UFP Technologies (NASDAQ:UFPT) reported third-quarter 2026 sales growth of 11.6%, supported by broad demand across its medical technology portfolio, while management outlined continued investments in capacity, operational improvements and acquisitions heading into 2027.
Third-quarter sales totaled $172.4 million, while organic sales growth was 11.1%, Chief Executive Officer Mitch Rock said during the company’s earnings call. Year-to-date sales increased 10.3% to $500.6 million. MedTech sales rose 12.5% during the quarter and were up 11.7% year to date, with the company’s five largest MedTech customers collectively growing 11.7% year to date.
“What stands out to me is how broad the growth is,” Rock said, adding that UFP’s growth does not depend on any single customer, program or end market.
Medical demand drives quarterly growth
Chief Financial Officer Ron Lataille said sales growth was fueled by strength in the patient beds and handling, cardiovascular, infection control and orthopedic submarkets. He said the company’s program launches were accelerating and that UFP continued to improve efficiencies at AJR, its acquired business.
Rock said robotic-surgery activity remained consistent with the company’s prior expectation that 2026 would be a flat-to-down year for that market. However, he pointed to potential growth at DAS Medical in 2027 and beyond, citing a long-term customer agreement, the annualized benefit of programs launched during 2026, and adoption of previously subscale robotic surgical platforms.
UFP is adding capacity, personnel and capabilities at DAS Medical in anticipation of double-digit growth, according to Rock. The company also received a supplier award from one of its five largest customers for creating value through innovation and cost savings, he said.
Margins improve despite AJR transfer delays
Gross margin increased to 29.4% in the third quarter from 27.7% a year earlier. Adjusted operating income increased 14.5%, while adjusted operating margin was 17.5%. Adjusted diluted earnings per share reached $2.88, Lataille said.
The gross-margin improvement occurred despite continued pressure at AJR, where the company is moving certain labor-intensive production to the Dominican Republic. Those transfers have been delayed because customer qualification is still required for some products.
Rock said AJR has made significant year-over-year progress in both the U.S. and Dominican Republic, though the company is behind schedule on transferring activity offshore. Management expects additional transfer activity to be completed in 2027.
“The overall business is contributing, so we’re making it better,” Rock said. He added that the transfer is complex and that the company is aligning resources with customers’ priorities.
When asked about profitability, Rock said management remains comfortable with its gross-margin range of 28% to 31% and views the current level near 29% as an appropriate baseline. He attributed progress across the broader portfolio to sales volume and ongoing cost-reduction efforts.
SG&A rises as company invests for growth
Third-quarter selling, general and administrative expense increased $4.1 million year over year to $23.2 million. Lataille attributed much of the increase to approximately $1.9 million in wages and benefits associated with back-office investments, additions to senior management and variable compensation.
The company also recorded approximately $800,000 in non-cash equity compensation, partially driven by duplicate CEO equity costs. Rock said those one-time duplicate CEO costs will roll off, while increased cybersecurity expenses will remain. He said UFP has invested ahead of growth in its team and expects SG&A growth to moderate as the company expands organically and adds businesses through acquisitions.
UFP generated approximately $38.5 million of cash from operations during the quarter, spent $3.9 million on capital expenditures and ended the period with a leverage ratio well below one times, Lataille said.
Acquisition strategy expands alongside plastics capabilities
In August, UFP acquired CI Medical, a medical-device printing company focused on printing on injection-molded and extruded plastic components. Rock said the acquisition complements the company’s growing plastics business and its 2025 investment in TPI, which gave UFP an initial position in medical injection molding.
Management views plastics, extrusion and adhesives as areas where UFP is comparatively smaller but sees potential to expand through both internal investment and acquisitions. Rock described plastics as one of the largest areas within single-use contract development and manufacturing organizations.
The company is also working to expand its credit facility as it seeks larger acquisition opportunities. Rock said UFP remains disciplined on strategic fit and valuation, while maintaining its existing approach to leverage. He said the company can borrow up to 3.25 times EBITDA under its credit facility and will consider transactions at a larger scale as the enterprise grows.
Looking ahead, Rock said UFP remains comfortable with its long-term framework of 6% to 9% organic growth and 12% to 18% combined organic and inorganic growth. He noted that the fourth quarter is traditionally softer and that expanded Dominican Republic operations could reinforce that seasonal pattern because of additional holiday shutdowns.
Management said its priorities remain growing with customers, improving operations, investing in capabilities and pursuing disciplined acquisitions as it enters 2027.
About UFP Technologies (NASDAQ:UFPT)
UFP Technologies, Inc (NASDAQ: UFPT) is a designer and manufacturer of engineered components, assemblies and packaging solutions, with a primary focus on the medical device and healthcare markets. The company works with original equipment manufacturers and other customers to develop products used in surgical, orthopedic, diagnostic, wound-care and other medical applications.
Its capabilities include converting and fabricating advanced materials such as foams, films, laminates, textiles and composites, as well as molding plastics and producing complex assembled products.
