Ufp Technologies, Inc. · NASDAQ:UFPT
Ufp Technologies — Investor Presentation (November 2019)
40 slides from Ufp Technologies's investor presentation, Nov 15, 2019
Slide 1: Welcome Investors
Welcome Investors November 20, 2019 draft 11/13/2019 2:50pm
Slide 2: Safe Harbor Statement
2 Nasdaq: UFPT Safe Harbor Statement This presentation contains forward - looking information that involves risks and uncertainties, including statements about the Company’s prospects, anticipated advantages the Company expects to realize from its acquisition strategies, the Company’s financial perf
Slide 3: Who We Are
3 Nasdaq: UFPT Who We Are UFP Technologies is an innovative designer and customer manufacturer of components, subassemblies, products and packaging primarily for the medical market. Headquarters: Newburyport, MA Ticker: UFPT Market cap: ~$323 million (1) Share count: 7.4 million 2018 Annual revenue:
Slide 4: What We Do
4 Nasdaq: UFPT What We Do We combine our: • Materials expertise • Design engineering capabilities • Precision manufacturing capabilities to help our customers develop, improve, manufacture, or safely transport their products.
Slide 5: Development Process: Customer Challenge
5 Nasdaq: UFPT Development Process Customer Challenge Customer Challenge 85% of new projects generated from current customers and referrals
Slide 6: Design & Development
6 Nasdaq: UFPT Customer Challenge Design & Development Design & Development • 90 + members in Engineering Group • Materials expertise • Vendor partnerships Development Process
Slide 7: Prototype
7 Nasdaq: UFPT Prototype Prototype Customer Challenge Design & Development • Quick turnaround • Laser sample cutting • 3D printing Development Process
Slide 8: Tooling
8 Nasdaq: UFPT Tooling Prototype Customer Challenge Design & Development Tooling • In house – 4 tooling centers • Offshore, low - cost tooling option • Rapid response for design enhancements • Key to close tolerances Development Process
Slide 9: Custom Equipment
9 Nasdaq: UFPT Custom Equipment Prototype Customer Challenge Design & Development Tooling Custom Equipment • Two in - house equipment design centers • 3 rd party vendor relationships • Automation Development Process
Slide 10: Quality Systems
10 Nasdaq: UFPT Prototype Customer Challenge Design & Development Tooling Quality Systems Custom Equipment Quality Systems • Customized quality test equipment • Extensive certifications ▪ ISO 9001 Quality Management ▪ ISO 13485 Medical Device ▪ FDA Registration ▪ ISO 14001 Environmental ▪ ISO/TS 169
Slide 11: Pilot Manufacturing
11 Nasdaq: UFPT Prototype Customer Challenge Design & Development Tooling Quality Systems Custom Equipment Pilot Manufacturing Pilot Manufacturing • Validation • Risk management Development Process
Slide 12: Commercial Production
12 Nasdaq: UFPT Prototype Customer Challenge Design & Development Tooling Quality Systems Custom Equipment Pilot Manufacturing Commercial Production Commercial Production • High volume • Continuous improvement • In - line inspection and test Development Process
Slide 13: Product Development Business Benefits
13 Nasdaq: UFPT Product Development Business Benefits Product Development Business High Margin Long Term Manufacturing Stronger Customer Relationships Added Expertise
Slide 14: Growth Strategy
14 Nasdaq: UFPT Growth Strategy Two - pronged: 1) Internal growth: market to our sweet spot 2) Strategic acquisitions
Slide 15: Internal Growth Strategy: Six Target Markets
15 Nasdaq: UFPT Internal Growth Strategy 64% 11% 9% 4% 5% 7% Six Target Markets 2019 YTD Revenue Mix • Infection prevention • Orthopedic implant packaging • Orthopedic soft braces • Advanced wound care • Sterile packaging • Surgical instrument protection • Biopharma Medical Automotive • Interior tri
Slide 16: Medical
16 Nasdaq: UFPT Medical $425 billion Global Medical Device Market with a 5.4% CAGR 1 » UFP expertise in component solutions for orthopedics, infection prevention, wound care, and minimally invasive surgery » Customers include 24 of the top 28 largest medical device manufacturers in the world 2 UFP D
Slide 17: Medical Product Examples
17 Nasdaq: UFPT Medical Product Examples Medical
Slide 18: Automotive
18 Nasdaq: UFPT Automotive 17 Million Light Vehicles Manufactured in the US 1 » UFP Innovations such as FirmaLite ® load floors and HPAM™ acoustic insulation align with current trends in lightweighting for SUVs and trucks as well as interior cabin noise reduction in electric vehicles. » Our componen
Slide 19: Automotive Product Examples
19 Nasdaq: UFPT Automotive Product Examples Automotive
Slide 20: Aerospace & Defense
20 Nasdaq: UFPT Aerospace & Defense Aircraft Volumes Expected to Double by 2037 1 While Defense Opportunities Lie in Long - term R&D » UFP expertise in comfort & safety components, acoustic insulation, thermal insulation, engine components, uniforms & tactical gear, cases and inserts UFP Differentia
Slide 21: Aerospace & Defense Product Examples
21 Nasdaq: UFPT Aerospace & Defense Product Examples Aerospace & Defense
Slide 22: Why Invest?
22 Nasdaq: UFPT Why Invest? • Significant market growth opportunities • Barriers to entry • Strong customer relationships • Experienced management team • Proven growth strategy • Attractive financial metrics
Slide 23: Why is UFP an exciting investment?
23 Nasdaq: UFPT Why is UFP an exciting investment? Significant market growth opportunities » Addressable markets are growing • Medical – aging population • Aerospace – safer, lighter aircraft » Device development business seeding growth » Universe of specialty materials growing
Slide 24: Barriers to Entry
24 Nasdaq: UFPT Barriers to Entry Engineering Resources • Veteran engineering team for product design and development; more than 90 members of the engineering group Greater Access to Materials • Offers broad array of materials to meet customer needs • 50 + years in business and strong supplier relat
Slide 25: National Footprint
25 Nasdaq: UFPT National Footprint Gain Efficiencies Asset utilization Sharing best practices Sharing resources 9 Manufacturing Facilities Over 1 million square feet of space 25
Slide 26: Management Team
26 Nasdaq: UFPT Management Team R. Jeffrey Bailly – Chairman, CEO & President 31 - year history at the company, beginning as an operations manager in 1988; MBA, CPA. Ronald Lataille – CFO, Sr. VP & Treasurer 21 - year history at the company; CPA. Mitchell Rock – SVP, Sales & Marketing 21 - year hist
Slide 27: Proven Growth Strategy Creating Shareholder Value
Proven Growth Strategy Creating Shareholder Value
Slide 28: Organic Growth Opportunity
28 Nasdaq: UFPT Organic Growth Opportunity Organic Growth (Target of 5% - 7%) • Focus on higher - growth markets (Medical – approximately 64% of revenue and growing) • Expand business with existing customers o Offer complementary products and services o Additional value - add services • Gain market
Slide 29: Acquisition Growth Opportunity
29 Nasdaq: UFPT Acquisition Growth Opportunity Acquisition Growth (Target of 5% - 7%) Very fragmented market • No single company controls a large percentage of the market (UFP is one of the largest players) • 500 + companies (potential targets) • Many owner / operators at or near retirement age • Re
Slide 30: Acquisitive Growth Strategy
30 Nasdaq: UFPT Acquisitive Growth Strategy Continue to Focus on Higher - Growth, Higher - Margin Medical Opportunities that Create Value • Become more valuable to our customers • Strategic focus – new capability, geography, market penetration, materials, products • Add scale / market share • Look f
Slide 31: Dielectrics Acquisition
31 Nasdaq: UFPT Dielectrics Acquisition » Revenue $43 million » 100% medical » Single location in Chicopee, Massachusetts » Great cultural and strategic fit » Instantly accretive to earnings » Makes UFP more valuable to medical customers
Slide 32: Financial Review
FINANCIAL REVIEW Revenue Growth, Margin Expansion & Strong Financial Profile
Slide 33: Financial Targets
33 Nasdaq: UFPT Financial Targets 10% - 14% Revenue Growth 11% - 13% Operating Margin 27% - 28% Gross Margin 3 to 5 Year Financial Targets
Slide 34: Revenue
34 Nasdaq: UFPT Revenue 10% to 14% Targeted Revenue Growth Internal Growth + Acquisitions 0 20 40 60 80 100 120 140 160 180 200 2014 2015 2016 2017 2018 3Q18 TTM 3Q19 TTM $ Millions
Slide 35: Revenue Mix Shift
35 Nasdaq: UFPT Revenue Mix Shift 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 Medical Consumer Automotive Aerospace & Defense Electronics Industrial 2014 2015 2016 2017 2018 9 Mos 2019 (Annualized) Revenue Mix Shift 2014 to September 2019 Medical mix increased from 36% to 64%
Slide 36: Gross Profit Margin
36 Nasdaq: UFPT Gross Profit Margin Gross Margin Target – 27% to 28% Operating Leverage from Mix Shift + Acquisition synergies + Efficiencies 27 - 28%Target 10.0% 15.0% 20.0% 25.0% 30.0% 2014 2015 2016 2017 2018 TTM 3Q18 TTM 3Q19
Slide 37: Adjusted Operating Margin
37 Nasdaq: UFPT Adjusted* Operating Margin Target: 11 - 13% Operating leverage from mix shift + acquisition synergies + efficiencies 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 2014 2015 2016 2017 2018 3Q18 TTM 3Q19 TTM * Adjusted Operating Income is a non - GAAP term. A reconciliation to GAAP is pro
Slide 38: Growing Book Value
38 Nasdaq: UFPT Growing Book Value Book Value EPS $1.59 $1.05 $1.05 $1.10 $1.26 $1.93 $2.46 $10.00 $12.00 $14.00 $16.00 $18.00 $20.00 $22.00 2013 2014 2015 2016 2017 2018 Q3 19 TTM BV/ Share EPS
Slide 39: Thank you
UFP TECHNOLOGIES Thank you.
Slide 40: Reconciliation of Non-GAAP Results
40 Nasdaq: UFPT Appendix Reconciliation of Non - GAAP Results (in Millions) 2014 2015 2016 2017 2018 3Q18 TTM 3Q19 TTM Revenue, As Reported $ 139.3 $ 138.9 $ 146.1 $ 147.8 $ 190.5 $ 177.0 $ 198.8 Operating Income, as reported 11.6 11.7 12.2 11.7 19.6 16.2 23.5 Add: Acquisition/ Restructuring related
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