UFPT

Forward-looking Statements Some of the statements contained in this Report are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). Management and representatives of UFP Technologies, Inc. (the “Company”) also may from time to time make forward-looking statements. These statements are subject to known and unknown risks, uncertainties, and other factors, which may cause our or our industry’s actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements include, but are not limited to, statements about the Company’s prospects; the demand for its products, the well-being and availability of the Company’s employees, the continuing operation of the Company’s locations, delayed payments by the Company’s customers and the potential for reduced or canceled orders; statements about expectations regarding customer inventory levels; statements about the Company’s acquisition strategies and opportunities and the Company’s growth potential and strategies for growth; expectations regarding customer demand; expectations regarding the Company’s liquidity and capital resources, including the sufficiency of its cash reserves and the availability of borrowing capacity to fund operations and/or potential future acquisitions; anticipated revenues and the timing of such revenues; expectations about shifting the Company’s book of business to higher-margin, longer-run opportunities; anticipated trends and potential advantages in the different markets in which the Company competes, including the medical and non-medical, and the Company’s plans to expand in certain of its markets; statements regarding anticipated advantages the Company expects to realize from its investments and capital expenditures; statements regarding anticipated advantages to improvements and alterations at the Company’s existing plants; expectations regarding the Company’s manufacturing capacity, operating efficiencies, and new production equipment; expectations that the Company will receive reimbursement for tariff-related costs in the form of vendor credits from suppliers that previously passed such tariffs through to the Company, whether directly or through price increases; statements about new product offerings and program launches; statements about the Company’s participation and growth in multiple markets; statements about the Company’s business opportunities; and any indication that the Company may be able to sustain or increase its net sales, earnings or earnings per share, or its sales, earnings or earnings per share growth rates. Investors are cautioned that such forward-looking statements involve risks and uncertainties that could adversely affect the Company’s business and prospects, and otherwise cause actual results to differ materially from those anticipated by such forward-looking statements, or otherwise, including without limitation: our financial condition and results of operations, including risks relating to substantially decreased demand for the Company’s products; risks relating to the potential closure of any of the Company’s facilities or the unavailability of key personnel or other employees; risks that the Company’s inventory, cash reserves, liquidity or capital resources may be insufficient; risks relating to delayed payments by our customers and the potential for reduced or canceled orders; risks related to customer concentration; risks related to global conflict or civil unrest to the efficacy or cost of our manufacturing process and supply chain; risks associated with the identification of suitable acquisition candidates and the successful, efficient execution of acquisition transactions, the integration of any such acquisition candidates, the value of those acquisitions to our customers and shareholders, and the financing of such acquisitions; risks related to our indebtedness and compliance with covenants contained in our financing arrangements, and whether any available financing may be sufficient to address our needs; risks associated with efforts to shift the Company’s book of business to higher-margin, longer-run opportunities; risks associated with the Company’s entry into and growth in certain markets; risks and uncertainties associated with seeking and implementing manufacturing efficiencies and implementing new production equipment; risks associated with governmental regulations and/or sanctions affecting the import and export of products, including tariffs, global trade barriers, additional taxes, tariff increases or uncertainties, cash repatriation restrictions, retaliations and boycotts between the U.S. and other countries; risks associated with domestic, regional and global political risks and uncertainties; risks associated with the U.S. and Iran conflict; risks and uncertainties associated with growth of the Company’s business and increases to sales, earnings and earnings per share; risks relating to cybersecurity, including cyber-attacks on the Company’s information technology infrastructure, products, suppliers, customers and partners, and cybersecurity-related regulations, and the potential consequences of the Cyber Incident (as defined in Item 1C, Cybersecurity in our Annual Report on Form 10-K for the year ended December 31, 2025) could result in data or financial loss, reputational harm, business disruption, damage to our relationships with customers, consumers, employees and third parties on which we rely, litigation, regulatory investigations, enforcement actions or other negative impacts under cybersecurity related regulations or otherwise; risks associated with our or third-party use of artificial intelligence technologies; risks associated with new product and program launches; risks relating to our performance and the performance of our counterparties under the agreements we have entered into; the risk that our two largest customers, on whom we depend for a substantial portion of our annual revenues, will not purchase the expected 24 volume of goods under the supply agreements we have entered into with them because, among other things, they no longer require the products at all or to the degree they anticipated or because, among other things, our largest customer, decides to manufacture the products itself or through one of its affiliates it obtains the products from other listed suppliers specified in our agreement; the risk that we will not achieve expected rebates under the applicable supply agreement; and risks relating to our ability to maintain increased levels of production at profitable levels, if at all; or to continue to increase production rates and risks relating to disruptions and delays in our supply chain or labor force. Accordingly, actual results may differ materially. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “potential,” and similar expressions intended to identify forward-looking statements. Our actual results could be different from the results described in or anticipated by our forward-looking statements due to the inherent uncertainty of estimates, forecasts, and projections, and may be materially better or worse than anticipated. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Forward-looking statements represent our current beliefs, estimates and assumptions and are only as of the date of this Report. We expressly disclaim any duty to provide updates to forward-looking statements, and the estimates and assumptions associated with them, after the date of this Report, in order to reflect changes in circumstances or expectations, or the occurrence of unanticipated events, except to the extent required by applicable securities laws. All of the forward-looking statements are qualified in their entirety by reference to the factors discussed above and under “Risk Factors” set forth in Part I Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025, as well as the risks and uncertainties discussed elsewhere in this Report and our filings with the Securities and Exchange Commission. We qualify all of our forward-looking statements by these cautionary statements. We caution you that these risks are not exhaustive. We operate in a continually changing business environment and new risks emerge from time to time. Unless the context requires otherwise, the terms “we”, “us”, “our”, or “the Company” refer to UFP Technologies, Inc. and its consolidated subsidiaries. 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. 25 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. 26 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 27 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): June 30, 2026 Revolving credit facility $ 14,180 Term loan 103,125 Total long-term debt 117,305 Current portion (12,500) Long-term debt, excluding current portion $ 104,805 Future maturities of long-term debt at June 30, 2026 are as follows (in thousands): Term Loan Revolving credit facility Total Remainder of 2026 $ 6,250 $ — $ 6,250 2027 12,500 — 12,500 2028 12,500 — 12,500 2029 71,875 14,180 86,055 $ 103,125 $ 14,180 $ 117,305 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. 28 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.