstanding borrowings under the Third Amended and Restated Credit Agreement and also had approximately $0.7 million in standby letters of credit outstanding, drawable as a financial guarantee on worker’s compensation insurance policies. At June 30, 2026, the weighted average interest rate was approximately 5.0% and we were in compliance with all covenants under the Third Amended and Restated Credit Agreement.

Previous wording

We require cash to pay our operating expenses, purchase capital equipment, and to service our contractual obligations. Our principal sources of funds are our operations and our Third Amended and Restated Credit Agreement. We generated cash of approximately $3.2 million from operations during the three months ended March 31, 2026. We cannot guarantee that its operations will generate cash in future periods. Our longer-term liquidity is contingent upon future operating performance and the availability of draws on its revolving credit facility. Further, the economic uncertainty resulting from events including inflation, tariffs, bank failures, and other factors beyond our control could affect our long-term ability to access the public markets and obtain necessary capital in order to properly capitalize and continue operations.

Current wording

We require cash to pay our operating expenses, purchase capital equipment, and to service our contractual obligations. Our principal sources of funds are our operations and our Third Amended and Restated Credit Agreement. We generated cash of approximately $18.8 million from operations during the six months ended June 30, 2026. We cannot guarantee that our operations will generate cash in future periods. Our longer-term liquidity is contingent upon future operating performance and the availability of draws on our revolving credit facility. Further, the economic uncertainty resulting from events including inflation, tariffs, bank failures, and other factors beyond our control could affect our long-term ability to access the public markets and obtain necessary capital in order to properly capitalize and continue operations.

Previous wording

We plan to continue to add capacity to enhance operating efficiencies in our manufacturing plants and accommodate anticipated growth in demand. We may consider additional acquisitions of companies, technologies, or products that are complementary to our business. We believe that our existing resources, including our revolving credit facility, together with cash expected to be generated from operations, will be sufficient to fund our cash flow requirements, including expected capital expenditures, through the next twelve months.

Current wording

We plan to continue to add capacity to enhance operating efficiencies in its manufacturing plants and accommodate anticipated growth in demand. We may consider additional acquisitions of companies, technologies, or products that are complementary to our business. We believe that our existing resources, including our revolving credit facility, together with cash expected to be generated from operations, will be sufficient to fund our cash flow requirements, including expected capital expenditures, through the next twelve months.

Previous wording

There have been no material changes to the our Critical Accounting Estimates, as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.

Current wording

There have been no material changes to our Critical Accounting Estimates, as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.