“I am pleased with our Q3 results and progress on our growth initiatives, particularly our expansion plans in our low-cost country facilities,” said
“After adjusting for the sale of our Molded Fiber unit in Q3 of 2022, organic revenue growth in Q3 was 5.6%, with Medical sales up 6.8%,” Bailly added. “Our growth was impacted by multiple customers delaying releases due to excess inventory in their systems. Due to Covid-related caution, many customers ordered safety stock inventory, which is reaching levels they feel are excessive. We anticipate this softness will be short-term in nature as they work down their inventories, and our growth should accelerate as we enter next year.”
“We are excited about our growth potential in 2024, which should benefit from the significant investments mentioned above,” Bailly said. “We are also continuing our efforts to identify strategic acquisition candidates that will increase our value to customers. High interest rates have slowed deal flow, but have increased our competitiveness against private equity buyers who typically rely on higher leverage than UFP does.”
Financial Highlights for Q3 and YTD 2023
- Sales for the third quarter increased 3.9% to
$100.8 million , from$97.0 million in the same period of 2022. Year-to-date sales through September increased 13.7% to$298.6 million , from$262.6 million in the same period of 2022. Organic sales growth for the three- and nine-month periods endedSeptember 30 was 5.6% and 16.9%, respectively. - Third quarter sales to the medical market increased 6.8% to
$87.1 million . Sales to all other markets decreased 11.2% to$13.7 million , largely due to the sale of Molded Fiber in the third quarter of 2022. Year-to-date sales to the medical market increased 23.3% to$257.1 million . Sales to all other markets decreased 23.3% to$41.5 million , largely due to the sale of Molded Fiber in the third quarter of 2022. - Gross profit as a percentage of sales (“gross margin”) increased to 27.5% for the third quarter, from 26.3% in the same quarter of 2022. Gross margin for the nine-month period ended
September 30, 2023 increased to 28.8% from 25.5% in the same period of 2022. - Selling, general and administrative expenses (“SG&A”) for the third quarter increased to
$12.5 million in 2023 compared to$11.8 million in the same quarter of 2022. For the nine-month period endedSeptember 30, 2023 , SG&A increased to$37.8 million from$33.9 million in the same period of 2022. - Adjusted operating income grew 11.5% and 46.1% for the three- and nine-month periods ended
September 30, 2023 when compared to the respective periods of 2022. GAAP operating income for the third quarter decreased to$15.0 million , from$26.0 million in the same quarter of 2022. For the nine-month period endedSeptember 30, 2023 , operating income increased to$44.9 million , from$44.5 million in the same period of 2022. Adjusted operating income is a non-GAAP term. Please see “Non-GAAP Financial Information” at the end of this news release. - Adjusted net income increased 13.8% to
$11.9 million in the third quarter of 2023 from$10.4 million in the third quarter of 2022. Adjusted net income increased 44.4% to$35.8 million for the nine months endedSeptember 30, 2023 from$24.8 million in the same period of 2022. GAAP net income decreased to$11.7 million in the third quarter of 2023, from$19.5 million in the same period of 2022. GAAP net income of$33.3 million was consistent for the nine-month periods endedSeptember 30, 2023 and 2022. Adjusted net income is a non-GAAP term. Please see “Non-GAAP Financial Information” at the end of this news release. - Adjusted EBITDA increased to
$19.3 million in the third quarter of 2023 from$17.5 million in the same period of 2022. Adjusted EBITDA increased to$60.2 million for the nine-month period endedSeptember 30, 2023 from$44.9 million in the same period of 2022. See the reconciliation provided in Table 3. EBITDA and Adjusted EBITDA are Non-GAAP Financial Measures. Please see "Non-GAAP Financial Information" at the end of this news release.
About
Consolidated Condensed Statements of Income | ||||||||||||||
(in thousands, except per share data) | ||||||||||||||
(Unaudited) | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||
Net sales | $ | 100,784 | $ | 96,970 | $ | 298,575 | $ | 262,555 | ||||||
Cost of sales | 73,034 | 71,447 | 212,479 | 195,575 | ||||||||||
Gross profit | 27,750 | 25,523 | 86,096 | 66,980 | ||||||||||
SG&A | 12,467 | 11,822 | 37,771 | 33,909 | ||||||||||
Change in fair value of contingent consideration | 238 | 3,346 | 3,289 | 9,348 | ||||||||||
Gain on sale of | - | (15,623 | ) | - | (15,623 | ) | ||||||||
Loss (Gain) on sale of fixed assets | - | 3 | 108 | (6,206 | ) | |||||||||
Acquisition costs | - | 10 | - | 1,027 | ||||||||||
Operating income | 15,045 | 25,965 | 44,928 | 44,525 | ||||||||||
Interest expense, net | 933 | 830 | 2,890 | 1,891 | ||||||||||
Other (income) expense | (29 | ) | (104 | ) | 28 | (313 | ) | |||||||
Income before income taxes | 14,141 | 25,239 | 42,010 | 42,947 | ||||||||||
Income taxes | 2,447 | 5,699 | 8,694 | 9,620 | ||||||||||
Net income | $ | 11,694 | $ | 19,540 | $ | 33,316 | $ | 33,327 | ||||||
Net Income per share | $ | 1.53 | $ | 2.58 | $ | 4.37 | $ | 4.41 | ||||||
Net income per diluted share | $ | 1.52 | $ | 2.56 | $ | 4.33 | $ | 4.37 | ||||||
Weighted average common shares outstanding | 7,639 | 7,570 | 7,619 | 7,559 | ||||||||||
Weighted average diluted common shares outstanding | 7,709 | 7,638 | 7,697 | 7,629 | ||||||||||
Consolidated Condensed Balance Sheets | ||||||
(in thousands) | ||||||
(Unaudited) | ||||||
2023 | 2022 | |||||
Assets: | ||||||
Cash and cash equivalents | $ | 6,376 | $ | 4,451 | ||
Receivables, net | 60,968 | 55,117 | ||||
Inventories | 69,777 | 53,536 | ||||
Other current assets | 3,346 | 3,242 | ||||
Net property, plant, and equipment | 60,687 | 58,072 | ||||
112,968 | 113,028 | |||||
Intangible assets, net | 65,020 | 68,361 | ||||
Other assets | 20,668 | 22,385 | ||||
Total assets | $ | 399,810 | $ | 378,192 | ||
Liabilities and equity: | ||||||
Accounts payable | $ | 26,948 | $ | 19,961 | ||
Current installments, net of long-term debt | 4,000 | 4,000 | ||||
Other current liabilities | 25,640 | 32,000 | ||||
Long-term debt, excluding current installments | 39,000 | 51,000 | ||||
Other liabilities | 31,839 | 33,686 | ||||
Total liabilities | 127,427 | 140,647 | ||||
Total stockholders' equity | 272,383 | 237,545 | ||||
Total liabilities and stockholders' equity | $ | 399,810 | $ | 378,192 | ||
Forward Looking Statements
Certain statements in this press release may be considered "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. In some cases, the reader can identify forward-looking statements by words such as "may," "should," "expect," "intend," "will," "estimate," "anticipate," "believe," "predict," or similar words. Forward-looking statements relate to expected financial or operating performance and/or future business prospects, events, and plans. Such statements include, but are not limited to: statements regarding our capital expenditure plans and hiring plans and the anticipated benefits to be realized as a result thereof; statements regarding production expectations and improving our operating efficiencies, customer order activity and capacity; statements regarding human capital; expectations regarding our liquidity and business opportunities; statements about our growth potential and strategies for growth; and any statements implying that we may be able to sustain or increase sales, earnings and earnings per share or sales, earnings and earnings per share growth rates. Investors are cautioned that such forward-looking statements involve risks and uncertainties that could adversely affect our business and prospects, and otherwise cause actual results to differ materially from those anticipated by such forward-looking statements, or otherwise. These risks include, without limitation: risks relating to our ability to realize expected advantages of capital expenditures; risks relating to our ability to maintain increased levels of production, or to continue to increase production rates; risks relating to disruptions and delays in our supply chain; risks relating to onboarding, training and retaining new talent; risks relating to maintaining demand for our products; risks relating to the identification of suitable acquisition candidates and the successful, efficient execution of acquisition transactions and integration of any acquisition candidates; risks and uncertainties associated with increasing sales, earnings and earnings per share, as well as other risks and uncertainties that are detailed in the documents we file with the
Non-GAAP Financial Information
This news release includes non-generally accepted accounting principles (“GAAP”) performance measures. Management considers Adjusted Operating Income, Adjusted Net Income, EBITDA and Adjusted EBITDA, non-GAAP measures. The Company uses these non-GAAP financial measures to facilitate management's financial and operational decision-making, including evaluation of the Company’s historical operating results. The Company’s management believes these non-GAAP measures are useful in evaluating the Company’s operating performance and are similar measures reported by publicly listed
Contact:
978-234-0926
Table 1: Adjusted Operating Income Reconciliation | |||||||||||||
(in thousands) | |||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||
Operating income (GAAP) | $ | 15,045 | $ | 25,965 | $ | 44,928 | $ | 44,525 | |||||
Adjustments: | |||||||||||||
Acquisition Costs | - | 10 | - | 1,027 | |||||||||
Change in fair value of contingent consideration | 238 | 3,346 | 3,289 | 9,348 | |||||||||
Gain on sale of Molded Fiber | - | (15,623 | ) | - | (15,623 | ) | |||||||
Loss (gain) on disposal of fixed assets | - | 3 | 108 | (6,206 | ) | ||||||||
Adjusted operating income (Non-GAAP) | $ | 15,283 | $ | 13,701 | $ | 48,325 | $ | 33,071 | |||||
Table 2: Adjusted Net Income and Diluted Common Share Outstanding Reconciliation | |||||||||||||
(in thousands, except per share data) | |||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||
Net income (GAAP) | $ | 11,694 | $ | 19,540 | $ | 33,316 | $ | 33,327 | |||||
Adjustments (net of taxes): | |||||||||||||
Acquisition Costs | - | 7 | - | 763 | |||||||||
Change in fair value of contingent consideration | 177 | 2,485 | 2,442 | 6,942 | |||||||||
Gain on sale of Molded Fiber | - | (11,602 | ) | - | (11,602 | ) | |||||||
Loss (gain) on disposal of fixed assets | - | 2 | 80 | (4,609 | ) | ||||||||
Adjusted net income (Non-GAAP) | $ | 11,871 | $ | 10,432 | $ | 35,838 | $ | 24,821 | |||||
Adjusted Net Income per diluted share outstanding (Non-GAAP) | $ | 1.54 | $ | 1.37 | $ | 4.66 | $ | 3.25 | |||||
Weighted average diluted common shares outstanding | 7,709 | 7,638 | 7,697 | 7,629 | |||||||||
Table 3: Adjusted EBITDA Reconciliation | |||||||||||||
(in thousands) | |||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||
Net income (GAAP) | $ | 11,694 | $ | 19,540 | $ | 33,316 | $ | 33,327 | |||||
Income tax expense | 2,447 | 5,699 | 8,694 | 9,620 | |||||||||
Interest expense, net | 933 | 830 | 2,890 | 1,891 | |||||||||
Depreciation | 1,741 | 1,696 | 5,142 | 5,874 | |||||||||
Amortization of intangible assets | 1,099 | 1,116 | 3,304 | 3,264 | |||||||||
EBITDA (Non-GAAP) | $ | 17,914 | $ | 28,881 | $ | 53,346 | $ | 53,976 | |||||
Adjustments: | |||||||||||||
Share based compensation | 1,197 | 897 | 3,450 | 2,370 | |||||||||
Acquisition Costs | - | 10 | - | 1,027 | |||||||||
Change in fair value of contingent consideration | 238 | 3,346 | 3,289 | 9,348 | |||||||||
Gain on sale of Molded Fiber | - | (15,623 | ) | - | (15,623 | ) | |||||||
Loss (gain) on disposal of fixed assets | - | 3 | 108 | (6,206 | ) | ||||||||
Adjusted EBITDA (Non-GAAP) | $ | 19,349 | $ | 17,514 | $ | 60,193 | $ | 44,892 |
Q3 2023 EARNINGS RELEASE
Source:
2023 GlobeNewswire, Inc., source