UFP Technologies Inc. Reports Operating Results (10-Q)

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Nov 12, 2010
UFP Technologies Inc. (UFPT, Financial) filed Quarterly Report for the period ended 2010-09-30.

Ufp Technologies Inc. has a market cap of $70.4 million; its shares were traded at around $11.34 with a P/E ratio of 8.2 and P/S ratio of 0.7. Ufp Technologies Inc. had an annual average earning growth of 35.1% over the past 5 years.UFPT is in the portfolios of Jim Simons of Renaissance Technologies LLC, HOTCHKIS & WILEY of HOTCHKIS & WILEY Capital Management LLC.

Highlight of Business Operations:

Sales for the three-month period ended September 30, 2010, increased 10.3% to $30.5 million from sales of $27.6 million for the same period in 2009. Sales for the nine-month period ended September 30, 2010, were $89.1 million or 27.0% higher than sales of $70.2 million for the same period in 2009. The increase in sales for the three-month period ended September 30, 2010, was primarily due to increased sales of interior trim parts to the automotive industry of approximately $1.5 million (Component Products segment). The increase in sales for the nine-month period ended September 30, 2010, was primarily due to sales from businesses acquired during 2009 (for the portion of the respective 2010 period that the businesses were not owned by the Company in the comparable period of 2009) of approximately $11.9 million (Component Products segment) and increased sales of interior trim parts to the automotive industry of approximately $5.7 million (Component Products segment).

Selling, general, and administrative expenses (SG&A) increased slightly to just over $5.1 million for the three-month period ended September 30, 2010, from just under $5.1 million for the same period in 2009. SG&A increased 11.7% to $15.5 million for the nine-month period ended September 30, 2010, from $13.9 million for the nine-month period ended September 30, 2009. The increase in SG&A for the nine-month period ended September 30, 2010, is primarily due to SG&A from newly acquired companies of approximately $1.8 million (Component Products segment).

Net interest expense declined for the three- and nine-month periods ended September 30, 2010, to approximately $35,000 and $104,000, respectively, from $53,000 and $189,000, respectively, for the same 2009 periods. This decline is primarily due to lower average borrowings and interest earned on an increased cash position.

Net cash provided by operations for the nine-month periods ended September 30, 2010, and 2009, was approximately $9.1 million and $6.9 million, respectively. The increase in cash generated from operations is primarily due to an increase in net income of approximately $3.1 million, partially offset by an increase in inventories of approximately $700,000 in the nine-month period ended September 30, 2010, compared to a decrease in inventories of approximately $1.4 million in the nine-month period ended September 30, 2009. The increase in inventories in the nine-month period ended September 30, 2010 was primarily due to the overall increase in sales activity.

Cash used in financing activities was approximately $238,000 in the nine-month period ended September 30, 2010, compared to cash generated from financing activities of approximately $2 million in the nine-month period ended September 30, 2009. The change in cash from financing activities is due primarily to new mortgage debt secured in 2009 of approximately $4 million, partially offset by the repayment of capital lease debt of approximately $1.6 million.

On January 29, 2009, the Company amended and extended its credit facility with Bank of America, NA. The facility comprises: (i) a revolving credit facility of $17 million; (ii) a term loan of $2.1 million with a seven-year straight-line amortization; (iii) a term loan of $1.8 million with a 20-year straight-line amortization; and (iv) a term loan of $4.0 million with a 20-year straight-line amortization. Extensions of credit under the revolving credit facility are based in part upon accounts receivable and inventory levels. Therefore, the entire $17 million may not be available to the Company. At September 30, 2010, the Company had availability of approximately $15.6 million, based upon collateral levels as of that date. The credit facility calls for interest of LIBOR plus a margin that ranges from 1.0% to 1.5% or, at the option of the Company, the banks prime rate less a margin that ranges from 0.25% to zero. In both cases the applicable margin is dependent upon Company performance. The loans are collateralized by a first priority lien on all of the Companys assets, including its real estate located in Georgetown, Massachusetts, and in Grand Rapids, Michigan. Under the credit facility, the Company is subject to a minimum fixed-charge coverage financial covenant with which it was in compliance at September 30, 2010. The Companys $17 million revolving credit facility matures November 30, 2013; the term loans are all due on January 29, 2016. The interest rate on these facilities was approximately 1.25% at September 30, 2010.

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