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September 11, 2006 02:00 AM

UFP purchase is groundwork for expansion

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    With its acquisition of Miami custom foam packaging fabricator Stephen Packaging Corp. under its belt, UFP Technologies Inc. of Georgetown, Mass., is on the hunt again.

    The publicly held company designs and manufactures interior protective packaging using molded fiber, vacuum forming and molded and fabricated foam plastic. Its end markets include automotive, computers, electronics, medical, aerospace and defense, consumer and industrial.

    In an Aug. 25 telephone interview, Ron Lataille, UFP's vice president and chief financial officer, said the company went through a period during the U.S. recession when it wasn't active with acquisitions.

    ``We're seeking acquisitions of all types, whether it's growing us in a new technology or new geography. It's situational,'' he said.

    Stephen Packaging beefed up UFP's presence in Florida, giving it a facility in Miami where UFP handles light manufacturing, warehousing and distribution. Some of the manufacturing will be consolidated into UFP's existing plant in Kissimmee, Fla.

    UFP paid $300,000 for Stephen Packaging in April, said research firm Taglich Bros. Inc. in New York.

    ``We view this acquisition as a strategic move for the company, as it brings the company a book business of approximately $1 million, and management believes it fits very well with UFPT's existing capabilities in Florida,'' analyst John Nobile wrote in a July research report.

    UFP has reported substantially stronger financial results for the first half of 2006 over the same period in 2005. In its first-quarter financial results, its sales increased 33 percent over 2005's first quarter to $24 million, and its gross margins increased to 20.2 percent from 19.9 percent.

    Nobile in his report said the increase primarily was due to an increase in component product sales stemming from a new $95 million automotive contract in the Southeast and increased sales in aerospace and defense. By comparison, its component product sales increased 61 percent to $14.9 million and its engineered packaging sales increased 3 percent to $9.3 million.

    For its second quarter, UFP reported more than doubling its profit over that period in 2005. For the first half of 2006, it reported a profit of $1.3 million compared with a profit of $400,000 for the first half of 2005.

    ``Our Southeast automotive program, scheduled to run into 2011, is in full production and operating efficiently,'' said R. Jeffrey Bailly, UFP president and chief executive officer, upon announcing first-quarter results. ``This has helped to offset an otherwise challenging automotive market.''

    The strengthened cash-flow position itself allowed the company to pay down debt, leaving it with $11 million available on its revolving credit agreement so it is positioned well to fund future growth opportunities, Bailly said.

    According to Plastics News' 2006 thermoformers ranking, UFP had $8.5 million in estimated thermoforming sales for 2005 and total corporate sales of $68.6 million. It operates plants in Raritan, N.J., Georgetown and Kissimmee.

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