Company: UFPT
Filing Date: 2025-05-12
Form Type: 10-Q
Source: 0001171843-25-003049
Chunk: 27

Company: UFP TECHNOLOGIES INC
Filing Date: 2025-05-12
Form: 10-Q
Item: Part I, Item 8
Chunk 27
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 and also the countries in which our customers operate. The tariff policy environment has been and is expected to continue to be dynamic, and we cannot predict what additional actions may ultimately be taken by the United States or other governments with respect to tariffs or trade relations, including retaliatory trade measures taken by other countries in response to existing or future United States tariffs or other measures.

To date, such tariffs have not had a material direct impact on our business, financial condition or results of operations. However, this is a very dynamic changing environment and tariffs may cause (i) increases in manufacturing costs, (ii) disruptions or delays to our supply chain, (iii) limitations on our ability to sell our products domestically or abroad, and (iv) reductions in sales volumes and gross margins for our products, any of which could negatively affect our business, results of operations and financial condition. We cannot anticipate, for example, whether there will be an adverse impact on demand for our products from customers who are responsible for payment of the tariffs on our shipments.

Results of Operations 

Net Sales

Net sales for the three-month period ended March 31, 2025 increased approximately 41.1% to $148.1 million from sales of $105.0 million for the same period in 2024. The increase in net sales is primarily due to increased sales to customers in the medical market of 50.4%, primarily due to sales from the 2024 acquisitions, which collectively contributed approximately $40.7 million in sales during the first quarter. Organic sales growth for the first quarter was 2.3%. Organic growth in the medical market was approximately 5.4% and was fueled by strong sales in the interventional and surgical infection prevention and advanced wound care market segments that more than offset the decline in sales to customers in the robot assisted surgery market segment.

Gross Profit

Gross margin decreased slightly to 28.5% for the three-month period ended March 31, 2025, from 28.6% for the same period in 2024. As a percentage of sales, material and labor costs collectively increased 0.1% and overhead costs increased 0.1%. As anticipated, we had some inefficiency in our newly acquired AJR operations related to onboarding many new direct labor associates. We were able to offset most of it by leveraging fixed overhead costs throughout the company. It is anticipated that the inefficiency at AJR will continue through the second quarter as we continue to onboard new associates.

Selling,