UFP Technologies UFPT Form 10-Q filing Q2 FY2026

PART I: FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

The accompanying notes are an integral part of these condensed consolidated financial statements.

The accompanying notes are an integral part of these condensed consolidated financial statements.

UFP TECHNOLOGIES, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands)

(Unaudited)

The accompanying notes are an integral part of these consolidated financial statements.

The accompanying notes are an integral part of these condensed consolidated financial statements.

Notes to Interim Condensed Consolidated Financial Statements

(1) Basis of Presentation

The interim condensed consolidated financial statements of UFP Technologies, Inc. (the “Company”) presented herein, have been prepared pursuant to the rules of the Securities and Exchange Commission for quarterly reports on Form 10-Q and do not include all the information and note disclosures required by accounting principles generally accepted in the United States of America. These statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2025, included in the Company's 2025 Annual Report on Form 10-K, as filed with the Securities and Exchange Commission.

The condensed consolidated balance sheets as of June 30, 2026 and December 31, 2025, the condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2026 and 2025, the condensed consolidated statements of stockholders’ equity for the three and six months ended June 30, 2026 and 2025, and the condensed consolidated statements of cash flows for the six months ended June 30, 2026 and 2025 are unaudited but, in the opinion of management, include all adjustments (consisting of normal, recurring adjustments) necessary for a fair presentation of results for these interim periods. The condensed consolidated balance sheet as of December 31, 2025 has been derived from the Company’s annual financial statements that were audited by an independent registered public accounting firm but does not include all of the information and footnotes required for complete annual financial statements.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

The results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results to be expected for the entire year ending December 31, 2026.

Recent Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The ASU is intended to improve disclosures about a public business entity's expenses and provide more detailed information to investors about the types of expenses in commonly presented expense captions. The ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this ASU will have on its consolidated financial statements and related disclosures.

(2) Acquisitions

Techno Plastics Industries

On July 7, 2025, the Company purchased 100% of the outstanding membership interests of Techno Plastics Industries, Inc. (“TPI”) pursuant to a Securities Purchase Agreement, for an aggregate purchase price of $4.5 million in cash. The purchase price was subject to adjustment based upon TPI’s estimated working capital at closing. Subsequent purchase accounting opening balance sheet adjustments resulted in a decrease to the purchase price of approximately $0.2 million. A portion of the purchase price is being held by the Company to indemnify the Company against certain claims, losses, and liabilities. The Securities Purchase Agreement contains representations, warranties, and covenants customary for transactions of this type. As part of the Securities Purchase Agreement, the Sellers as well as certain restricted parties have agreed not to compete with the Company for a period of five years.

TPI, based in Anasco, Puerto Rico, is a specialty manufacturer of precision thermoplastic injection-molded components.

The following table summarizes the allocation of the total purchase price of approximately $4.3 million, net of cash acquired, to the acquisition date fair value of the assets acquired and liabilities assumed based on management’s estimates of fair value (in thousands):

Acquisition costs associated with the transaction of approximately $0.2 million were charged to expense during the year ended December 31, 2025. These costs were primarily for legal services, and are included within “Acquisition costs” on the face of the condensed consolidated statements of comprehensive income.

None of the goodwill related to the TPI acquisition is expected to be deductible for tax purposes. Goodwill is primarily attributable to the workforce of TPI and the synergies that have been and are expected to further be realized post-acquisition.

Universal Plastics & Engineering Company

On July 2, 2025, the Company purchased 100% of the outstanding membership interests of Universal Plastics & Engineering Company, Inc. (“UNIPEC”) pursuant to a Securities Purchase Agreement, for an aggregate purchase price of $7.5 million in cash. The purchase price was subject to adjustment based upon UNIPEC’s estimated working capital at closing. Subsequent purchase accounting opening balance sheet adjustments resulted in an increase to the purchase price of approximately $0.1 million. A portion of the purchase price is being held in escrow to indemnify the Company against certain claims, losses, and liabilities. The Securities Purchase Agreement contains representations, warranties, and covenants customary for transactions of this type. As part of the Securities Purchase Agreement, the Sellers as well as certain restricted parties have agreed not to compete with the Company for a period of seven years.

UNIPEC, headquartered in Rockville, Maryland, develops and manufactures precision thermoformed and heat-sealed polymer components used primarily for shielding batteries in Class III implantable medical devices.

The following table summarizes the allocation of the total purchase price of approximately $7.6 million, net of cash acquired, to the acquisition date fair value of the assets acquired and liabilities assumed based on management’s estimates of fair value (in thousands):

Acquisition costs associated with the transaction of approximately $0.1 million were charged to expense during the year ended December 31, 2025. These costs were primarily for legal services, and are included within “Acquisition costs” on the face of the condensed consolidated statements of comprehensive income.

100% of the goodwill related to the UNIPEC acquisition is expected to be deductible for tax purposes. The goodwill is primarily attributable to the workforce of UNIPEC and the synergies that have been and are expected to further be realized post-acquisition.

AJR Specialty Products and AJR Custom Foam Products

On April 25, 2025, the Company purchased 100% of the outstanding membership interests of AJR Specialty Products, LLC, (“AJR Specialty”) and AJR Custom Foam Products, LLC, (“AJR Custom Foam”) pursuant to a Securities Purchase Agreement, for an aggregate purchase price of $2.8 million in cash. The purchase price was subject to adjustment based upon AJR’s estimated working capital at closing. A portion of the purchase price is being held in escrow to indemnify the Company against certain claims, losses, and liabilities. The Purchase Agreement contains customary representations, warranties, and covenants customary for transactions of this type. As part of the Securities Purchase Agreement, the Sellers as well as certain restricted parties have agreed not to compete with the Company for a period of seven years.

AJR Specialty and AJR Custom Foam, are both headquartered in St. Charles, IL. AJR Specialty and AJR Custom Foam provide additional capacity in the growing single-use safe patient handling space, as well as additional expertise in specialty fabrics and foam fabrication.

Acquisition costs associated with the transaction of approximately $0.1 million were charged to expense during the year ended December 31, 2025. These costs were primarily for legal services, and are included within “Acquisition costs” on the face of the condensed consolidated statements of comprehensive income.

As the revenues, earnings, balance sheet, and pro forma effects of the AJR Specialty and AJR Custom Foam acquisitions are not, and would not have been, material to the results of operations or financial position of the Company, the Company has elected to not disclose substantially all required disclosures of Accounting Standards Codification 805, Business Combinations, for this acquisition.

Pro-forma Statements

The following table contains an unaudited pro forma consolidated statement of comprehensive income for the three and six months ended June 30, 2025, as if the collective acquisitions of TPI and UNIPEC had occurred on January 1, 2025 (in thousands):

The above unaudited pro forma information is presented for illustrative purposes only and may not be indicative of the results of operations that would have occurred had all 2025 acquisitions occurred as presented. In addition, future results may vary significantly from the results reflected in such pro forma information. Pro-forma adjustments include depreciation adjustments on fixed asset step up/down; inventory step-up; amortization of intangibles; and estimated interest expense.

(3) Equity Method Investment

On August 23, 2024 in conjunction with the acquisition of AQF, the Company became 50% owners of the equity interest in AQF Asia PTE Ltd., located in Singapore (“AQF Asia”). While the Company owns 50% of the equity interest of AQF Asia and does have significant influence over the entity, the Company has concluded that it does not have control of AQF Asia due to certain veto rights held by the other joint venture partner with regards to management decision making.

As a result, the Company accounts for its ownership interest in AQF Asia following the equity method of accounting, in accordance with ASC 323, Investments —Equity Method and Joint Ventures. Under this method, the carrying cost is initially recorded at fair value and then increased or decreased by recording its percentage of gain or loss in the consolidated statement of comprehensive income and a corresponding change to the carrying value of the asset. The initial fair value of this equity method investment as of August 2024 was approximately $7.0 million. The following table provides a roll-forward of the equity method investment for the six-month periods ended June 30, 2026 and 2025 (in thousands):

(4) Revenue Recognition

The Company recognizes revenue when a customer obtains control of a promised good or service. The amount of revenue recognized reflects the consideration that the Company expects to be entitled to in exchange for promised goods or services. The Company recognizes revenue in accordance with the core principles of ASC 606 which include (1) identifying the contract with a customer, (2) identifying separate performance obligations within the contract, (3) determining the transaction price, (4) allocating the transaction price to the performance obligations, and (5) recognizing revenue. The Company recognizes a significant portion of its product sales upon shipment. For tooling and machinery sales, the Company recognizes revenue primarily upon manufacture of the customer's product using the applicable tooling or machinery. If customer acceptance is stipulated within the contract, the Company recognizes revenue from the sale of tooling and machinery when the acceptance is received. The Company recognizes revenue from engineering services, which are primarily product development services, as the services are performed or as otherwise determined based on the substance of the agreement.

Standard payment terms are net 30 days unless contract terms state otherwise. When determining the transaction price of a contract, an adjustment is made if payment from a customer occurs either significantly before or after performance, resulting in a significant financing component. The Company does not assess whether a significant financing component exists if the period between when it performs its obligations under the contract and when the customer pays is one year or less. The Company accepts sales returns from customers for defective goods, such amounts being immaterial. The Company warrants that goods sold to customers will conform to agreed-upon specifications and that services will be performed in a reasonable and workmanlike manner. The Company does not provide a service as part this assurance warranty and its customers do not have the opportunity to purchase a warranty separately. Accordingly, any warranty activities are not considered to be a separate performance obligation. Although only applicable to an insignificant number of transactions, the Company has elected to exclude sales taxes from the transaction price. The Company has elected to account for shipping and handling activities for which the Company is responsible under the terms and conditions of the sale not as performance obligations but rather as fulfillment costs. These activities are required to fulfill the Company’s promise to transfer the goods and are expensed when revenue is recognized. Variable consideration to be included in the transaction price is estimated using either the expected value method or the most likely method based on facts and circumstances. Variable consideration is included in the transaction price if it is probable that a significant future reversal of cumulative revenue under the contract will not occur. The Company has elected to not disclose the aggregate amount of the transaction price allocated to unsatisfied performance obligations, as the Company’s contracts have an original expected duration of one year or less, or revenue has been recognized at the amount for which the Company has the right to invoice for engineering services performed.

Disaggregated Revenue

The following table presents the Company’s revenue disaggregated by the major types of goods and services sold to the Company’s customers (in thousands) (See Note 13 for further information regarding net sales by market):

Contract Balances

The timing of revenue recognition may differ from the time of invoicing to customers. When invoicing occurs prior to revenue recognition, the Company has contract liabilities included within “deferred revenue” on the condensed consolidated balance sheets.

The following table presents opening and closing balances of contract liabilities for the six-month periods ended June 30, 2026 and 2025 (in thousands):

Revenue recognized during the six months ended June 30, 2026 and 2025 from amounts included in deferred revenue at the beginning of the period were both approximately $2.0 million.

When invoicing occurs after revenue recognition, the Company has contract assets, which are included within “receivables, net” on the condensed consolidated balance sheets.

The following table presents opening and closing balances of contract assets for the six-month periods ended June 30, 2026 and 2025 (in thousands):

(5) Supplemental Cash Flow Information

Supplemental cash flow information consists of the following (in thousands):

(6) Receivables and Allowance for Credit Losses

Receivables consist of the following (in thousands):

The Company is exposed to credit losses primarily through sales of products and services. The Company’s expected loss allowance methodology is developed using historical collection experience, current and future economic and market conditions, and a review of the current status of customers' trade accounts receivables. The estimate of the amount of accounts receivable that may not be collected is based on the aging of the accounts receivable balances as well as the financial condition of customers. Additionally, specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default. The Company’s monitoring activities include timely account reconciliation, dispute resolution, payment confirmation, consideration of customers' financial condition and macroeconomic conditions. Balances are written off when determined to be uncollectible.

The following table provides a roll-forward of the allowance for credit losses that is deducted from accounts receivable to present the net amount expected to be collected for the six-month periods ended June 30, 2026 and 2025 (in thousands):

(7) Fair Value of Financial Instruments

Financial instruments recorded at fair value in the consolidated balance sheets, or disclosed at fair value in the footnotes, are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels defined by ASC 820, Fair Value Measurements and Disclosures, and directly related to the amount of subjectivity associated with inputs to fair valuation of these assets and liabilities, are as follows:

Level 1

Valued based on unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2

Valued based on either directly or indirectly observable prices for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

Level 3

Valued based on management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

The following table presents the fair value and hierarchical levels, for financial assets that are measured at fair value on a recurring basis (in thousands):

In connection with the acquisitions of Welch Fluorocarbon Inc. ("Welch") and Marble Medical, Inc. ("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 total potential contingent consideration payments for the Welch, Marble and DAS Medical acquisitions were $6 million, $0.5 million and $20 million, respectively, as of each acquisition date. 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 $0.8 million, $0.4 million and $5.2 million for the Welch, Marble and the 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 each reporting period. The Company paid $0, $0.25 million, and $5.0 million for contingent consideration payments during the six months ended June 30, 2026 to Welch, Marble, and DAS Medical, respectively. The contingent consideration for the Welch acquisition has no fair value as of June 30, 2026, as Welch did not achieve the EBITDA targets for the years ended December 31, 2024, and 2025. The Company has also determined that it is not probable that Welch will achieve the EBITDA targets for the year ended December 31, 2026. The contingent consideration for the Marble and DAS Medical acquisitions were both $0 as of June 30, 2026. Any change in fair value of contingent consideration for the acquisitions is included in change in fair value of contingent consideration in the condensed consolidated statements of comprehensive income.

The Company entered into Non-Competition Agreements with certain previous owners of DAS Medical and Advant Medical which includes, an aggregate of $10.0 million in payments to certain previous owners of DAS Medical over a ten-year period, and an aggregate of €0.4 million in payments to the previous owner of Advant Medical over a three-year period. The Company paid non-competition payments of $1.7 million and $0.1 million during the six months ended June 30, 2026 to DAS Medical and Advant Medical, respectively. The non-competition contingent consideration present value for DAS Medical was approximately $3.2 million at June 30, 2026 and is included with accrued expenses and long-term liabilities with the condensed consolidated balance sheets. The non-competition contingent consideration present value for Advant Medical was approximately $0.1 million at June 30, 2026 and is included within accrued expenses on the face of the condensed consolidated balance sheets. These liabilities are considered to be a Level 3 financial liabilities that are re-measured each reporting period.

The Company has financial instruments, such as accounts receivable, accounts payable, and accrued expenses, that are stated at carrying amounts that approximate fair value because of the short maturity of those instruments. The carrying amount of the Company’s long-term debt approximates fair value as the interest rate on the debt approximates the estimated borrowing rate currently available to the Company.

(8) Share-Based Compensation

Share-based compensation is measured at the grant date based on the fair value of the award and is recognized as an expense over the requisite service period (generally the vesting period of the equity grant).

The Company issues share-based awards through several plans that are described in detail in the notes to the consolidated financial statements within the Annual Report on Form 10-K for the year ended December 31, 2025.

The compensation cost charged against income from those plans is included in selling, general & administrative expenses as follows (in thousands):

The total income tax benefit recognized in the condensed consolidated statements of comprehensive income for share-based compensation arrangements was approximately $1.0 million and $1.9 million for the three and six months ended June 30, 2026, respectively, and approximately $0.8 million and $2.0 million for the three and six months ended June 30, 2025.

Common Stock Grants

The compensation expense for common stock granted during the six months ended June 30, 2026, was determined based on the market price of the shares on the date of grant.

Stock Option Grants

The following is a summary of stock option activity under all plans for the six months ended June 30, 2026:

During the six months ended June 30, 2026 and 2025, the total intrinsic value of all options exercised (i.e., the difference between the market price and the price paid by the employees to exercise the options) was approximately $1.7 million and $2.2 million, respectively, and the total amount of consideration received by the Company from the exercised options was approximately $0.2 million and $0.4 million, respectively. At its discretion, the Company allows option holders to surrender previously owned common stock in lieu of paying the exercise price and withholding taxes. During the six months ended June 30, 2026, no shares were surrendered. During the six months ended June 30, 2025, 748 shares were surrendered at an average market price of $282.42.

Restricted Stock Unit awards

The following table summarizes information about RSU activity during the six months ended June 30, 2026:

At the Company’s discretion, upon vesting, RSU holders are given the option to net-share settle to cover the required minimum withholding tax and the remaining amount is converted into the equivalent number of common shares and issued to the RSU holder. During the six months ended June 30, 2026 and 2025, 17,440 and 18,152 shares were surrendered at an average market price of $204.76 and $215.60, respectively.

As of June 30, 2026, the Company had approximately $15.0 million of unrecognized compensation expense that is expected to be recognized over a period of 2.75 years.

(9) Inventories

Inventories are stated at the lower of cost (determined using the first-in, first-out method) or net realizable value, and consist of the following at the stated dates (in thousands):

(10) Property, Plant and Equipment

Property, plant, and equipment consist of the following (in thousands):

(11) Leases

The Company has operating and finance leases for offices, manufacturing plants, vehicles and certain office and manufacturing equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company accounts for each separate lease component of a contract and its associated non-lease components as a single lease component, thus causing all fixed payments to be capitalized. Variable lease payment amounts that cannot be determined at the commencement of the lease such as increases in lease payments based on changes in index rates or usage, are not included in the right of use (“ROU”) assets or lease liabilities. These are expensed as incurred and recorded as variable lease expense. The Company determines if an arrangement is a lease at the inception of a contract. Operating and finance lease ROU assets and operating and finance lease liabilities are stated separately in the condensed consolidated balance sheets.

ROU assets represent the Company's right to use an underlying asset during the lease term and lease liabilities represent the Company's obligation to make lease payments pursuant to the lease. ROU assets and lease liabilities are recognized at commencement date based on the net present value of fixed lease payments over the lease term. The Company's assumed lease term includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option. ROU assets are also adjusted for any deferred or accrued rent. As the Company's leases do not typically provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

ROU assets and lease liabilities consist of the following (in thousands):

The components of lease costs for the six months ended June 30, 2026 and 2025 consist of the following (in thousands):

The components of lease income were as follows (in thousands):

The following table provides additional details of cash flow information related to the Company's leases (in thousands):

Maturities of lease liabilities and receipts as of June 30, 2026 are as follows (in thousands):

(12) Income Per Share

Basic income per share is based on the weighted average number of shares of common stock outstanding. Diluted income per share is based upon the weighted average number of common shares outstanding and dilutive common stock equivalent shares outstanding during each period.

The weighted average number of shares used to compute basic and diluted net income per share consisted of the following (in thousands):

The computation of diluted earnings per share excludes the effect of the potential exercise of stock awards, including stock options, when the average market price of the common stock is lower than the exercise price of the related options during the period. These outstanding stock awards are not included in the computation of diluted income per share because the effect would be antidilutive. For each of the three and six months ended June 30, 2026 and 2025, 2,958 shares were excluded from the computation of diluted earnings per share for this reason.

(13) Segment Data

The Company consists of a single operating and reportable segment and uses consolidated net income as its measure of segment profit and loss. The chief operating decision maker of the Company is the Chief Executive Officer (CEO). The CEO reviews consolidated operating results to make decisions about how to allocate resources to the segment and assess its performance as a whole. The Company has identified the following significant segment expenses (SSEs) due to their relevance to the overall consolidated operating results (in thousands):

(a)Other segment items include (production overhead, stock compensation, professional fees, and other selling, general, and administrative expenses ("SG&A") expenses)

(b)See Condensed Consolidated Balance Sheet for details

Information about Geographic Areas

Net sales shipped to customers outside of the United States comprised approximately 16.8%, and 17.6% of the Company’s consolidated net sales for the three and six months ended June 30, 2026, respectively. Net sales shipped to customers outside of the United States comprised approximately 17.0% and 17.1% of the Company’s consolidated net sales for the three and six months ended June 30, 2025, respectively. Approximately 34.7% of all long-lived assets are located outside of the United States as of June 30, 2026 .

Information about Major Customers

Net sales to two customers comprised approximately 26.2% and 21.0% respectively, of the Company’s consolidated net sales for the three months ended June 30, 2026. Net sales to two customers comprised approximately 25.5% and 21.5% respectively, of the Company’s consolidated net sales for the six months ended June 30, 2026. Net sales to two customers comprised approximately 20.5% and 27.4% respectively, of the Company’s consolidated net sales for the three months ended June 30, 2025. Net sales to two customers comprised approximately 22.2% and 24.4% respectively, of the Company’s consolidated net sales for the six months ended June 30, 2025.

As of June 30, 2026, two customers represented approximately 27.9% and 13.0% respectively of the Company's gross accounts receivable. As of December 31, 2025, one customer represented approximately 32.1% of the Company's gross accounts receivable.

The Company’s products are primarily sold to customers within the Medical and Non-medical markets. Sales by market for the three and six months ended June 30, 2026 and 2025 are as follows (in thousands):

(14) Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill for the six months ended June 30, 2026 are as follows (in thousands):

The carrying values of the Company’s definite lived intangible assets as of June 30, 2026 are as follows (in thousands, except for weighted-average amortization period):

Amortization expense related to intangible assets was approximately $2.5 million and $5.0 million for the three and six months ended June 30, 2026, respectively, and $2.4 million and $4.8 million for the three and six months ended June 30, 2025, respectively. The estimated remaining amortization expense as of June 30, 2026 is as follows (in thousands):

(15) Other Long-Term Liabilities

Other long-term liabilities consist of the following (in thousands):

(16) Income Taxes

The determination of income tax expense in the accompanying unaudited condensed consolidated statements of income is based upon the estimated effective tax rate for the year, adjusted for the impact of any discrete items which are accounted for in the period in which they occur. The Company recorded income tax expense of approximately 21.1% and 20.2% of income before income tax expense for the three and six months ended June 30, 2026, respectively, and 20.6% and 18.0% of income before income tax expense for the three and six months ended June 30, 2025, respectively.

(17) Debt

On June 27, 2024, the Company, as the borrower, entered into a secured $275 million Amended and Restated Credit Agreement (the “Third Amended and Restated Credit Agreement”) with certain of the Company’s subsidiaries (the “Subsidiary Guarantors”) and Bank of America, N.A., in its capacity as the initial lender, Administrative Agent, Swingline Lender and L/C Issuer, and certain other lenders from time-to-time party thereto. The Third Amended and

Restated Credit Agreement amends and restates the Company’s prior credit agreement, originally dated as of December 22, 2021.

The credit facilities under the Third Amended and Restated Credit Agreement consist of a secured term loan to the Company of $125 million and a secured revolving credit facility, under which the Company may borrow up to $150 million. The Third Amended and Restated Credit Facilities mature on June 27, 2029. This maturity date is subject to acceleration and the Company could be subject to additional fees and expenses in certain circumstances should one or more events of default described in the Third Amended and Restated Credit Agreement occur. The secured term loan requires quarterly principal payments of $3,125,000 that commenced on December 31, 2024. The proceeds of the Third Amended and Restated Credit Agreement may be used for general corporate purposes, including funding certain acquisitions, as well as certain other permitted acquisitions. The Company’s obligations under the Third Amended and Restated Credit Agreement are guaranteed by Subsidiary Guarantors and secured by substantially all assets of the Company.

The Third Amended and Restated Credit Facilities call for interest at Secured Overnight Financing Rate (“SOFR”) plus a margin that ranges from 1.25% to 2.25% or, at the discretion of the Company, the bank’s prime rate plus a margin that ranges from .25% to 1.25%. In both cases the applicable margin is dependent upon Company performance. Under the Third Amended and Restated Credit Agreement, the Company is subject to a minimum fixed-charge coverage financial covenant as well as a maximum total funded debt to EBITDA financial covenant. The Third Amended and Restated Credit Agreement contains other covenants customary for transactions of this type, including restrictions on certain payments, permitted indebtedness and permitted investments.

At June 30, 2026, the Company had approximately $117.3 million in outstanding borrowings under the Third Amended and Restated Credit Agreement and also had approximately $0.7 million in standby letters of credit outstanding, drawable as a financial guarantee on worker’s compensation insurance policies. At June 30, 2026, the weighted average interest rate was approximately 5.0% and the Company was in compliance with all covenants under the Third Amended and Restated Credit Agreement.

Long-term debt consists of the following (in thousands):

Future maturities of long-term debt at June 30, 2026 are as follows (in thousands):

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

UFP Technologies is a trusted contract development and manufacturing organization specializing in comprehensive solutions for medical devices, sterile packaging and other highly engineered custom products. Our single-use and single-patient devices and components are used across a wide range of medical products in segments including robotic assisted surgery, patient beds, infection control, cardiovascular, orthopedics and spine and wound care.

Our current strategy includes further organic growth and growth through strategic acquisitions.

Net sales for the six months ended June 30, 2026 increased 9.6% to $328.2 million from $299.3 million in the same period last year. The increase was largely due to growth in sales in our Surfaces and Support, Cardiovascular, Infection Control, and Orthopedics sub-markets. Organic sales growth for the three and six months ended June 30, 2026 was 12.4% and 6.8%, respectively. Net sales from our largest two customers were 26.2% and 21.0% of our total net sales during the three months ended June 30, 2026, respectively, and 25.5% and 21.5% of our total net sales during the six months ended June 30, 2026, respectively.

In 2025, we executed a post-acquisition review of our AJR Enterprises, LLC (“AJR”) labor force’s United States employment eligibility through E-Verify protocols. This review has resulted in significant workforce turnover during the year (the "AJR Labor Issue"). Attention spent by experienced employees training new direct and indirect employees in our standards and policies has decreased productivity and therefore has created inefficiencies in our AJR operations. To address the AJR Labor Issue, we recruited legally eligible replacement associates.

Impact of Tariffs

In 2025, the United States imposed increased tariffs on foreign imports, including all the countries in which we manufacture goods outside the United States and also the countries in which our customers operate. In February 2026, the U.S. Supreme Court ruled that these tariffs levied under the International Emergency Economic Powers Act (“IEEPA”) are unconstitutional. As a result of this ruling, the U.S. Court of International Trade issued an order directing the U.S. Customs and Border Protection (“CBP”) agency to begin formalizing a process for refunds. On April 20, 2026, the CBP launched an online portal that can be used to submit IEEPA tariff refund requests. Since then, the U.S. has launched tariffs under different authorities. Given that the tariff landscape created by the current administration remains dynamic, we continue to adapt to the changes and manage new requirements. We believe this will remain dynamic in the near future and we will continue to monitor and manage.

Cyber Incident

On or about February 14, 2026, we detected the Cyber Incident (as defined in Item 1C, Cybersecurity in our Annual Report on Form 10-K for the year ended December 31, 2025). As of the date hereof, the incident has not had a material impact on our financial systems, operations or financial condition. While our investigation and assessment of this incident is ongoing, as of the date of this filing, our IT systems are operational in all material respects and we do not believe the incident is reasonably likely to materially impact our financial condition or results of operations. There can be no assurance that the Cyber Incident or any future cybersecurity incidents will not have a material impact on our future operations, financial systems or financial condition. See Item 1A “Risk Factors” within our Annual Report on Form 10-K for the year ended December 31, 2025 under the headings “Security breaches, including cybersecurity incidents and other disruptions could compromise our information, expose us to liability and harm our reputation and business” and “We experienced a material information technology (“IT”) systems incident in February 2026, which could result in a number of potentially unknown outcomes, including but not limited to, litigation, regulatory investigations or enforcement actions, or reputational harm, any of which could have a material impact on our business operations, financial condition, or results of operations,” and the discussion in Item 1C, Cybersecurity, within our Annual Report on Form 10-K for the year ended December 31, 2025.

Results of Operations

Net Sales

Net sales for the three months ended June 30, 2026 increased approximately 15.1% to $174.0 million from sales of $151.2 million for the same period in 2025. The increase was largely due to growth in sales in our Surfaces and Support, Cardiovascular, Infection Control, and Orthopedics sub-markets. Organic sales growth for the second quarter of 2026 was 12.4%.

Net sales for the six months ended June 30, 2026 increased approximately 9.6% to $328.2 million from sales of $299.3 million for the same period in 2025. The increase was largely due to growth in sales in our Surfaces and Support, Cardiovascular, Infection Control, and Orthopedics sub-markets. Organic sales growth for the first half of 2026 was 6.8%.

Gross Profit

Gross profit as a percentage of sales ("Gross Margin") increased to 29.3% for the three months ended June 30, 2026 from 28.8% for the same period in 2025, driven primarily by increased operating efficiencies as well as leveraging strong organic sales growth against fixed overhead costs.

Gross margin increased to 29.0% for the six months ended June 30, 2026, from 28.6% for the same period in 2025, driven primarily by increased operating efficiencies.

Selling, General and Administrative Expenses

SG&A increased approximately 21.8% to $22.8 million for the three months ended June 30, 2026, from $18.7 million for the same period in 2025. The increase is primarily attributable to increased headcount and other back-office resources, including variable compensation, of approximately $1.9 million and an increase in share-based compensation expense of approximately $1.0 million, partially due to CEO transition costs. As a percentage of sales, SG&A increased to 13.1% for the three months ended June 30, 2026, from 12.4% for the same three months in 2025.

SG&A increased approximately 17.0% to $43.8 million for the six months ended June 30, 2026, from $37.4 million for the same period in 2025. The increase is primarily attributable to increased headcount and other back-office resources, including variable compensation, of approximately $2.6 million and an increase in share-based compensation expense of approximately $1.6 million, partially due to CEO transition costs. As a percentage of sales, SG&A increased to 13.3% for the six months ended June 30, 2026 from 12.5% for the same six months in 2025.

Interest Expense, Net

Interest expense, net was approximately $1.7 million and $2.7 million for the three months ended June 30, 2026, and 2025, respectively. The decrease for the three months ended June 30, 2026 was primarily due to lower average debt in the three months ended June 30, 2026 as compared to the same period in 2025. Interest income was immaterial.

Interest Expense, net was approximately $3.4 million and $5.5 million for the six months ended June 30, 2026, and 2025, respectively. The increase for the six months ended June 30, 2026 was primarily due to lower average debt in the six months ended June 30, 2026 as compared to the same period in 2025. Interest income was immaterial.

Other (Income) Expense

Other income was less than $0.1 million and other expense was less than $0.1 million for the three months ended June 30, 2026 and 2025, respectively. Changes in other (income) expense are primarily generated by equity method investment income and foreign currency transaction gains and losses.

Other income was less than $0.1 million and other expense was approximately $0.1 million for the six months ended June 30, 2026 and 2025, respectively. Changes in other (income) expense are primarily generated by equity method investment income and foreign currency transaction gains and losses.

Income Taxes

We recorded tax expense of approximately 21.1% and 20.6% of income before income tax expense, for the three months ended June 30, 2026 and 2025, respectively. The increase in the effective tax rate for the second quarter of 2026 is largely due to higher anticipated income from domestic operations.

We recorded tax expense of approximately 20.2% and 18.0% of income before income tax expense, for the six months ended June 30, 2026 and 2025, respectively. The increase in the effective tax rate for the current period as compared to the prior period is largely due to higher anticipated income from domestic operations, along with large favorable discrete items in the first quarter of 2025 associated with equity compensation and a state tax refund.

Liquidity and Capital Resources

We generally fund our 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, 2026 was approximately $18.8 million and was primarily a result of net income generated of approximately $38.3 million, depreciation and amortization of approximately $9.9 million, and share-based compensation of approximately $6.0 million for the six months ended June 30, 2026. This was offset by changes in operating assets and liabilities of approximately $40.1 million, primarily driven by a $30.5 million increase in accounts receivables, net due to increased sales volume in the second quarter of 2026 as compared to the fourth quarter of 2025.

Net cash used for investing activities during the six months ended June 30, 2026 was approximately $2.8 million and was primarily comprised of additions of manufacturing machinery and equipment and various building improvements.

Net cash used for financing activities was approximately $27.0 million during the six months ended June 30, 2026 and was primarily the result of debt payments of approximately $18.2 million.

Outstanding and Available Debt

On June 27, 2024, we, as the borrower, entered into a secured $275 million Amended and Restated Credit Agreement (the “Third Amended and Restated Credit Agreement”) with certain of our subsidiaries (the “Subsidiary Guarantors”) and Bank of America, N.A., in its capacity as the initial lender, Administrative Agent, Swingline Lender and L/C Issuer, and certain other lenders from time-to-time party thereto. The Third Amended and Restated Credit Agreement amends and restates our prior credit agreement, originally dated as of December 22, 2021.

The credit facilities under the Third Amended and Restated Credit Agreement consist of a secured term loan to us of $125 million and a secured revolving credit facility, under which we may borrow up to $150 million. The Third Amended and Restated Credit Facilities mature on June 27, 2029. This maturity date is subject to acceleration and we could be subject to additional fees and expenses in certain circumstances should one or more events of default described in the Third Amended and Restated Credit Agreement occur. The secured term loan requires quarterly principal payments of $3,125,000 that

commenced on December 31, 2024. The proceeds of the Third Amended and Restated Credit Agreement may be used for general corporate purposes, including funding certain acquisitions, as well as certain other permitted acquisitions. Our obligations under the Third Amended and Restated Credit Agreement are guaranteed by Subsidiary Guarantors and secured by substantially all of our assets.

The Third Amended and Restated Credit Facilities call for interest at the Secured Overnight Financing Rate (“SOFR”) plus a margin that ranges from 1.25% to 2.25% or, at our discretion, the bank’s prime rate plus a margin that ranges from .25% to 1.25%. In both cases the applicable margin is dependent upon Company performance. Under the Third Amended and Restated Credit Agreement, we are subject to a minimum fixed-charge coverage financial covenant as well as a maximum total funded debt to EBITDA financial covenant. The Third Amended and Restated Credit Agreement contains other covenants customary for transactions of this type, including restrictions on certain payments, permitted indebtedness and permitted investments.

At June 30, 2026, we had approximately $117.3 million in outstanding borrowings under the Third Amended and Restated Credit Agreement and also had approximately $0.7 million in standby letters of credit outstanding, drawable as a financial guarantee on worker’s compensation insurance policies. At June 30, 2026, the weighted average interest rate was approximately 5.0% and we were in compliance with all covenants under the Third Amended and Restated Credit Agreement.

Long-term debt consists of the following (in thousands):

Future maturities of long-term debt at June 30, 2026 are as follows (in thousands):

Future Liquidity

We require cash to pay our operating expenses, purchase capital equipment, and to service our contractual obligations. Our principal sources of funds are our operations and our Third Amended and Restated Credit Agreement. We generated cash of approximately $18.8 million from operations during the six months ended June 30, 2026. We cannot guarantee that our operations will generate cash in future periods. Our longer-term liquidity is contingent upon future operating performance and the availability of draws on our revolving credit facility. Further, the economic uncertainty resulting from events including inflation, tariffs, bank failures, and other factors beyond our control could affect our long-term ability to access the public markets and obtain necessary capital in order to properly capitalize and continue operations.

We plan to continue to add capacity to enhance operating efficiencies in its manufacturing plants and accommodate anticipated growth in demand. We may consider additional acquisitions of companies, technologies, or products that are complementary to our business. We believe that our existing resources, including our revolving credit facility, together with cash expected to be generated from operations, will be sufficient to fund our cash flow requirements, including expected capital expenditures, through the next twelve months.

We may also require additional capital in the future to fund capital expenditures, acquisitions, or other investments. These capital requirements could be substantial. We anticipate that any future expansion of our business will be financed through existing resources, cash flow from operations, our revolving credit facility, or other new financing. We cannot guarantee that we will be able to meet existing financial covenants or obtain other new financing on favorable terms, if at all.

Critical Accounting Estimates

There have been no material changes to our Critical Accounting Estimates, as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.

Commitments and Contractual Obligations

There have been no material changes outside the ordinary course of business to our contractual obligations and commitments, as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in our market risks as previously disclosed in Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2025.

ITEM 4: CONTROLS AND PROCEDURES

The Company carried out an evaluation, under the supervision and with the participation of its management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Report (the “Evaluation Date”). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

The Company closed on the acquisitions of TPI and UNIPEC in the third quarter of 2025. The TPI and UNIPEC acquisitions’ total assets and net sales constituted approximately 2.4% and 2.6%, respectively, of the Company’s consolidated total assets and net sales as shown on our condensed consolidated financial statements as of and for the period ended June 30, 2026. As the acquisitions occurred in the third quarter of fiscal 2025, the Company excluded all of the acquired businesses internal control over financial reporting from the scope of the assessment of the effectiveness of the Company’s disclosure controls and procedures. This exclusion is in accordance with the general guidance issued by the Staff of the Securities and Exchange Commission that an assessment of a recently acquired business may be omitted from the scope within the first year of acquisition if specified conditions are satisfied.

PART II: OTHER INFORMATION

ITEM 1: LEGAL PROCEEDINGS

The Company is not a party to any material litigation or other material legal proceedings. From time to time, the Company may be a party to various suits, claims and complaints arising in the ordinary course of business. In the opinion of management of the Company, these suits, claims and complaints should not result in final judgments or settlements that, in the aggregate, would have a material adverse effect on the Company’s financial condition or results of operations.

ITEM 1A: RISK FACTORS

The Company faces a number of uncertainties and risks that are difficult to predict and many of which are outside of the Company's control. For a detailed discussion of the risks that affect our business, you should consider carefully the risks and uncertainties described in this Quarterly Report on Form 10-Q as well as our other public filings with the SEC including Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes from the risk factors included in our Annual Report on Form 10-K for the year ended December 31, 2025 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2026.

ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3: DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4: MINE SAFETY DISCLOSURES

Not Applicable.

ITEM 5: OTHER INFORMATION

During the second quarter of fiscal 2026, none of our directors or executive officers adopted Rule 10b5-1 trading plans and none of our directors or executive officers terminated a Rule 10b5-1 trading plan or adopted or terminated a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K).

ITEM 6: EXHIBITS

*Filed herewith.

**Furnished herewith.