UFP Technologies, Inc.

Second-quarter sales increased 15.1% to $174 million. Organic sales growth was 12.4%, gross margin increased to 29.3% from 28.8% a year ago, operating income grew 15.5%, and adjusted EPS rose 16.8% to a company record of $2.92. Adjusted operating margin was 17.6%, SG&A increased by $4.1 million to $22.8 million, cash from operations was approximately $15.6 million, capital expenditures were $1.2 million, and leverage ended under 1x. On forward commentary, management did not give formal full-year guidance, but said Q2 organic growth was helped by easy comps and that they expect to remain in their 6% to 9% organic growth target range for the year, though not at the same double-digit pace seen in Q2.

Mitch Rock framed the quarter as evidence that UFP’s platform is working, emphasizing that growth was broad-based and not dependent on any single customer, product category, or end market. He highlighted continued investment in the Dominican Republic, organizational capacity, and disciplined acquisitions, saying the company is positioned for the next phase of growth. His tone was confident and steady, with repeated emphasis on long-term value creation and customer-driven expansion.

Ron Lataille said margin performance remained solid despite ongoing pressure at AJR from transfer timing into the Dominican Republic, noting gross margin of 29.3% versus 28.8% last year and adjusted operating margin of 17.6%. He pointed to SG&A rising by $4.1 million to $22.8 million, driven by about $1.9 million of back-office investments and roughly $1 million of additional noncash equity compensation tied partly to CEO transition costs. He also cited $15.6 million in operating cash flow, $1.2 million in capex, leverage under 1x, and said current SG&A is about the right level going forward, with some relief expected by mid-2027.

Analysts focused on the drivers of the revenue beat, asking how much came from backlog, new launches, and specific end markets. Management said growth came mainly from existing customer relationships and product families rather than launches, that the AJR backlog has been worked through and the labor issue is fully resolved, and that 2 of 3 planned DR transfers have already moved while the third is delayed by customer sign-off. Management also said the two robotic-assisted surgical programs are launched and ramping, with an 8-figure contribution expected as they move into 2027.