Company: UFPT
Filing Date: 2025-08-11
Form Type: 10-Q
Source: 0001171843-25-005268
Chunk: 79

Company: UFP TECHNOLOGIES INC
Filing Date: 2025-08-11
Form: 10-Q
Item: Part I, Item 1
Chunk 79
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 this year.

Gross margin decreased slightly to 28.6% for the six months ended June 30, 2025, from 29.3% for the same period in 2024. As a percentage of sales, material and labor costs collectively increased 0.3% and overhead costs increased 0.4%.

Selling, General and Administrative Expenses

Selling, general, and administrative expenses (“SG&A”) increased approximately 34.4% to $18.7 million for the three months ended June 30, 2025, from $13.9 million for the same period in 2024. The increase is primarily attributable to SG&A from the Company’s 2024 acquisitions. As a percentage of sales, SG&A decreased to 12.4% for the three months ended June 30, 2025, from 12.6% for the same three months in 2024.

SG&A increased approximately 34.5% to $37.4 for the six months ended June 30, 2025, from $27.8 million for the same period in 2024, which we primarily attribute to SG&A from the Company’s 2024 acquisitions. As a percentage of sales, SG&A decreased to 12.5% for the six months ended June 30, 2025, from 12.9% for the same six months in 2024.

27

Change in fair value of contingent consideration

In connection with the acquisitions of Welch and Marble in 2024, and DAS Medical in 2021, the Company is required to make contingent payments, subject to the entities achieving certain financial performance thresholds. The contingent consideration payments for the Welch, Marble and DAS Medical acquisitions are up to $6 million, $500 thousand and $20 million, respectively. The fair value of the liability for the contingent consideration payments recognized upon the acquisition as part of the purchase accounting opening balance sheets totaled approximately $800 thousand, $400 thousand and $5.2 million for the Welch, Marble and DAS Medical acquisitions, respectively, and was estimated by discounting to present value the probability-weighted contingent payments expected to be made. Assumptions used in the initial calculation were management’s financial forecasts, a discount rate and various volatility factors. The ultimate settlement of contingent consideration could deviate from current estimates based on the actual results of these financial measures. Contingent consideration is considered to be a Level 3 financial liability that is re-measured