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What changed in UFP TECHNOLOGIES INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of UFP TECHNOLOGIES INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+164 added−144 removedSource: 10-K (2025-03-03) vs 10-K (2024-02-29)

Top changes in UFP TECHNOLOGIES INC's 2024 10-K

164 paragraphs added · 144 removed · 126 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThe Company markets through websites, trade shows and expositions, social media, online advertising, emails, and press releases. Its relationships with key material suppliers are also an important part of its marketing and sales efforts. The Company markets and sells its products principally through a direct sales force.
Biggest changeIts relationships with key material suppliers are also an important part of its marketing and sales efforts. The Company markets and sells its products principally through a direct sales force. The Company’s commercial leaders, in conjunction with Company engineers, collaborate with customers and in-house design and manufacturing experts to develop custom-engineered solutions on a cost-effective basis.
The product segments we target, and within which we operate, include minimally invasive surgery, infection control, orthopedics, interventional & surgical, surfaces & support, therapeutics, diagnostics, wound care, and biopharma. ● Automotive – Automotive companies are challenged with creating quieter, safer and more efficient vehicles.
The product segments we target, and within which we operate, include minimally invasive surgery, infection control, orthopedics, interventional & surgical, surfaces & support, therapeutics, diagnostics, wound care, and biopharma. 4 ● Automotive – Automotive companies are challenged with creating quieter, safer and more efficient vehicles.
The Company expects to compete effectively in the engineered products market due to its ability to address its customers' primary vendor selection criteria, including inclusion on their preferred supplier lists, price, product performance, product reliability, and customer service, as well as its access to a wide variety of materials, its engineering expertise, its ability to combine foams with other materials such as plastics and laminates, and its ability to manufacture products in a clean room environment. 6 Patents and Other Proprietary Rights The Company relies upon trade secrets, patents, and trademarks to protect its technology and proprietary rights.
The Company expects to compete effectively in the engineered products market due to its ability to address its customers' primary vendor selection criteria, including inclusion on their preferred supplier lists, price, product performance, product reliability, manufacturing locations, and customer service, as well as its access to a wide variety of materials, its engineering expertise, its ability to combine foams with other materials such as plastics and laminates, and its ability to manufacture products in a clean room environment. 6 Patents and Other Proprietary Rights The Company relies upon trade secrets, patents, and trademarks to protect its technology and proprietary rights.
Although the Company relies upon a limited number of suppliers for cross-linked and technical polyurethane foams, the Company’s relationships with its suppliers are good, and the Company expects that these suppliers will be able to meet its requirements for these foams.
Although the Company relies upon a limited number of suppliers for cross-linked and technical polyurethane foams, and TPU, the Company’s relationships with its suppliers are good, and the Company expects that these suppliers will be able to meet its requirements for these foams.
The Company will not tolerate unlawful discrimination and harassment in the workplace; it expressly prohibits any form of unlawful discrimination or harassment based on race, color, religion, sex, sexual orientation, gender identity or expression, national origin, ethnicity, age, physical or mental disability, genetic information, military or veteran status, pregnancy, childbirth or related medical conditions, or any other legally protected status under applicable federal, state, or local law.
The Company does not tolerate unlawful discrimination and harassment in the workplace; it expressly prohibits any form of unlawful discrimination or harassment based on race, color, religion, sex, sexual orientation, gender identity or expression, national origin, ethnicity, age, physical or mental disability, genetic information, military or veteran status, pregnancy, childbirth or related medical conditions, or any other legally protected status under applicable federal, state, or local law.
The Company partners with OEMs, Tier 1 suppliers, and its own material manufacturers to develop customized solutions designed to solve automakers’ biggest challenges. 4 ● Aerospace & Defense – With regard to the aerospace market, the Company primarily targets commercial aircraft manufacturers to address the need for improved safety, better fuel economy, lower emissions, and overall passenger comfort.
The Company partners with OEMs, Tier 1 suppliers, and its own material manufacturers to develop customized solutions designed to solve automakers’ challenges. ● Aerospace & Defense – With regard to the aerospace market, the Company primarily targets commercial aircraft manufacturers to address the need for improved safety, better fuel economy, lower emissions, and overall passenger comfort.
Laminated products for medical, military, and personal comfort and protection are produced through a process whereby the foam medium is heated to the melting point and the heated foam is typically bonded to a non-foam material through the application of mechanical pressure. The Company also engineers components for automotive use as interior trim and structural applications.
Laminated products for medical, military, and personal comfort and protection are produced through a process whereby the foam medium is heated to the melting point and then bonded to a non-foam material through the application of mechanical pressure. The Company also engineers components for automotive use as interior trim and structural applications.
With regard to the defense market, as a long-time supplier to military defense contractors and law enforcement, the Company provides highly innovative solutions to enhance soldier safety, improve comfort, and protect mission critical equipment. ● Industrial/Other – The applications for the Company's industrial and other products are highly diverse.
With regard to the defense market, as a long-time supplier to military defense contractors and law enforcement, the Company provides highly innovative solutions intended to enhance soldier and officer safety, improve comfort, and protect mission critical equipment. ● Industrial/Other – The applications for the Company's industrial and other products are highly diverse.
See the Company’s consolidated financial statements contained in Part IV, Item 15, of this Report for net sales by market. Manufacturing The Company’s manufacturing operations consist primarily of cutting, routing, compression and injection, molding, vacuum-forming, laminating, radio frequency and impulse welding and assembling.
See the Company’s consolidated financial statements contained in Part IV, Item 15, of this Report for net sales by market. Manufacturing The Company’s manufacturing operations consist primarily of cutting, routing, compression and injection molding, vacuum-forming, micro-molding, thermoforming, laminating, radio frequency and impulse welding, and assembling.
The loss of any such customer, a reduction in sales to any such customer, or the decline in the financial condition of any such customer could have a material adverse effect on our business, financial condition, and results of operations.” 5 Seasonality is not a major factor in the Company’s sales.
The loss of any such customer, a reduction in net sales to any such customer, or the decline in the financial condition of any such customer could have a material adverse effect on our business, financial condition, and results of operations.” Seasonality is not a major factor in the Company’s net sales.
The Company has a total of 19 active patents relating to technologies including foam, packaging, tool control technologies, radio frequency welding, automotive superforming processes and certain nail file technologies. The Company also has patent applications in process.
The Company has a total of 23 active patents relating to technologies including foam, packaging, tool control technologies, radio frequency welding, automotive superforming processes and certain nail file technologies. The Company also has patent applications in process.
These companies generally market their products in specific geographic areas from neighboring facilities. The Company’s custom engineered products face competition primarily from smaller companies that typically concentrate on production of products for specific industries.
These companies generally market their products in specific geographic areas from neighboring facilities. The Company’s custom engineered products face competition primarily from smaller companies that typically concentrate on the production of products for specific industries or regions.
The Company sells its products into distinct markets with its primary focus on the MedTech market: ● MedTech – The global medical market is large, growing, and varied but the Company targets and operates in specific segments where its design and manufacturing expertise and access to highly specialized materials helps customers differentiate products, improve patient outcomes, and increase their client’s speed to market.
The Company sells its products into distinct markets with its primary focus on the MedTech market: ● MedTech – The global medical market is large and growing but the Company targets in specific segments where its development and manufacturing expertise and access to highly specialized materials helps customers differentiate products, improve patient outcomes, and increase their client’s speed to market.
There can be no assurance that any patent or patent application will provide significant protection for the Company’s products and technology or will not be challenged or circumvented by others. The expiration dates for the Company’s patents range from 2024 through 2040.
There can be no assurance that any patent or patent application will provide significant protection for the Company’s products and technology or will not be challenged or circumvented by others. The expiration dates for the Company’s patents range from 2025 through 2041.
Thin films and other materials are sealed using radio frequency and impulse welding. Reticulated polyurethane foam is also used for many high-performance medical products requiring precision fluid or air management. These products are typically fabricated using high speed die-cutting or waterjet cutting.
Thin films and other materials are sealed using radio frequency and impulse welding and formed through a thermoforming process. Reticulated polyurethane foam is also used for many high-performance medical products requiring precision fluid or air management. These products are typically fabricated using high speed die-cutting or waterjet cutting.
With regard to the defense market, molded composites for military gear improve the safety and comfort of soldiers. Applications include backpack components, knee and elbow pads, eyewear, and helmets. In addition, the Company supplies r eusable cases and custom inserts to quickly and safely transport, store, and deploy mission-critical equipment.
With regard to the defense market, molded composites for military gear improve the safety and comfort of soldiers. Applications include backpack components, knee and elbow pads, eyewear, and helmets. In addition, the Company supplies custom protective case systems to quickly and safely transport, store, and deploy mission-critical equipment.
Examples of its custom products targeted to specific markets include: ● MedTech – Protective drapes for robotic surgery, single patient use surfaces, advanced wound care, infection prevention, disposables for surgical and endoscopic procedures, packaging for medical devices, orthopedic implants, biopharma drug manufacturing, and dispenser coils for catheters.
Examples of its custom products targeted to specific markets include: ● MedTech – Protective drapes for robotic surgery, patient handling and comfort, advanced wound care, infection prevention, disposables for surgical and endoscopic procedures, packaging for medical devices and orthopedic implants, components for cardiac implants, dispenser coils for catheters, and biopharma drug manufacturing.
FlexShield®, FirmaLite®, BioShell®, T-Tubes®, Tri-Covers®, Design Nail®, Pro-Sticks®, Cryoshell® Case Fit®, Alloshell®, Flash Shiner®, Mambo®, and EZ Card® are the Company’s U.S. registered trademarks. Each trademark, trade name, or service mark of any other company appearing in this Report belongs to its respective holder.
The Company’s U.S. registered trademarks are: UFP Technologies®, Shaping Innovation®, FlexShield®, FirmaLite®, BioShell®, T-Tubes®, T-Tube®, Tri-Covers®, Design Nail®, Pro-Sticks®, Cryoshell® Case Fit®, Alloshell®, Flash Shiner®, Mambo®, EZ-Card®, ControlClean®, United Foam®, and the Company’s U logo. Each trademark, trade name, or service mark of any other company appearing in this Report belongs to its respective holder.
Growth and Development The Company supports every employee’s opportunity for career growth. It offers tuition reimbursement for employees to further their industry-related formal education; access to virtual training and education platforms; reimbursement to attend work-related seminars; and on-the-job training and cross-training to improve job skills.
For those employees struggling with life’s challenges, the Company offers employee assistance programs. 7 Growth and Development The Company supports every employee’s opportunity for career growth. It offers tuition reimbursement for employees to further their industry-related formal education; access to virtual training and education platforms; reimbursement to attend work-related seminars; and on-the-job training and cross-training to improve job skills.
Access to company subsidized health, life and disability insurance; a matching 401(k) plan; and paid time off for vacation, illness and personal reasons, are the highlights of the Company’s benefits available to all eligible full-time employees. For those employees struggling with life’s challenges, the Company offers employee assistance programs.
Access to company subsidized health, life and disability insurance; a matching 401(k) plan; and paid time off for vacation, illness and personal reasons, are the highlights of the Company’s benefits available to all eligible full-time employees.
Human Capital Management As of January 27, 2024, the Company had a total of 3,093 full-time employees (compared to 2,665 full-time employees as of January 28, 2023) and 200 temporary employees (compared to 303 temporary employees at January 28, 2023). The Company is not a party to any collective bargaining agreements. The Company considers its employee relations to be good.
Human Capital Management As of January 25, 2025, the Company had a total of 4,146 full-time employees (compared to 3,093 full-time employees as of January 27, 2024) and 189 temporary workers (compared to 200 temporary workers at January 27, 2024). The Company is not a party to any collective bargaining agreements. The Company considers its employee relations to be good.
Compensation and Benefits The Company’s compensation and benefits offerings are supported by regular third-party benchmarking surveys. In addition to competitive compensation practices, the Company offers annual stock award bonus programs to reward and retain executives and key employees.
Compensation and Benefits The Company’s compensation and benefits offerings are supported by external data services. In addition to competitive compensation practices, the Company offers annual stock award bonus programs to reward and retain executives and key employees.
In addition, the Company bales and disposes of certain of its urethane and cross-linked foam scrap for use in various recycled products. The Company’s Newburyport, MA facility utilizes solar power to provide approximately 6% of its electricity, with plans to increase capacity in the future. The Company is aware of public support for environmentally responsible packaging and products.
The Company designs products to provide optimum performance with minimum material. In addition, the Company bales and disposes certain of its urethane and cross-linked foam scrap for use in various recycled products. The Company’s Newburyport MA facility utilizes solar power to provide approximately 6% of its electricity, with plans to increase capacity in the future.
The Company has eleven manufacturing locations that are ISO 13485 certified and eight that are FDA registered. The Company’s automotive customers sometimes require their suppliers to certify their manufacturing locations to the IATF 16949 automotive quality standard. The Company’s Grand Rapids, MI facility meets this requirement. The Company designs products to provide optimum performance with minimum material.
The Company has seventeen manufacturing locations that are ISO 13485 certified and eight that are FDA registered. The Company’s automotive customers sometimes require their suppliers to certify their manufacturing locations to the International Automotive Task Force (“IATF”) 16949 automotive quality standard. The Company’s Grand Rapids, MI facility meets this requirement.
Examples include air and liquid filters, thermal and acoustic insulation, seals and gaskets, and comfort gear for sports equipment. Products The Company’s custom products are targeted at macro market trends and create specific opportunities in niche segments where the Company’s access to specialty materials, engineering know-how, and processing expertise can be leveraged to create value for its customers.
Products The Company’s products, which often are custom-made to its customers specifications, are targeted at macro market trends and create specific opportunities in niche segments where the Company’s access to specialty materials, engineering know-how, and processing expertise can be leveraged to create value for its customers.
Products can be used on a stand-alone basis or bonded to another foam product or other material such as a corrugated medium. The Company does not manufacture any of the raw materials used in its products. With the exception of certain grades of cross-linked foam and technical polyurethane foams, these raw materials are available from multiple supply sources.
Products can be used on a stand-alone basis or bonded to another foam product or other material such as a corrugated medium. The Company does not manufacture any of the raw materials used in its products.
Safety As an essential manufacturing company, the Company takes its responsibility to our essential employees’ health and safety seriously. Its corporate safety officer reports directly to the SVP of HR and works with dedicated safety officers at each of our plants to implement safety programs and training. Safety audits are conducted regularly to ensure compliance.
Its corporate safety officer reports directly to the Vice President, Chief Operating Officer, Medtech and works with dedicated safety officers at each of our plants to implement safety programs and training. Safety audits are conducted regularly to ensure compliance.
All significant intercompany balances and transactions have been eliminated in consolidation. Available Information The Company’s Internet website address is http://www.ufpt.com.
The consolidated financial statements of the Company include the accounts and results of operations of UFP Technologies, Inc. and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Available Information The Company’s Internet website address is http://www.ufpt.com.
Applications include military ballistics panels, virtual training systems, drones, communications equipment, and rugged portable computers. Regulatory Climate and Environmental Considerations The Company’s medical customers typically require FDA approval for their products and therefore sometimes require their suppliers to manufacture in facilities that are FDA registered and comply with the ISO 13485 quality standard for medical devices.
Regulatory Climate and Environmental Considerations The Company’s medical customers typically require Food and Drug Administration (“FDA”) approval for their products and therefore sometimes require their suppliers to manufacture in facilities that are FDA registered and comply with the International Organization for Standardization (“ISO”) 13485 quality standard for medical devices.
The Company’s single-use and single-patient devices and components are used in a wide range of medical devices and packaging for minimally invasive surgery, infection prevention, surfaces and support, wound care, wearables, orthopedic soft goods, and orthopedic implants. The Company is diversified by also providing highly engineered products and components to customers in the automotive, aerospace and defense, and industrial/other markets.
The Company’s single-use and single-patient devices and components are used in a wide range of medical devices and packaging for minimally invasive surgery, infection prevention, robotic surgery, patient handling, orthopedic implants, wound care, wearables, and orthopedic soft goods. The Company was incorporated in the State of Delaware in 1993.
Its talent management program provides feedback on performance, identifies employees with potential for advancement, and allows for personalized career development plans.
Its talent management program provides feedback on performance, identifies employees with potential for advancement, and allows for personalized career development plans. Its summer internship program provides the opportunity for college and technical school students to demonstrate and develop the skills to become valuable members of our team.
Future government action may impose restrictions affecting the industry in which the Company operates. There can be no assurance that any such action will not adversely impact the Company’s products and business. Marketing and Sales The Company markets to the target industries it serves by promoting specific solutions, materials, and manufacturing capabilities and services.
There can be no assurance that any such action will not adversely impact the Company’s products and business. 5 Marketing and Net Sales The Company markets to its target customers by promoting specific solutions, materials, and manufacturing capabilities and services. The Company markets through websites, trade shows and expositions, social media, online advertising, emails, and press releases.
For additional information, see “Risk Factors— We depend on a small number of customers for a large percentage of our revenues.
For the year ended December 31, 2024, two customers’ net sales were approximately 28.8% and 15.4% of net sales, respectively; no other customer’s net sales exceeded 10% of net sales. For additional information, see “Risk Factors— We depend on a small number of customers for a large percentage of our net sales.
Its summer internship program provides the opportunity for college and technical school students to demonstrate and develop the skills to become valuable members of our team. 7 The Company’s commitment to its employees has resulted in several national, regional, and local “Best in Class” awards.
The Company’s commitment to its employees has resulted in several national, regional, and local “Best in Class” awards. Safety As an essential manufacturing company, the Company takes its responsibility for our employees’ health and safety seriously.
Removed
Typical applications of its products include military uniform and gear components, automotive interior trim, air filtration, and protective cases and inserts. The Company was incorporated in the State of Delaware in 1993. The consolidated financial statements of the Company include the accounts and results of operations of UFP Technologies, Inc. and its wholly owned subsidiaries.
Added
Examples include air and liquid filters, thermal and acoustic insulation, seals and gaskets, and protective gear for sports equipment.
Removed
The Company’s commercial sales force, in conjunction with Company engineers, collaborate with customers and in-house design and manufacturing experts to develop custom-engineered solutions on a cost-effective basis. For the year ended December 31, 2023, one customer’s sales were approximately 28% of total sales; no other customer’s sales exceeded 10% of total sales.
Added
Applications include military ballistics panels, virtual training systems, drones, communications equipment, and rugged portable computers.
Added
The Company is aware of public support for environmentally responsible packaging and products. Future government action may impose restrictions affecting the industry in which the Company operates.
Added
With the exception of certain grades of cross-linked foam, thermoplastic urethane (“TPU”) and technical polyurethane foams, these raw materials are available from multiple supply sources.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

45 edited+18 added−7 removed80 unchanged
Biggest changeOur effective income tax rate is the result of the income tax rates in the various countries in which we do business. Our mix of income and losses in these jurisdictions affects our effective tax rate. For example, relatively more income in higher tax rate jurisdictions would increase our effective tax rate and thus lower our net income.
Biggest changeOur mix of income and losses in these jurisdictions affects our effective tax rate. For example, relatively more income in higher tax rate jurisdictions would increase our effective tax rate and thus lower our net income. Similarly, if we generate losses in tax jurisdictions for which no benefits are available, our effective income tax rate will increase.
Depending on the market, these risks include those relating to: ● Changes in the local economic environment including, among other things, labor cost increases and other general inflationary pressures; 13 ● Political instability, armed conflicts, or terrorism; ● Public health crises, such as pandemics or epidemics; ● Social changes; ● Intellectual property legal protections and remedies; ● Trade regulations; ● Procedures and actions affecting approval, production, pricing, reimbursement and marketing of products and services; ● Foreign currency; ● Additional U.S. and foreign taxes; ● Export controls; ● Antitrust and competition laws and regulations; ● Lack of reliable legal systems which may affect our ability to enforce contractual rights; ● Changes in local laws or regulations, or interpretation or enforcement thereof; ● Potentially longer ramp-up times for starting up new operations, and for payment and collection cycles; ● Financial, operational and information technology systems integration; ● Failure to comply with U.S. laws, such as the foreign corrupt practices act, or local laws that prohibit us, our partners, or our partners’ or our agents or intermediaries from making improper payments to foreign officials or any third party for the purpose of obtaining or retaining business; and ● Data and privacy restrictions. ● Foreign currency fluctuations Issues relating to the failure to comply with applicable non-U.S. laws, requirements or restrictions may also impact our domestic business and increase scrutiny of our domestic practices.
Depending on the market, these risks include those relating to: ● Changes in the local economic environment including, among other things, labor cost increases and other general inflationary pressures; ● Political instability, armed conflicts, or terrorism; ● Public health crises, such as pandemics or epidemics; ● Social changes; 13 ● Intellectual property legal protections and remedies; ● Trade regulations; ● Procedures and actions affecting approval, production, pricing, reimbursement and marketing of products and services; ● Foreign currency; ● Additional U.S. and foreign taxes; ● Export controls; ● Antitrust and competition laws and regulations; ● Lack of reliable legal systems which may affect our ability to enforce contractual rights; ● Changes in local laws or regulations, or interpretation or enforcement thereof; ● Potentially longer ramp-up times for starting up new operations, and for payment and collection cycles; ● Financial, operational and information technology systems integration; ● Failure to comply with U.S. laws, such as the foreign corrupt practices act, or local laws that prohibit us, our partners, or our partners’ or our agents or intermediaries from making improper payments to foreign officials or any third party for the purpose of obtaining or retaining business; and ● Data and privacy restrictions. ● Foreign currency fluctuations Issues relating to the failure to comply with applicable non-U.S. laws, requirements or restrictions may also impact our domestic business and increase scrutiny of our domestic practices.
Expansion of our operations into markets outside of the U.S. subjects us to political, economic, legal, operational, and other risks that could have a material adverse effect on our business, results of operations, financial condition, cash flows and reputation. We have recently added manufacturing facilities in the Dominican Republic, Ireland, Costa Rica, and Mexico.
Expansion of our operations into markets outside of the U.S. subjects us to political, economic, legal, operational, and other risks that could have a material adverse effect on our business, results of operations, financial condition, cash flows and reputation. We have recently added and expanded manufacturing facilities in the Dominican Republic, Ireland, Costa Rica, and Mexico.
The breach of any of these covenants or restrictions could result in a default under the Credit Agreement, which could have a material adverse impact to our business, financial condition, and results of operation. 14 We are also exposed to the risk of increasing interest rates as our revolving credit and term loan facilities are both at a variable interest rate.
The breach of any of these covenants or restrictions could result in a default under the Credit Agreement, which could have a material adverse impact to our business, financial condition, and results of operation. We are also exposed to the risk of increasing interest rates as our revolving credit and term loan facilities are both at a variable interest rate.
If we fail to comply with specific provisions of our customer contracts or Food and Drug Administration (FDA) regulations, our business could be materially adversely affected. Our customer contracts, particularly with respect to contracts for which the government is a direct or indirect customer, may include unique and specialized requirements.
If we fail to comply with specific provisions of our customer contracts or Food and Drug Administration (FDA) regulations, our business could be materially adversely affected. Our customer contracts, particularly with respect to contracts for which the US government is a direct or indirect customer, may include unique and specialized requirements.
Our failure to develop new technologies, or anticipate or react to changes in existing technologies, could result in a decrease in our sales and a loss of market share to our competitors. Our financial performance depends on our ability to design, develop, and manufacture new products and product enhancements on a timely and cost-effective basis.
Our failure to develop new technologies, or anticipate or react to changes in existing technologies, could result in a decrease in our net sales and a loss of market share to our competitors. Our financial performance depends on our ability to design, develop, and manufacture new products and product enhancements on a timely and cost-effective basis.
In addition, intellectual property litigation or claims could force us to do one or more of the following: ● Cease selling or using any of our products that incorporate the asserted intellectual property, which would adversely affect our revenues; ● Pay substantial damages for past use of the asserted intellectual property; ● Obtain a license from the holder of the asserted intellectual property, which license may not be available on reasonable terms, if at all; and/or ● Redesign or rename, in the case of trademark claims, our products to avoid infringing the intellectual property rights of third parties, which may be costly and time-consuming, even if possible.
In addition, intellectual property litigation or claims could force us to do one or more of the following: ● Cease selling or using any of our products that incorporate the asserted intellectual property, which would adversely affect our net sales; ● Pay substantial damages for past use of the asserted intellectual property; ● Obtain a license from the holder of the asserted intellectual property, which license may not be available on reasonable terms, if at all; and/or ● Redesign or rename, in the case of trademark claims, our products to avoid infringing the intellectual property rights of third parties, which may be costly and time-consuming, even if possible.
The loss of any such customer, a reduction in sales to any such customer, or the decline in the financial condition of any such customer could have a material adverse effect on our business, financial condition, and results of operations. A limited number of customers typically represent a significant percentage of our revenues in any given year.
The loss of any such customer, a reduction in net sales to any such customer, or the decline in the financial condition of any such customer could have a material adverse effect on our business, financial condition, and results of operations. A limited number of customers typically represent a significant percentage of our net sales in any given year.
Further, technological innovation by any of our existing competitors, or new competitors entering any of the markets in which we do business, could put us at a competitive disadvantage and could cause us to lose market share.
Further, technological innovation by any of our existing competitors, including our customers, or new competitors entering any of the markets in which we do business, could put us at a competitive disadvantage and could cause us to lose market share.
In addition, inflation has resulted in higher interest rates and could otherwise adversely impact the macroeconomic environment, which in turn could adversely impact our customers and their ability or willingness to purchase our products. Our inability to successfully manage the effects of inflation could have a material adverse effect on our business, results of operations and cash flows.
In addition, inflation could result in higher interest rates and could otherwise adversely impact the macroeconomic environment, which in turn could adversely impact our customers and their ability or willingness to purchase our products. Our inability to successfully manage the effects of inflation could have a material adverse effect on our business, results of operations and cash flows.
When and if we successfully acquire another business, the process of successfully integrating the acquired operations into our existing operations may result in unforeseen operating difficulties and may require significant financial re‐sources that would otherwise be available for the ongoing development or expansion of our existing business.
When and if we successfully acquire another business, the process of successfully integrating the acquired operations into our existing operations may result in unforeseen operating difficulties and may require significant financial resources that would otherwise be available for the ongoing development or expansion of our existing business.
These industry participants may try to use their market power to negotiate price reductions for our products or may undertake additional vertical integration or supplier diversification initiatives. If we are forced to reduce our prices, our revenues would decrease and our operating results would suffer.
These industry participants may try to use their market power to negotiate price reductions for our products or may undertake additional vertical integration or supplier diversification initiatives. If we are forced to reduce our prices, our net sales would decrease and our operating results would suffer.
In addition, we cannot guarantee that we will be able to finance additional acquisi‐tions or that we will realize any anticipated benefits from acquisitions or other strategic opportunities that we complete.
In addition, we cannot guarantee that we will be able to finance additional acquisitions or that we will realize any anticipated benefits from acquisitions or other strategic opportunities that we complete.
Consolidation in the healthcare industry could result in greater competition and reduce our revenues and harm our business. Many healthcare industry companies are consolidating to create new companies with greater market power. As the healthcare industry consolidates, competition to provide products and services to industry participants will become more intense.
Consolidation in the healthcare industry could result in greater competition and reduce our net sales and harm our business. Many healthcare industry companies are consolidating to create new companies with greater market power. As the healthcare industry consolidates, competition to provide products and services to industry participants will become more intense.
These risks are also present in connection with our entry into new geographic markets. Additionally, as a result of our international operations, we are subject to exposure from currency exchange rate fluctuations. Historically, foreign currency exchange rate fluctuations have not had a material effect on our net financial results.
These risks are also present in connection with our entry into new geographic markets. Also, due to our international operations, we are subject to exposure from currency exchange rate fluctuations. Historically, foreign currency exchange rate fluctuations have not had a material effect on our net financial results.
Variability in the mix and profitability of domestic and international activities, identification and resolution of various tax uncertainties, changes in tax laws and rates, and the extent to which we are able to realize deferred tax assets and avoid potential adverse outcomes included in deferred tax liabilities, among other matters, may significantly affect our effective income tax rate in the future.
Variability in the mix and profitability of domestic and international activities, identification and resolution of various tax uncertainties, changes in tax laws and rates, and the extent to which we are able to realize deferred tax assets and avoid potential adverse outcomes included in deferred tax liabilities, among other matters, may significantly affect our effective income tax rate in the future. 16 Our effective income tax rate is the result of the income tax rates in the various countries in which we do business.
In addition, intangible assets with definite lives, which represent $64.1 million of our net intangible assets at December 31, 2023, will continue to be amortized. These expenses will continue to reduce our future earnings or increase our future losses. The accounting for intangible assets requires reliance on forward-looking estimates of sales and/or earnings.
In addition, intangible assets with definite lives, which represent $144.3 million of our net intangible assets at December 31, 2024, will continue to be amortized. These expenses will continue to reduce our future earnings or increase our future losses. The accounting for intangible assets requires reliance on forward-looking estimates of sales and/or earnings.
Our business strategy includes the acquisition of businesses and other business combinations that we expect will complement and expand our business. In addition, we may also pursue other strategic relationships or opportunities. We may not be able to success‐fully identify suitable acquisition or other strategic opportunities or complete any particular acquisition, combina‐tion, or other transaction on acceptable terms.
Our business strategy includes the acquisition of businesses and other business combinations that we expect will complement and expand our business. In addition, we may also pursue other strategic relationships or opportunities. We may not be able to successfully identify suitable acquisition or other strategic opportunities or complete any particular acquisition, combination, or other transaction on acceptable terms.
We are currently unable to predict the extent, nature or duration of any of these occurrences. 8 We depend on a small number of customers for a large percentage of our revenues.
We are currently unable to predict the extent, nature or duration of any of these occurrences. We depend on a small number of customers for a large percentage of our net sales.
Failure to retain key personnel could impair our ability to execute our business strategy. The continuing service of our executive officers and essential sales, engineering, technical and management personnel, together with our ability to attract and retain such personnel, is an important factor in our continuing ability to execute our strategy.
Failure to retain key personnel could impair our ability to execute our business strategy. The continuing service of our executive officers and essential sales, engineering, technical, back-office and management personnel, together with our ability to attract and retain such personnel, is a key factor in our continuing ability to execute our strategy.
Our sales outside the U.S., which accounted for approximately 20.8% of sales for 2023, and our operations in Europe, Mexico, South America and the Caribbean are and could be subject to a number of risks and potential costs, including: ● changes in foreign economic conditions or regulatory requirements; ● changes in foreign currency exchange rates; ● local product preferences and product requirements; ● difficulties in enforcing agreements through foreign legal systems; ● less protection of intellectual property in some countries outside of the U.S.; 15 ● trade protection measures and import and export licensing requirements; ● work force instability; ● political and economic instability; ● transportation delays or interruptions; and ● complex tax and cash management issues.
Our net sales to customers outside the U.S., which accounted for approximately 16.7% of net sales for 2024, and our operations in Ireland, Mexico, Central America and the Caribbean are and could be subject to a number of risks and potential costs, including: ● changes in foreign economic conditions or regulatory requirements; ● changes in foreign currency exchange rates; ● local product preferences and product requirements; ● difficulties in enforcing agreements through foreign legal systems; ● less protection of intellectual property in some countries outside of the U.S.; ● trade protection measures and import and export licensing requirements; ● work force instability; ● political and economic instability; ● transportation delays or interruptions; and ● complex tax and cash management issues.
Our identification of suitable acquisition candidates and strategic opportunities involves risks inherent in assessing the values, strengths, weaknesses, risks, and profitability of these opportunities including their effects on our business, diversion of our management’s attention and risks associated with unanticipated problems or unforeseen liabilities.
Our identification of suitable acquisition candidates and strategic opportunities involves risks inherent in assessing the values, strengths, weaknesses, risks, and profitability of these opportunities including their effects on our business, diversion of our management’s attention and risks associated with unanticipated problems or unforeseen liabilities. Our failure to identify suitable acquisition or other strategic opportunities may restrict our ability to grow.
The military conflict and related sanctions could damage or disrupt international commerce and the global economy. We cannot predict the broader or longer-term consequences of the conflict or of the sanctions imposed to date or in the future, which could include embargoes, regional instability, geopolitical shifts, exchange rate fluctuations, financial market disruptions and economic recession.
We cannot predict the broader or longer-term consequences of the conflict or of the sanctions imposed to date or in the future, which could include embargoes, regional instability, geopolitical shifts, exchange rate fluctuations, financial market disruptions and economic recession.
Two customers represented approximately 17% and 12%, respectively, of gross accounts receivable for the year ended December 31, 2023, and one customer represented approximately 10% of gross accounts receivable for the year ended December 31, 2022. Our business could be harmed if our products contain undetected errors or defects or do not meet applicable specifications.
One customer represented approximately 34.0% of gross accounts receivable for the year ended December 31, 2024, and two customers represented approximately 16.5% and 12.2%, respectively, of gross accounts receivable for the year ended December 31, 2023. Our business could be harmed if our products contain undetected errors or defects or do not meet applicable specifications.
Our failure to identify suitable acquisition or other strategic opportunities may restrict our ability to grow our business. If we are successful in pursuing future acquisitions or strategic opportunities, we may be required to expend significant funds, incur additional debt, or issue additional securities, which may materially and adversely affect our results of operations and be dilutive to our stockholders.
If we are successful in pursuing future acquisitions or strategic opportunities, we may be required to expend significant funds, incur additional debt, or issue additional securities, which may materially and adversely affect our results of operations and be dilutive to our stockholders.
In December 2021, we entered into a secured $130 million Second Amended and Restated Credit Agreement with Bank of America, N.A., which provided for a $90 million revolving credit facility and a $40 million term loan facility. This Credit Agreement contains covenants imposing various restrictions on our business and financial activities.
In June 2024, we entered into a secured $275 million Third Amended and Restated Credit Agreement with Bank of America, N.A., which provided for a $150 million revolving credit facility and a $125 million term loan facility. This Credit Agreement contains covenants imposing various restrictions on our business and financial activities.
The Credit Agreement also requires us to meet certain financial ratios, including a minimum fixed-charge coverage ratio and a maximum total funded debt to EBITDA ratio.
The Credit Agreement also requires us to meet certain financial ratios, including a minimum fixed-charge coverage ratio and a maximum total funded debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”) ratio.
Further, the conflict could exacerbate supply chain challenges, lead to an increase in cyberattacks from Russia, affect the global price and availability of key commodities, reduce our sales and earnings or otherwise have an adverse effect on our business and results of operations.
Further, the conflict could exacerbate supply chain challenges, lead to an increase in cyberattacks from Russia, affect the global price and availability of key commodities, reduce our sales and earnings or otherwise have an adverse effect on our business and results of operations. 8 Our manufacturing facilities and warehouses in the Dominican Republic play a crucial role in the production of certain of our medical products.
These inflationary pressures have affected our manufacturing costs, operating expenses (including wages) and other expenses. We may not be able to pass these cost increases on to our customers in a timely manner, which could have an impact on our gross margins and profitability.
We may not be able to pass these cost increases on to our customers in a timely manner, which could have an impact on our gross margins and profitability.
We are subject to the provisions of Section 203 of the Delaware General Corporation Law which prohibits a publicly-held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stock‐holder, unless the business combination is approved in a prescribed manner.
In addition, our bylaws set forth advance notice procedures for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders. 15 We are subject to the provisions of Section 203 of the Delaware General Corporation Law which prohibits a publicly held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stock‐holder, unless the business combination is approved in a prescribed manner.
Estimating the future performance of our business is extremely challenging and the range of deviation from internal estimates could be more significant in this environment. 16 General Risks We are subject to a variety of federal, state and local laws and regulations, including health and safety laws and regulations, and the cost of complying, or our failure to comply, with such requirements could materially adversely affect our business, financial condition and results of operations.
General Risks We are subject to a variety of federal, state and local laws and regulations, including health and safety laws and regulations, and the cost of complying, or our failure to comply, with such requirements could materially adversely affect our business, financial condition and results of operations.
In addition, the conflict between Russia and Ukraine may have the effect of heightening other risks disclosed in this Form 10-K, any of which could materially and adversely affect our business and results of operations.
In addition, the conflict between Russia and Ukraine, civil unrest in Haiti and similar conflicts or situations such as a break in the current ceasefire in the Israel-Hamas War may have the effect of heightening other risks disclosed in this Form 10-K, any of which could materially and adversely affect our business and results of operations.
The ongoing conflict between Russia and Ukraine and the related implications could have a material adverse effect on our business and results of operations. As a result of the ongoing military conflict between Russia and Ukraine, the United States and other countries have imposed significant sanctions on Russia and could impose even wider sanctions.
As a result of the ongoing military conflict between Russia and Ukraine, the United States and other countries have imposed significant sanctions on Russia and could impose even wider sanctions. The military conflict and related sanctions could damage or disrupt international commerce and the global economy.
No one customer’s sales exceeded 10% of total sales for the year ended December 31, 2021. The loss of a significant portion of our expected future sales to any of our large customers would have a material adverse effect on our business, financial condition, and results of operations.
The loss of a significant portion of our expected future net sales to any of our large customers could have a material adverse effect on our business, financial condition, and results of operations.
If we violate, or fail to comply with these requirements, we could be fined or otherwise sanctioned by regulators. In addition, these requirements are complex, change frequently and may become more stringent over time, which could materially adversely affect our business, financial condition and results of operations.
In addition, these requirements are complex, change frequently and may become more stringent over time, which could materially adversely affect our business, financial condition and results of operations. 17 Our operations could be disrupted by natural or human causes beyond our control .
Goodwill and other intangible assets with indefinite lives are not amortized but are tested annually or upon the occurrence of certain events that indicate that the assets may be impaired.
These intangible assets consist primarily of goodwill, trade names, intellectual property, customer lists and non-compete agreements arising from our acquisitions. Goodwill and other intangible assets with indefinite lives are not amortized but are tested annually or upon the occurrence of certain events that indicate that the assets may be impaired.
Similarly, if we generate losses in tax jurisdictions for which no benefits are available, our effective income tax rate will increase. Our effective income tax rate may also be impacted by the recognition of discrete income tax items, such as required adjustments to our liabilities for uncertain tax positions or our deferred tax asset valuation allowance.
Our effective income tax rate may also be impacted by the recognition of discrete income tax items, such as required adjustments to our liabilities for uncertain tax positions or our deferred tax asset valuation allowance. We have recorded deferred tax assets based on our assessment that we will be able to realize their benefits .
We have recorded deferred tax assets based on our assessment that we will be able to realize the benefits of our net operating losses and other favorable tax attributes. Realization of deferred tax assets involve significant judgments and estimates which are subject to change and ultimately depends on generating sufficient taxable income of the appropriate character during the appropriate periods.
Realization of deferred tax assets involve significant judgments and estimates which are subject to change and ultimately depends on generating sufficient taxable income of the appropriate character during the appropriate periods.
Further, if our products are defectively designed, manufactured, or labeled, contain defective components or are misused, we may become subject to costly litigation by our customers or be expected to fund product recalls. Product liability claims could divert management's attention from our core business, be expensive to defend and result in sizable damage awards against us.
Further, if our products are defectively designed, manufactured, or labeled, contain defective components or are misused, we may become subject to costly litigation by our customers or be expected to fund product recalls.
New technologies could result in the development of new products by our competitors and a decrease in demand for our products, which could materially adversely affect our business, financial condition and results of operations.
Product liability claims could divert management's attention from our core business, be expensive to defend and result in sizable damage awards against us. 9 New technologies could result in the development of new products by our competitors and a decrease in demand for our products, which could materially adversely affect our business, financial condition and results of operations.
These risks could have a material adverse effect on our business, results of operations, financial condition, and cash flows, and could materially harm our reputation. Risks Related to our Share Ownership and our Capital Structure Restrictions in our credit facilities may limit our business and financial activities, including our ability to obtain additional capital in the future.
Risks Related to our Share Ownership and our Capital Structure Restrictions in our credit facilities may limit our business and financial activities, including our ability to obtain additional capital in the future.
We may never realize the full value of our intangible assets, which represent a significant portion of our total assets. At December 31, 2023, we had $177.4 million of goodwill and other intangible assets, representing approximately 44% of our total assets. These intangible assets consist primarily of goodwill, trade names, customer lists and non-compete agreements arising from our acquisitions.
We may never realize the full value of our intangible assets, which represent a significant portion of our total assets. At December 31, 2024, we had $334 million of goodwill and other intangible assets, representing approximately 53% of our total assets.
Further, any negative publicity related to our failure to comply with the provisions in our customer contracts could have a material adverse effect on our business, financial condition, or results of operations. 9 Increased focus on our environmental, social, and governance ("ESG") responsibilities have and will likely continue to result in additional costs and risks, and may adversely impact our reputation, employee retention, and willingness of customers and partners to do business with us.
Further, any negative publicity related to our failure to comply with the provisions in our customer contracts could have a material adverse effect on our business, financial condition, or results of operations. Increased focus and evolving views of lawmakers on climate change and other ESG issues could have a long-term impact on our business and result of operations.
Risks Related to our Business Our business, operating results, and cash flows have been affected and may continue to be adversely affected by inflation. Inflationary pressures have increased due to general macroeconomic factors as well as the global supply chain disruptions and labor shortages. Although inflation rates have somewhat normalized, rates could again rise in the foreseeable future.
Risks Related to our Business Our business, operating results, and cash flows have historically been affected and may continue to be adversely affected by inflation. Inflation rates could rise in the future. Such inflationary pressures could affect our manufacturing costs, operating expenses (including wages) and other expenses.
Our top ten customers represented approximately 59%, 47%, and 34% of our total revenues in 2023, 2022, and 2021, respectively. One customer comprised approximately 28% of our total sales for the year ended December 31, 2023; that same customer comprised approximately 21% of our total sales for the year ended December 31, 2022.
Two customers (Intuitive Surgical SARL and Stryker) comprised approximately 28.8% and 15.4%, respectively, of our net sales for the year ended December 31, 2024; one customer comprised approximately 28.1% of our net sales for the year ended December 31, 2023; and one customer comprised approximately 21.5% of our net sales for the year ended December 31, 2022.
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Institutional, individual, and other investors, proxy advisory services, regulatory authorities, consumers and other stakeholders are increasingly focused on ESG practices of companies. Some investors may use these non-financial performance factors to guide their investment strategies and, in some cases, may choose not to invest in us if they believe our policies and actions relating to ESG are inadequate.
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The ongoing conflict between Russia and Ukraine, other similar conflicts and civil unrest in Haiti, which is in proximity to our manufacturing facilities in the Dominican Republic could have a material adverse effect on our business and results of operations.
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Our disclosures on these matters, or a failure to meet evolving stakeholder expectations for ESG practices and reporting, may potentially harm our reputation and customer relationships. As ESG best practices and reporting standards continue to develop, we may incur increasing costs relating to ESG monitoring and reporting and complying with ESG initiatives.
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Our manufacturing facilities and warehouses may be damaged or our ability to use or access them may be disrupted as a result of civil unrest or other occurrences in Haiti.
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The standards for tracking and reporting on ESG matters and disclosure frameworks are relatively new, have not been harmonized, and continue to evolve. Ensuring there are systems and processes in place to comply with the various ESG tracking and reporting obligations may require management time and expense.
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Such events may interfere with our manufacturing process, information systems, telecommunication services, and product delivery for sustained periods and may also make it difficult or impossible for employees to reach our business locations.
Removed
As we look to respond to evolving standards for identifying, measuring, and reporting ESG metrics, our efforts may result in a significant increase in costs and may nonetheless not meet investor or other stakeholder expectations and evolving standards or regulatory requirements, which may negatively impact our financial results, our reputation, our ability to attract or retain employees, our attractiveness as a supplier, investment, or business partner, or expose us to government enforcement actions, private litigation, and actions by stockholders or stakeholders.
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Damage or destruction that interrupts our manufacturing facilities could adversely affect our reputation, our relationships with our largest customers, our leadership team’s ability to administer and supervise our business and cause us to incur substantial additional expenditures to repair or replace damages equipment or facilities or commence alternate production locations.
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In addition, if our competitors’ ESG performance is perceived to be better than ours, potential or current investors may elect to invest with our competitors. Increased focus and evolving views of lawmakers on climate change and other ESG issues could have a long-term impact on our business and result of operations.
Added
Our top ten customers represented approximately 68.1%, 59.3%, and 47.2% of our total net sales in 2024, 2023, and 2022, respectively.
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In addition, our bylaws set forth advance notice procedures for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders.
Added
These risks could have a material adverse effect on our business, results of operations, financial condition, and cash flows, and could materially harm our reputation. If significant tariffs or other restrictions are placed on imports or any related counter-measures are taken by foreign countries, our revenue and results of operations may be materially harmed.
Removed
Our operations could be disrupted by natural or human causes beyond our control .
Added
Potential changes in international trade relations between the United States and other countries could have a material adverse effect on our business. There is currently significant uncertainty about the future relationship between the United States and various other countries, with respect to trade policies, treaties, government regulations and tariffs.
Added
The U.S. government has adopted a new approach to trade policy including in some cases to renegotiate, or potentially terminate, certain existing bilateral or multi-lateral trade agreements. The U.S. government has also imposed tariffs on certain foreign goods. These measures may materially increase costs for goods imported into the United States.
Added
This in turn could require us to materially increase prices to our customers which may reduce demand, or, if we are unable to increase prices to adequately address any tariffs, quotas or duties result in lowering our margin on products sold.
Added
Changes in U.S. trade policy have resulted in, and could result in more, U.S. trading partners adopting responsive trade policies, including imposition of increased tariffs, quotas or duties, making it more difficult or costly for us to export our products to those countries.
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The implementation of a border tax, tariff or higher customs duties on our products manufactured abroad or components that we import into the U.S., or any potential corresponding actions by other countries in which we do business, could negatively impact our financial performance. 14 We have incorporated and may further incorporate artificial intelligence (AI) into our internal operations to enhance employee productivity and improve cybersecurity.
Added
Implementation of artificial intelligence technologies may result in legal and regulatory risks, reputational harm, or other adverse consequences to our business . We have a policy placing controls around the use of AI in the enterprise. Further, certain of our third-party vendors utilize AI and machine learning technologies in furnishing services to us.
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As with many technological innovations, AI presents risks and challenges that could affect its adoption, and therefore our business. By policy, we do not allow the upload of any personal or company confidential information to any AI tools.
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Though we have taken steps to be thoughtful in the allowed use of AI, it could pose certain risks to our customers, and it is not guaranteed that regulators will agree with our approach to limiting these risks or to our compliance more generally.
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Risks can include, but are not limited to, the potential for errors or inaccuracies in the algorithms or models used by AI, the potential for bias or inaccuracies in the data used to train the AI, the potential for improper processing of personal information, and the potential for cybersecurity breaches that could compromise internal operations.
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Such risks could negatively affect the performance of our business, as well as our reputation and the reputations of our customers, and we could incur liability through the violation of laws or contracts to which we are a party or civil claims.
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Estimating the future performance of our business is extremely challenging and the range of deviation from internal estimates could be more significant in this environment.
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If we violate, or fail to comply with these requirements, we could be fined or otherwise sanctioned by regulators.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeComponents of our approach include the following: ● The use of a cyber risk matrix that assesses the likelihood and impact of threats and risks identified in the Company’s hardware, software, and data systems. • Threats are ranked by potential severity and mitigation / remediation efforts are tracked. • Matrix is updated on a semi-annual basis and as new risks are identified. ● System penetration testing is performed by rotating third-party service providers at least every 18 months. ● System vulnerability testing is performed by the Company monthly. ● Network assessments are performed at least annually by qualified third-party service providers. ● Monitoring of Federal government alerts (CISA, FBI) and industry threat information is performed to stay current on the newest cybersecurity threats bad actor tactics. ● Multifactor authentication is required for all authorized users to access network resources which adds a second layer of protection from unauthorized entry to our systems. ● The cybersecurity practices and controls are derived from multiple recognized cybersecurity frameworks to meet the evolving needs of our organizations. 17 The cybersecurity risk assessment process is part of the Company’s overall risk management process.
Biggest changeComponents of our approach include the following: ● The Company aligns its cybersecurity program with the Center for Internet Security (“CIS”) framework of Critical Security Controls ● System penetration testing is performed by rotating third-party service providers at least every 18 months. ● System vulnerability testing performed by our cybersecurity partner who is System of Organization Controls (“SOC”) 2 certified and also assists with mitigation. ● Network assessments are performed at least annually by qualified third-party service providers. ● Facilitated incident response tabletop exercises conducted at least bi-annually by qualified cybersecurity service providers. ● Monitoring of Federal government alerts (CISA, FBI) and industry threat information is performed to stay current on the newest cybersecurity threats bad actor tactics. ● Multifactor authentication is required for all authorized users to access network resources which adds a second layer of protection from unauthorized entry to our systems. ● Associates are required to complete mandatory cybersecurity awareness training annually. ● We have Certified Information System Security Professional (“CISSP”) and Information Systems Security Management Professional (“ISSMP”) certifications among our internal security personnel.
To mitigate the risk of cybersecurity threats related to the use of third-party service providers, the Company obtains and reviews System of Organization Controls (SOC) reports from third parties when available, to provide assurance that the third-party has appropriate controls in place and has not identified any significant cyber issues.
To mitigate the risk of cybersecurity threats related to the use of third-party service providers, the Company obtains and reviews SOC reports from third parties when available, to provide assurance that the third-party has appropriate controls in place and has not identified any significant cyber issues.
The Company does not believe that any risks from cybersecurity threats have materially affected or are reasonably likely to affect our business strategy, results of operations, or financial condition. See Item 1A “Risk Factors” for a summary of certain cybersecurity risks.
The Company does not believe that any risks from cybersecurity threats have materially affected or are reasonably likely to affect our business strategy, results of operations, or financial condition. See Item 1A “Risk Factors” for a summary of certain cybersecurity risks. Governance General risk assessment and management oversight resides with the Company’s Board of Directors.
Management’s process for monitoring prevention, detection, mitigation, and remediation of cybersecurity incidents is summarized above in the Risk management and strategy section .
Master’s degrees in Cybersecurity and Information Assurance); CISSP and ISSMP certifications and, over 100 years of combined Information Technology experience. Management’s process for monitoring prevention, detection, mitigation, and remediation of cybersecurity incidents is summarized above in the Risk management and strategy section . 18
As noted above, the Company utilizes third-party consultants and services in our process of assessing and managing cybersecurity risk.
The Company also utilizes other third-party consultants and services in our process of assessing and managing cybersecurity risk for a diverse perspective of our cybersecurity practices and posture.
The Company’s Board of Directors is in charge of reviewing the Company’s information security procedures and evaluating management’s assessment of materiality for cyber incidents. The Board of Directors is formally updated on cybersecurity risks by the VP of Information Technology no less than annually. Management is responsible for assessing and managing material risks from cybersecurity threats.
The Company’s Audit Committee has oversight of financial risks and is in charge of reviewing the Company’s information security disclosures and incident reporting related to cybersecurity. The Company’s Board of Directors reviews the Company’s information security procedures and evaluates management’s assessment of materiality for cyber incidents. The Board of Directors is formally updated on cybersecurity risks no less than annually.
This responsibility primarily resides with the VP of Information Technology and his qualified team, including dedicated cyber security personnel.
Management is responsible for assessing and managing material risks from cybersecurity threats. This responsibility primarily resides with the VP of Information Technology and his qualified team, including dedicated cyber security personnel. The qualifications of the Information Technology team include a combination of formal education (e.g.
Removed
Governance While general risk assessment and management oversight resides with the Company’s Audit Committee, oversight of risks from cybersecurity threats resides with our Board of Directors. The Company’s Audit Committee is in charge of reviewing the Company’s information security disclosures and incident reporting related to cybersecurity.
Added
The cybersecurity risk assessment process is part of the Company’s overall risk management process. Our cybersecurity partner helps us prioritize actions to improve compliance with CIS Critical Security Controls and assists with those actions.
Removed
The qualifications of the Information Technology team include a combination of formal education (e.g. degrees in Information Assurance, Computer Information Systems, Computer Networking, and current enrollment in a Cyber Security degree program); current trainings and certifications in systems, network and cybersecurity; and, over 100 years of combined Information Technology experience.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changePROPERTIES The following table presents certain information relating to each of the Company’s design and manufacturing properties: Location Square Feet Lease Expiration Date Principal Use Newburyport, Massachusetts 183,000 Company Owned Headquarters, fabrication, molding, tooling, test lab, clean room, warehousing, and engineering Huntsville, Alabama 9,000 6/30/2031 Engineering, design, and fabrication Grand Rapids, Michigan 255,260 Company Owned Fabrication, molding, warehousing, and engineering Rancho Dominguez, California 56,000 10/31/2027 Fabrication, molding and engineering Denver, Colorado 18,270 Company Owned Fabrication and molding Denver, Colorado 28,383 Company Owned Fabrication, molding and engineering Kissimmee, Florida 49,400 Company Owned Fabrication, molding, test lab and engineering El Paso, Texas 127,730 Company Owned Warehousing, fabrication Chicopee, Massachusetts 103,792 Company Owned Fabrication, molding, clean room, warehousing, and engineering Providence, Rhode Island 79,535 9/30/2026 Fabrication, molding, clean room, and warehousing Dominican Republic 16,557 12/31/2024 Fabrication, molding, clean room, and warehousing Dominican Republic 12,630 12/31/2026 Fabrication, molding, clean room, and warehousing Dominican Republic 51,970 8/31/2025 Fabrication, molding, clean room, and warehousing 18 Location Square Feet Lease Expiration Date Principal Use Tijuana, Mexico 83,256 2/28/2032 Fabrication, molding, and warehousing Kennesaw, Georgia 11,017 12/31/2027 Warehousing Galway, Ireland 35,069 Company Owned Fabrication, molding, clean room, and warehousing Galway, Ireland 11,500 12/31/2025 Fabrication, molding, clean room, and warehousing La Aurora, Heredia, Costa Rica 13,000 4/30/2028 Fabrication, molding, clean room, and warehousing Chicopee, Massachusetts 3,500 11/30/2024 Warehousing Dominican Republic 26,468 12/31/2025 Fabrication, molding, clean room, and warehousing La Aurora, Heredia, Costa Rica 14,200 4/30/2028 Fabrication, molding, clean room, and warehousing Dominican Republic 40,921 12/31/2028 Fabrication, molding, clean room, and warehousing
Biggest changePROPERTIES The following table presents certain information relating to each of the Company’s design and manufacturing properties: Location Square Feet Lease Expiration Date Principal Use Newburyport, Massachusetts 183,000 Company Owned Headquarters, fabrication, molding, tooling, test lab, clean room, warehousing, and engineering Huntsville, Alabama 9,000 6/30/2031 Engineering, design, and fabrication Grand Rapids, Michigan 255,260 Company Owned Fabrication, molding, warehousing, and engineering Rancho Dominguez, California 56,000 10/31/2027 Fabrication, molding and engineering Denver, Colorado 18,270 Company Owned Fabrication and molding Denver, Colorado 28,383 Company Owned Fabrication, molding and engineering Kissimmee, Florida 49,400 Company Owned Fabrication, molding, test lab and engineering El Paso, Texas 127,730 Company Owned Warehousing, fabrication Chicopee, Massachusetts 103,792 Company Owned Fabrication, molding, clean room, warehousing, and engineering Providence, Rhode Island 79,535 9/30/2026 Fabrication, molding, clean room, and warehousing La Romana, Dominican Republic 16,557 12/31/2024 Fabrication, molding, clean room, and warehousing La Romana, Dominican Republic 12,630 12/31/2026 Fabrication, molding, clean room, and warehousing La Romana, Dominican Republic 51,970 8/31/2025 Fabrication, molding, clean room, and warehousing Tijuana, Mexico 83,256 2/28/2032 Fabrication, molding, and warehousing Kennesaw, Georgia 11,017 12/31/2027 Warehousing Galway, Ireland 35,069 Company Owned Fabrication, molding, clean room, and warehousing Galway, Ireland 11,500 12/31/2025 Fabrication, molding, clean room, and warehousing La Aurora, Heredia, Costa Rica 13,000 4/30/2028 Fabrication, molding, clean room, and warehousing Chicopee, Massachusetts 3,500 11/30/2024 Warehousing La Romana, Dominican Republic 26,468 12/31/2025 Fabrication, molding, clean room, and warehousing La Aurora, Heredia, Costa Rica 14,200 4/30/2028 Fabrication, molding, clean room, and warehousing La Romana, Dominican Republic 40,921 12/31/2028 Fabrication, molding, clean room, and warehousing La Romana, Dominican Republic 23,728 6/30/2025 Fabrication, molding, clean room, and warehousing St.
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Charles, Illinois 110,086 6/30/2029 Distribution, manufacturing, and warehousing Santiago Norte, Dominican Republic 39,414 12/1/2025 Distribution, manufacturing, and warehousing Dover, New Hampshire 5,400 1/31/2027 Distribution, manufacturing, and warehousing Navan, Ireland 40,000 10/6/2041 Distribution, manufacturing, and warehousing Santiago Norte, Dominican Republic 49,425 12/16/2029 Distribution, manufacturing, and warehousing Tallahassee, Florida 12,000 Company Owned Distribution, manufacturing, and warehousing Dover, New Hampshire 22,500 Company Owned Distribution, manufacturing, and warehousing 19

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table sets forth the range of high and low quotations for the common stock as reported by NASDAQ for the quarterly periods from January 1, 2022 to December 31, 2023: Year Ended December 31, 2022 High Low First Quarter $ 76.01 $ 56.10 Second Quarter $ 87.83 $ 65.00 Third Quarter $ 100.64 $ 74.00 Fourth Quarter $ 126.78 $ 85.04 Year Ended December 31, 2023 High Low First Quarter $ 131.80 $ 103.64 Second Quarter $ 197.23 $ 123.68 Third Quarter $ 205.08 $ 151.09 Fourth Quarter $ 185.40 $ 127.29 19 Number of Stockholders As of February 23, 2024, there were 63 holders of record of the Company’s common stock.
Biggest changeThe following table sets forth the range of high and low quotations for the common stock as reported by NASDAQ for the quarterly periods from January 1, 2023 to December 31, 2024: Year Ended December 31, 2023 High Low First Quarter $ 131.80 $ 103.64 Second Quarter $ 197.23 $ 123.68 Third Quarter $ 205.08 $ 151.09 Fourth Quarter $ 185.40 $ 127.29 Year Ended December 31, 2024 High Low First Quarter $ 252.20 $ 155.66 Second Quarter $ 263.87 $ 205.94 Third Quarter $ 358.42 $ 283.66 Fourth Quarter $ 346.29 $ 238.73 20 Number of Stockholders As of February 25, 2025, there were 72 holders of record of the Company’s common stock.
Issuer Purchases of Equity Securities On June 16, 2015, the Company issued a press release announcing that its Board of Directors authorized the repurchase of up to $10.0 million of the Company’s outstanding common stock. There was no share repur‐chase activity for the years ended December 31, 2023, 2022, and 2021.
Issuer Purchases of Equity Securities On June 16, 2015, the Company issued a press release announcing that its Board of Directors authorized the repurchase of up to $10.0 million of the Company’s outstanding common stock. There was no share repur‐chase activity for the years ended December 31, 2024, 2023, and 2022.
Since many of the shares are held by brokers and other institutions on behalf of stockholders, the Company is unable to estimate the total number of beneficial stockholders represented by these holders of record. Dividends The Company did not pay any dividends in 2023 or 2022.
Since many of the shares are held by brokers and other institutions on behalf of stockholders, the Company is unable to estimate the total number of beneficial stockholders represented by these holders of record. Dividends The Company did not pay any dividends in 2024 or 2023.
During the year ended December 31, 2015, the Company repurchased 29,559 shares of common stock at a cost of approximately $587 thousand. At December 31, 2023, approximately $9.4 million was available for future repurchases of the Company's common stock under this authorization.
During the year ended December 31, 2015, the Company repurchased 29,559 shares of common stock at a cost of approximately $587 thousand. At December 31, 2024, approximately $9.4 million was available for future repurchases of the Company's common stock under this authorization.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

32 edited+14 added−7 removed14 unchanged
Biggest changeCash Flows Net cash provided by operations for the year ended December 31, 2023 was approximately $41.3 million and was primarily a result of net income generated of approximately $44.9 million, depreciation and amortization of approximately $11.4 million, a loss on disposal of fixed assets of approximately $0.2 million, share-based compensation of approximately $4.6 million, a change in the fair value of contingent consideration of approximately $3.5 million, a decrease in deferred taxes of approximately $0.8 million, an increase in deferred revenue of approximately $ 1.9 million primarily due to increased customer deposits on tooling and machinery, an increase in accounts payable of approximately $1.6 million due to the building of inventory to meet demand and the timing of vendor payments in the ordinary course of business, a decrease in other assets of approximately $1.6 million due primarily to the current reclassification of a deposit receivable, and an increase in other long-term liabilities of approximately $0.4 million. 22 These cash inflows and adjustments to income were partially offset by an increase in inventory of approximately $16.6 million due to inventory build for upcoming demand, an increase in accounts receivable of approximately $9.1 million due to higher sales in the last two months of the fourth quarter of 2023 as compared to the same period in the fourth quarter of 2022, an increase in refundable income taxes of approximately $3.0 million due to higher anticipated tax credits in 2023 compared to 2022, and a decrease in accrued expenses of approximately $0.9 million.
Biggest changeCash Flows Net cash provided by operations for the year ended December 31, 2024 was approximately $66.6 million and was primarily a result of net income generated of approximately $59.0 million, depreciation and amortization of approximately $14.7 million, share-based compensation of approximately $6.8 million, a change in the fair value of contingent consideration of approximately $1.0 million, an increase in net deferred income tax liabilities of approximately $ 1.3 million, a decrease in accounts receivable of approximately $1.2 million due to the collection of an escrow receivable, and a decrease in other assets of approximately $0.6 million. 23 These cash inflows and adjustments to income were partially offset by an increase in inventory of approximately $4.7 million due to inventory build for upcoming demand, an increase in prepaid expenses of approximately $0.5, an increase in refundable income taxes of approximately $3.4 million due to conservative estimated tax payments in in 2024, a decrease in accounts payable of approximately $1.1 million due to the timing of vendor payments in the ordinary course of business, a decrease in deferred revenue of approximately $1.9 million due to the recognition of development revenue and a decrease in other long-term liabilities of approximately $6.5 million due primarily to non-compete payments and payments of contingent consideration.
The Company’s longer-term liquidity is contingent upon future operating performance and availability of draws on its revolving credit facility.
The Company’s longer-term liquidity is contingent upon future operating performance and the availability of draws on its revolving credit facility.
Under the Second 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 Second Amended and Restated Credit Agreement contains other covenants customary for transactions of this type, including restrictions on certain payments, permitted indebtedness, and permitted investments.
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.
The stock repurchase program may be suspended, modified or discontinued at any time, and the Company has no obligation to repurchase any amount of its common stock under the program. There were no share repurchases during the years ended December 31, 2023, 2022, and 2021.
The stock repurchase program may be suspended, modified or discontinued at any time, and the Company has no obligation to repurchase any amount of its common stock under the program. There were no share repurchases during the years ended December 31, 2024, 2023, and 2022.
The Company’s obligations under the Second Amended and Restated Credit Agreement are guaranteed by the Subsidiary Guarantors and secured by substantially all assets of the Company.
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.
For more information about the Company’s results of operations of 2022 compared to 2021, see the section titled “ Management ’ s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — 2022 Compared to 2021 ” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 16, 2023.
For more information about the Company’s results of operations of 2023 compared to 2022, see the section titled “ Management ’ s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — 2023 Compared to 2022 ” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 29, 2024.
At December 31, 2023, approximately $9.4 million was available for future repurchases of the Company’s common stock under this authorization. 24 Critical Accounting Estimates The preparation of consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosure of contingent assets and liabilities.
At December 31, 2024, approximately $9.4 million was available for future repurchases of the Company’s common stock under this authorization. 25 Critical Accounting Estimates The preparation of consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, net sales, and expenses, and related disclosure of contingent assets and liabilities.
The Company’s principal sources of funds are its operations and its Second Amended and Restated Credit Agreement. The Company generated cash of approximately $41.3 million from operations during the year ended December 31, 2023. The Company cannot guarantee that its operations will generate cash in future periods.
The Company’s principal sources of funds are its operations and its Second Amended and Restated Credit Agreement. The Company generated cash of approximately $66.6 million from operations during the year ended December 31, 2024. The Company cannot guarantee that its operations will generate cash in future periods.
Income Taxes The Company recorded income tax expense, as a percentage of income before income tax expense, of 16.7% for the year ended December 31, 2023 compared to 20.7% for the same period in 2022.
Income Taxes The Company recorded income tax expense, as a percentage of income before income tax expense, of 19.2% for the year ended December 31, 2024 compared to 16.7% for the same period in 2023.
Outstanding and Available Debt On December 22, 2021, the Company, as the borrower, entered into a secured $130 million Second Amended and Restated Credit Agreement (the “Second 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.
Outstanding and Available 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.
Results of Operations The following table sets forth, for the years indicated, the percentage of revenues represented by the items as shown in the Company’s Consolidated Statements of Income: 2023 2022 2021 Net sales 100.0 % 100.0 % 100.0 % Cost of sales 71.9 % 74.5 % 75.2 % Gross profit 28.1 % 25.5 % 24.8 % Selling, general, and administrative expenses 12.7 % 12.9 % 14.3 % Acquisition costs 0.0 % 0.3 % 0.2 % Change in fair value of contingent consideration 0.9 % 2.8 % 0.0 % Gain on sale of Molded Fiber business 0.0 % -4.4 % 0.0 % Loss (gain) on sale of fixed assets 0.1 % -1.8 % 0.0 % Operating income 14.4 % 15.7 % 10.3 % Interest expense, net 0.9 % 0.8 % 0.0 % Income before taxes 13.5 % 14.9 % 10.3 % Income tax expense 2.3 % 3.1 % 2.6 % Net income from consolidated operations 11.2 % 11.8 % 7.7 % 2023 Compared to 2022 Sales Net sales increased 13.1% to $400.1 million for the year ended December 31, 2023, from net sales of $353.8 million in 2022.
This increase in net sales as well as strong margins and the leverage of relatively fixed SG&A costs, allowed the Company to generate a 40.3% and 31.3% increase in operating income and net income, respectively, for the year ended December 31, 2024. 21 Results of Operations The following table sets forth, for the years indicated, the percentage of net sales represented by the items as shown in the Company’s Consolidated Statements of Income: 2024 2023 2022 Net sales 100.0 % 100.0 % 100.0 % Cost of sales 70.9 % 71.9 % 74.5 % Gross profit 29.1 % 28.1 % 25.5 % Selling, general, and administrative expenses 12.3 % 12.7 % 12.9 % Acquisition costs 0.5 % 0.0 % 0.3 % Change in fair value of contingent consideration 0.2 % 0.9 % 2.8 % Gain on sale of Molded Fiber business 0.0 % 0.0 % -4.4 % Loss (gain) on sale of fixed assets 0.0 % 0.1 % -1.8 % Operating income 16.1 % 14.4 % 15.7 % Interest expense, net 1.6 % 0.9 % 0.8 % Income before taxes 14.5 % 13.5 % 14.9 % Income tax expense 2.8 % 2.3 % 3.1 % Net income from consolidated operations 11.7 % 11.2 % 11.8 % 2024 Compared to 2023 Net Sales Net sales increased 26.1% to $504.4 million for the year ended December 31, 2024, from net sales of $400.1 million for the same period in 2023.
Interest expense, net The Company had net interest expense of approximately $3.6 million and $2.8 million for the years ended December 31, 2023 and 2022, respectively. The increase in net interest expense for the year ended December 31, 2023 was primarily due to higher average interest rates in 2023. Interest income was immaterial.
Interest expense, net The Company had net interest expense of approximately $8.1 million and $3.6 million for the year ended December 31, 2024 and 2023, respectively. The increase in net interest expense for the year ended December 31, 2024 was primarily due to higher debt related to 2024 acquisitions. Interest income was immaterial.
Actual results may differ from these estimates under different assumptions or conditions. The Company’s significant accounting policies are described in Note 1 to the consolidated financial statements included in Item 8 of this Report. The Company does not believe that any of the significant accounting policies required significant judgement and estimates in the preparation of its consolidated financial statements.
Actual results may differ from these estimates under different assumptions or conditions. The Company’s significant accounting policies are described in Note 1 to the consolidated financial statements included in Item 8 of this Report. The Company believes the following critical accounting policy necessitated that significant judgments and estimates be used in the preparation of its consolidated financial statements.
Other Expense (Income) Other expense was approximately $117 thousand and other income was approximately $81 thousand for years ended December 31, 2023 and 2022, respectively. The changes in other income/expense in both periods are primarily generated by foreign currency transaction gains/losses and, in 2022, changes in the fair value of the swap liability.
Other (Income) Expense Other income was approximately $189 thousand and other expense was approximately $117 thousand for the years ended December 31, 2024 and 2023, respectively. The changes in other income/expense are primarily generated by equity method investment income in 2024 and foreign currency transaction gains/losses in both 2024 and 2023.
The ultimate settlement of contingent consideration could deviate from current estimates based on the actual results of these financial measures. This liability is considered to be a Level 3 financial liability that is re-measured each reporting period.
Assumptions used in the initial calculation were management’s financial forecasts, 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 change in fair value of contingent consideration for the DAS Medical acquisition for the year ended December 31, 2023, resulted in an expense of approximately $3.5 million, and was included in change in fair value of contingent consideration in the consolidated statements of comprehensive income.
The change in fair value of contingent consideration for the acquisitions for the year ended December 31, 2024, resulted in an expense of approximately $1.0 million, and is included in change in fair value of contingent consideration in the consolidated statements of comprehensive income.
At December 31, 2023, the Company had approximately $32 million in borrowings outstanding under the Second Amended and Restated Credit Agreement, which were used as partial consideration for the DAS Medical and Advant Medical acquisitions, 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 December 31, 2024, the Company had approximately $189.4 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 December 31, 2023, the applicable interest rate was approximately 6.7% and the Company was in compliance with all covenants under the Second Amended and Restated Credit Agreement. 23 Long-term debt consists of the following (in thousands): December 31, 2023 Term loan $ 32,000 Total long-term debt 32,000 Current portion (4,000 ) Long-term debt, excluding current portion $ 28,000 Future maturities of long-term debt at December 31, 2023 are as follows (in thousands): Year ended December 31, Term Loan 2024 $ 4,000 2025 4,000 2026 24,000 $ 32,000 Future Liquidity The Company requires cash to pay its operating expenses, purchase capital equipment, and to service its contractual obligations.
At December 31, 2024, the weighted average interest rate was approximately 5.9% and the Company was in compliance with all covenants under the Third Amended and Restated Credit Agreement. 24 Long-term debt consists of the following (in thousands): December 31, 2024 Revolving credit facility $ 67,500 Term loan 121,875 Total long-term debt 189,375 Current portion (12,500 ) Long-term debt, excluding current portion $ 176,875 Future maturities of long-term debt at December 31, 2024 are as follows ( in thousands ): Term Loan Revolving credit facility Total 2025 12,500 - 12,500 2026 12,500 - 12,500 2027 12,500 - 12,500 2028 12,500 - 12,500 2029 71,875 67,500 139,375 $ 121,875 $ 67,500 $ 189,375 Future Liquidity The Company requires cash to pay its operating expenses, purchase capital equipment, and to service its contractual obligations.
Net cash used in investing activities during the year ended December 31, 2023 was approximately $10.5 million and was primarily the result of additions of manufacturing machinery and equipment and various building improvements across the Company.
Net cash used in investing activities for the year ended December 31, 2024 was approximately $210.2 million and was primarily the result of the acquisition of Marble Medical, AJR Enterprises, Welch Fluorocarbon, and AQF Medical, and the additions of manufacturing machinery and equipment and various building improvements across the Company.
The Second Amended and Restated Credit Agreement calls for interest determined by the Bloomberg Short-Term Bank Yield Index rate (“BSBY”) plus a margin that ranges from 1.25% to 2.0% or, at the discretion of the Company, the bank’s prime rate less a margin that ranges from 0.25% to zero. In both cases the applicable margin is dependent upon Company performance.
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.
The fair value of the liabilities for the contingent consideration payments recognized at December 31, 2023 totaled approximately $13.1 million for the remaining $15 million of potential earnout.
The fair value of the liability for the contingent consideration payments recognized at December 31, 2024 totaled approximately $10.2 million out of the remaining potential payments of $14.5 million.
The Company’s single-use and single-patient devices and components are used in a wide range of medical devices and packaging for minimally invasive surgery, infection prevention, surfaces and support, wound care, wearables, orthopedic soft goods, and orthopedic implants. The Company is diversified by also providing highly engineered products and components to customers in the automotive, aerospace and defense, and industrial/other markets.
The Company’s single-use and single-patient devices and components are used in a wide range of medical devices and packaging for minimally invasive surgery, infection prevention, surfaces and support, wound care, wearables, orthopedic soft goods, and orthopedic implants. The Company’s current strategy includes further organic growth and growth through strategic acquisitions.
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 $9.7 million 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, discount rate and various volatility factors.
The fair value of the liability for the contingent consideration payments recognized upon the acquisition as part of the opening balance sheets totaled approximately $800 thousand, $400 thousand 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.
The Second Amended and Restated Credit Agreement amends and restates the Company’s prior credit agreement, originally dated as of February 1, 2018. The credit facilities under the Second Amended and Restated Credit Agreement consist of a $40 million secured term loan to the Company and a secured revolving credit facility, under which the Company may borrow up to $90 million.
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.
Net cash used for financing activities was approximately $30.0 million during the year ended December 31, 2023 and was primarily the result of payments on the revolving line of credit of approximately $28.0 million, payment of contingent consideration of approximately $5.0 million, principal payments of long-term debt of approximately $4.0 million, and payments of statutory withholding for stock options exercised and restricted stock units vested of approximately $2.7 million.
These borrowings were partially offset by payments on the revolving line of credit of approximately $91.7 million, principal payments of long-term debt of approximately $35.1 million, and payments of statutory withholding for stock options exercised and restricted stock units vested of approximately $5.0 million.
The Second Amended and Restated Credit Agreement matures on December 21, 2026. The secured term loan requires quarterly principal payments of $1 million that commenced on March 31, 2022. The proceeds of the Second Amended and Restated Credit Agreement may be used for general corporate purposes, including funding the acquisition of DAS Medical, as well as certain other permitted acquisitions.
The proceeds of the Third Amended and Restated Credit Agreement may be used for general corporate purposes, including funding certain acquisitions (see Note 2 for more information regarding this acquisition), as well as certain other permitted acquisitions.
Sales to customers in all other markets decreased 20.6%, largely due to the Company’s disposition of its Molded Fiber business in July 2022. Gross Profit Gross profit as a percentage of sales (“Gross Margin”) increased to 28.1% for the year ended December 31, 2023, from 25.5% in 2022.
Medical net sales represented 89.4% and 86.6% of overall Company net sales in 2024 and 2023, respectively. Gross Profit Gross profit as a percentage of net sales (“Gross Margin”) increased to 29.1% for the year ended December 31, 2024, from 28.1% in 2023.
As a percentage of sales, SG&A decreased to 12.7% in 2023 from 12.9% in 2022. 21 Change in fair value of contingent consideration In connection with the acquisition of DAS Medical in 2021, the Company is required to make contingent payments, subject to the acquired entities achieving certain financial performance thresholds.
These costs were primarily for legal, due diligence and valuation services and are reflected on the face of the consolidated statements of comprehensive income. 22 Change in fair value of contingent consideration In connection with the acquisitions of Welch and 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 increase in Gross Margin is primarily due to the leverage of organic sales growth over the fixed portion of overhead, as well as improved operating efficiencies, as described above under “Overview.” Selling, General and Administrative Expenses Selling, General, and Administrative Expenses (“SG&A”) increased approximately 11.1% to $50.9 million for the year ended December 31, 2023, from $45.8 million in 2022, largely due to increased performance based compensation, benefits and payroll tax expenses and the additional SG&A expenses from the Advant acquisition (Refer to Note 2, “Acquisitions and Divestiture – Advant Medical,” in the accompanying notes to the consolidated financial statements for a discussion of the acquisition of Advant Medical).
Selling, General and Administrative Expenses Selling, General, and Administrative Expenses (“SG&A”) increased approximately 22.3% to $62.2 million for the year ended December 31, 2024, from $50.9 million in 2023, largely due to SG&A from the Company’s recent acquisitions as well as increased performance-based compensation and professional fees.
As a percentage of sales, material and labor costs collectively decreased 0.7%, while overhead decreased 1.9%.
As a percentage of net sales, material costs decreased 1.8% while overhead and labor costs collectively increased 0.8%. We attribute the increase in gross margin primarily to the accretive margins from the Company’s recent acquisitions as well as increased manufacturing efficiencies and the containment of fixed overhead costs.
The contingent consideration payments for the DAS Medical acquisition are four, $5 million payments for a total of up to $20 million. The Company paid $5 million during the second quarter of 2023.
The contingent consideration payments for the Welch, Marble and the DAS Medical acquisitions are up to $6 million, $500 thousand and $20 million, respectively.
The decrease in the effective tax rate for the current period as compared to the prior period is largely due to higher earnings in low-tax jurisdictions in 2023.
The increase in the effective tax rate for the current period as compared to the prior period is largely due to the difference in discrete items during the two periods as well as more United States based income in 2024 as a result of the recent acquisitions.
Removed
Typical applications of its products include military uniform and gear components, automotive interior trim, air filtration, and protective cases and inserts. The Company’s current strategy includes further organic growth and growth through strategic acquisitions.
Added
The Company completed four strategic acquisitions during the year ended December 31, 2024. The acquired operations primarily serve the medical market and contributed to an overall 26.1% increase in net sales for the year. Organic net sales grew 8.5%, fueled by strong sales in the robotic surgery and infection prevention markets.
Removed
Net sales for the Company for the year ended December 31, 2023 increased 13.1% to $400.1 million from $353.8 million for the year ended December 31, 2022, primarily due to an increase in organic sales of approximately 15.7%. The organic growth was driven by strong MedTech sales led by the Company’s robotic surgery products in response to increased surgical procedures.
Added
Net sales relating to our largest customer, Intuitive Surgical SARL, were 28.8% of our net sales for the year ended December 31, 2024.
Removed
Gross profit as a percentage of sales (“gross margin”) for the year ended December 31, 2023 increased to 28.1% from 25.5% in the same period last year, largely due to improved operating efficiencies and strong organic sales growth primarily attributable to the Company’s great progress strengthening its platform and further integrating its three most recent acquisitions.
Added
We attribute the increase in net sales primarily to increased net sales from newly acquired companies of $70.3 million as well as 8.5% increased organic net sales fueled by increases in the robotic surgery and infection prevention markets. Overall net sales to customers in the medical market increased 30.2% while net sales to customers in other markets were flat.
Removed
The Company captured synergies by sharing best practices, moving business to best-fit manufacturing locations, and standardizing systems for information technology, quality, and safety. 20 The Company experienced some softening in demand in the latter part of the year due to excess inventory held by some of our customers.
Added
The gross margin increases were achieved despite the absorption of approximately $1.1 million in purchase accounting expenses (step-up of inventory to fair value at acquisition date).
Removed
The Company believes this is short-term in nature and will soon return to normal levels.
Added
As a percentage of net sales, SG&A decreased to 12.3% for the year ended December 31, 2024, from 12.7% for the same period in 2023 reflecting the leverage of the net sales increase over relatively fixed SG&A. The Company plans on investing in back-office resources in response to the significant acquisitions completed during 2024.
Removed
The increase in sales was primarily due to increased sales to customers in the Medical market of 21.0%, primarily as a result of strong organic sales led by the Company’s robotic surgery products in response to increased surgical procedures .
Added
Acquisition Costs The Company incurred approximately $2.5 million in costs associated with acquisition related activities which were charged to expense for the year ended December 31, 2024.
Removed
These payments were partially offset by borrowings under our credit facility to fund acquisitions of approximately $9.0 million and proceeds from the exercise of stock options of approximately $0.7 million.
Added
Net cash provided by financing activities was approximately $152.4 million for the year ended December 31, 2024 and was primarily the result of borrowings under the Company’s Third Amended and Restated Credit Agreement of approximately $284.2 million to recent acquisitions.
Added
The Third Amended and Restated Credit Agreement amends and restates the Company’s prior credit agreement, originally dated as of December 22, 2021.
Added
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 commence on December 31, 2024.
Added
Valuation of Intangible Assets and Contingent Consideration Liability We base the fair value of identifiable intangible assets acquired in a business combination on detailed valuations that use information and assumptions provided by management, which consider management’s best estimates of inputs and assumptions that a market participant would use.
Added
Further, for those arrangements that involve potential future contingent consideration, we record on the date of acquisition a liability equal to the fair value of the estimated additional consideration we may be obligated to pay in the future.
Added
We remeasure this liability each reporting period and record changes in the fair value through a separate line item within our consolidated statements of comprehensive income.
Added
Increases or decreases in the fair value of the contingent consideration liability can result from changes in discount rates, periods, timing and amount of projected revenue or timing or likelihood of achieving regulatory, revenue or commercialization-based milestones.
Added
The use of alternative valuation assumptions, including estimated revenue projections, growth rates, cash flows, discount rates, useful life or probability of achieving clinical, regulatory or revenue-based milestones could result in different purchase price allocations and recognized amortization expense and contingent consideration expense or benefit in current and future periods.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−0 removed1 unchanged
Biggest changeInterest under the Company’s credit facility with Bank of America, N.A. calls for interest of BSBY plus a margin that ranges from 1.25% to 2.00% or, at the discretion of the Company, the bank’s prime rate less a margin that ranges from 0.25% to zero. Therefore, future operations could be affected by interest rate changes.
Biggest changeInterest under the Company’s credit facilities with Bank of America, N.A. call for interest at 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%. Therefore, future operations could be affected by interest rate changes.
Market risk represents the risk of changes in value of a financial instrument caused by fluctuations in interest rates, foreign exchange rates, and equity prices. At December 31, 2023, the Company’s cash and cash equivalents consisted primarily of bank accounts in U.S. dollars, and their valuation would not be affected by market risk.
Market risk represents the risk of changes in value of a financial instrument caused by fluctuations in interest rates, foreign exchange rates, and equity prices. At December 31, 2024, the Company’s cash and cash equivalents consisted primarily of bank accounts in U.S. dollars, and their valuation would not be affected by market risk.
As of December 31, 2023, the applicable interest rate was approximately 6.7%.
As of December 31, 2024, the applicable weighted average interest rate was approximately 5.9%. 26

Other UFPT 10-K year-over-year comparisons