Company: UFPT
Filing Date: 2025-08-11
Form Type: 10-Q
Source: 0001171843-25-005268
Chunk: 34

Company: UFP TECHNOLOGIES INC
Filing Date: 2025-08-11
Form: 10-Q
Item: Part I, Item 8
Chunk 34
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2025 and foreign currency transaction losses in 2025 and gains in 2024.

Income Taxes

The Company recorded tax expense of approximately 20.6% and 22.0% of income before income tax expense, for the three months ended June 30, 2025 and 2024, respectively. The decrease in the effective tax rate for the second quarter of 2025 is largely due to higher anticipated income from operations in the Dominican Republic where the Company pays lower taxes.

The Company recorded tax expense of approximately 18.0% and 19.8% of income before income tax expense, for each of the six months ended June 30, 2025 and 2024, respectively. The decrease in the effective tax rate for the current period as compared to the prior period is largely due to increased discrete tax benefits associated with vested equity and a state tax refund.

28

Liquidity and Capital Resources

The Company generally funds its operating expenses, capital requirements, and growth plan through internally generated cash and bank credit facilities.

Cash Flows

Net cash provided by operations for the six months ended June 30, 2025 was approximately $39.1 million and was primarily a result of net income generated of approximately $34.4 million, depreciation and amortization of approximately $9.4 million, share-based compensation of approximately $4.5 million, a change in the fair value of contingent consideration of approximately $0.5 million, an increase in deferred taxes of approximately $1.7 million, a decrease in accounts receivable of approximately $1.3 million due to lower days sales outstanding (DSO) driven by customer sales mix, a decrease in inventory of approximately $3.9 million due to strategic reductions of raw material stock, and an increase in income taxes payable of approximately $3.2 million due to the timing of payment of tax estimates.

These cash inflows and adjustments to income were partially offset by an increase in prepaid expenses of approximately $0.3 million primarily due to the payment of current year insurance policies, an increase in other assets of approximately $3.7 million primarily due to the payment of an exclusivity fee on a long term contract, a decrease in accounts payable of approximately $2.3 million due to the timing of vendor payments in the ordinary course of business, a decrease in accrued expenses of approximately $6.1 million due primarily to the payment of accrued compensation, and a decrease in other long-term liabilities of approximately $7.1 million due primarily