UFP Technologies delivered better-than-expected results for the third quarter, as the company overcame significant labor inefficiencies at its AJR Illinois facility. Management credited strong growth in its MedTech business, particularly in Interventional and Surgical, Orthopedics, and Wound Care segments, for driving results. CEO Jeff Bailly highlighted that these segments each grew over 30%, partially offsetting a 23% decline in Patient Services and Support due to workforce turnover. Despite short-term operational setbacks, the company emphasized progress in hiring and training, as well as the resilience of its core medical markets.
Is now the time to buy UFPT? Find out in our full research report (it’s free for active Edge members).
UFP Technologies (UFPT) Q3 CY2025 Highlights:
- Revenue: $154.6 million vs analyst estimates of $149.6 million (6.5% year-on-year growth, 3.3% beat)
- Adjusted EPS: $2.39 vs analyst estimates of $2.17 (10% beat)
- Adjusted EBITDA: $30.74 million vs analyst estimates of $29.26 million (19.9% margin, 5% beat)
- Operating Margin: 15.3%, down from 17.7% in the same quarter last year
- Market Capitalization: $1.74 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From UFP Technologies’s Q3 Earnings Call
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Justin Ages (CJS Securities) asked for detail on robotic surgery growth, specifically contributions from the largest customer. CEO Jeff Bailly clarified that while overall growth was 5%, the primary customer grew closer to 8% due to a one-year sales mix effect.
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Brett Fishbin (KeyBanc) inquired about the nature of the contract expansion with the largest customer. Bailly explained that the contemplated agreement would include all product lines and require new facility investments, with anticipated volume increases in future years.
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Maxwell Michaelis (Lake Street Capital Markets) pressed for revenue expectations from two new robotic surgery programs. Bailly stated that the combined revenue estimate for next year is $10 million, describing this as conservative, with upside potential in subsequent years.
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Noah Lewis (Raymond James) sought clarity on the AJR backlog and timing for operational recovery. Bailly acknowledged the challenge of working down the $16 million backlog but expects double-digit growth and improved efficiency as hiring and training progress.
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Unknown Analyst (AFR) asked about the impact of launch-related costs on EBITDA and margin normalization. CFO Ronald Lataille confirmed that program launches typically generate modest short-term losses, but these costs should transition to profitability as new programs mature.
Catalysts in Upcoming Quarters
In future quarters, the StockStory team will be watching (1) the pace at which AJR resolves its production inefficiencies and reduces backlog, (2) progress on launching and scaling new robotic surgery programs and securing contract extensions, and (3) continued integration and financial contribution from recent acquisitions. Successfully navigating these milestones will be critical for sustaining momentum in the medical segment.
UFP Technologies currently trades at $226.02, up from $199.49 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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