UFP Technologies Q2 Earnings Call Highlights

UFP Technologies (NASDAQ:UFPT) reported second-quarter 2026 sales growth of 15.1% to $174 million, supported by broad-based demand across its medical technology portfolio, while adjusted earnings per share rose 16.8% to a company-record $2.92.

President and Chief Executive Officer Mitch Rock, speaking on his first earnings call since taking the role, said the company’s strategy remains centered on customer support, investment in personnel and capabilities, disciplined acquisitions and long-term shareholder value creation.

“Our second quarter and first half results reflect solid execution across the platform and continued progress towards our long-term growth strategy,” Rock said.

Gross margin increased to 29.3% from 28.8% in the prior-year quarter, while operating income grew 15.5%. Adjusted operating margin was 17.6% of sales, according to Chief Financial Officer Ron Lataille.

MedTech Growth Was Broad-Based

UFP said organic sales growth was 12.4% in the quarter, driven by accelerating launch programs and continued capacity expansion at AJR. The company identified strength in surfaces and support, cardiovascular, infection control and orthopedics.

Sales to the company’s five largest customers rose 14.7%, while the remainder of the MedTech business grew 19.7%. Lataille said the top five customers represented 61% of year-to-date sales, though those sales are spread across hundreds of stock-keeping units and a range of programs subject to validation and qualification requirements.

Rock said growth was not dependent on a single customer, product category or end market. Instead, he attributed performance to a range of customer programs, the breadth of the company’s operations and execution by its teams.

During the question-and-answer session, Rock said cardiovascular, infection prevention, patient handling and orthopedics continued to grow. He added that the robotic surgical market was “flat to down” during the year, consistent with prior company commentary.

New program activity contributed to quarterly results as expected, but Rock said most of the growth came from existing customer relationships, existing product families and expansion across the company’s broader customer base. Lataille clarified that UFP has three net-new programs being transferred from outside the company, while a previously discussed fourth program is an internal transfer.

AJR Backlog Cleared, Dominican Republic Transfer Continues

Management said AJR has moved through a previously discussed backlog and that labor issues at its St. Charles operation have been resolved. Rock said the facility is fully ramped and that the platform continues to grow.

However, the company continues to have production activity in St. Charles that it expects to move to the Dominican Republic. Rock said the original plan involved transferring three programs to the Dominican Republic; two have transferred, while the third remains in process.

UFP has continued to invest in the Dominican Republic to support customer growth initiatives, add capacity and improve its cost structure over time. Rock said those investments are producing early operational benefits, although the full benefits are taking longer than initially anticipated because program transfers depend on customer qualification.

Margin pressure at AJR persisted in the second quarter as programs scheduled for transfer to the Dominican Republic remained contingent on customer qualification, Lataille said.

Costs, Cash Flow and Commodity Inflation

Second-quarter selling, general and administrative expense increased $4.1 million to $22.8 million. Lataille attributed approximately $1.9 million of that increase to wages and benefits associated with back-office investments supporting the larger organization. The increase also reflected senior-management expansion and about $1 million in additional non-cash equity compensation, partially related to CEO transition costs.

Lataille said current SG&A levels are approximately where the company expects them to remain going forward, although temporary costs tied to the transition from former CEO Jeff to Rock are expected to ease around mid-2027.

The company generated about $15.6 million in operating cash flow during the quarter and spent $1.2 million on capital expenditures. It ended the period with a leverage ratio below 1x.

Lataille also said UFP continues to face inflation in petroleum-based raw-material costs because of oil-price volatility associated with the conflict in Iran. He said the company expects to pass those cost increases through to the market, though he noted the ultimate effect is difficult to estimate.

Acquisition Pipeline and Outlook

Rock said UFP’s acquisition pipeline remains robust, with the company evaluating roughly five to 10 opportunities involving businesses with EBITDA ranging from $5 million to $30 million. He said the company remains disciplined in its valuation approach and is seeking acquisitions that expand capabilities and strengthen its position in attractive MedTech markets.

The company did not provide formal guidance for the remainder of 2026. Lataille said second-quarter organic growth benefited partly from comparison with a weaker second quarter of 2025, when labor inefficiencies were more pronounced. He said UFP expects to remain within its long-term organic growth target range of 6% to 9% for the rest of the year, rather than sustain the double-digit growth reported in the second quarter.

Regarding two robotic-assisted surgical programs announced previously, Rock said both have launched and are ramping. He expects a more meaningful contribution in 2027, describing it as an eight-figure contribution that is expected to grow.

About UFP Technologies (NASDAQ:UFPT)

UFP Technologies, Inc (NASDAQ: UFPT) is a global designer and manufacturer of custom-engineered products using plastics, foams and adhesives. The company partners with customers to develop application-specific solutions through a range of in-house processes, including foam fabrication, die cutting, sheet processing, lamination, machining and assembly services. Its components find use in industries requiring precise material properties, such as medical devices, aerospace, defense, electronics and transportation.

Building on its origins as a specialty foam converter, UFP Technologies has expanded its capabilities to include advanced material technologies, such as thermal management and electromagnetic interference (EMI) shielding solutions.