Good day and welcome to the UFP Technologies second quarter earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Ron Lataille, Chief Financial Officer. Please go ahead. Thank you, operator. Good morning and thank you for joining us on our second quarter 2025 earnings conference call. With me on today's call is our CEO and Chairman, Jeff Bailly. Today, we will make some forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, the accuracy of which is subject to risks and uncertainties. Wherever possible, we will try to identify those forward-looking statements by using words such as believe, expect, anticipate, pursue, forecast, and similar expressions. Our forward-looking statements are based on our estimates and assumptions as of today and should not be relied upon as representing our estimates or views on any subsequent date. Please refer to the cautionary statement regarding forward-looking information and the risk factors in our most recent 10-K and subsequent 10-Q, including disclosure of the factors that could cause results to differ materially from those expressed or implied. During this call, we will discuss non-GAAP financial measures, which include organic sales growth, adjusted operating income, SG&A, adjusted EPS, and EBITDA and adjusted EBITDA. A reconciliation of GAAP to non-GAAP financial measures discussed in this call is contained in the associated press release and is available in the investor relations section of our website. I'll now turn the call over to Jeff. Thank you, Ron, and thank you to everyone joining the call. UFP had a strong second quarter. Revenue grew 37% with 5% organic growth. Adjusted operating income increased 35% and adjusted EPS grew 27%. Our medical business grew 46%. Our robotic-assisted surgery business grew 7%. We also saw strong growth across multiple other markets, including patient services and support, interventional and surgical, and wound care, each of which grew greater than 48%. Revenue from our two largest customers, Intuitive Surgical and Stryker, grew 10% and 567% respectively. We enjoy business across multiple platforms and multiple product categories with both customers and have secured multi-year contracts that help us protect that business. Our advanced components business, the non-medical part of UFP, declined approximately 20% as we continue to focus the majority of our resources on our fastest growing med tech opportunities. We do anticipate some improvement, particularly in the aerospace and defense sector in the second half of the year. We had strong operating results despite navigating through the impacts of high labor turnover at our AJR facility. Because the AJR acquisition was a carve-out of a parent company, there was a transition period where those team members were leased to us by the seller. When they officially became UFP employees in 2025, we began an eligibility to work audit using the U.S. e-Verify system. This process yielded significant turnover of our workforce in Illinois. Although that process is complete, it has and will continue to have an impact on labor efficiency and revenue at that location as new legally eligible employees slowly increase their output with additional training and experience. We estimate the margin impact of that labor inefficiency was $1.2 million in Q2. We believe Q3 will be the low point of that inefficiency with an estimated impact of approximately $2.5 million. Q4's impact should be much smaller. We recently closed on two additional acquisitions, UNIPEC, a specialty thin film component supplier located in Rockville, Maryland. They're a peer of Welch who we acquired in 2024. We anticipate a number of synergies as these two organizations share best practices and engineering resources. And Techno Plastics Industries, TPI, a specialty manufacturer of injection molded components for the med tech industry located in Iñazco, Puerto Rico. TPI enhances our thermoplastic molding capability and is located in proximity to our Dominican Republic facility, which is a significant purchaser of injection molded components. We continue to make progress on a number of other key initiatives, including our expansion plans in Santiago and La Romana, Dominican Republic. In Santiago, equipment is in place and personnel have been hired and are in training to support our upcoming program launches. In La Romana, we have taken possession of a fifth building on that campus, which includes additional warehouse space, enabling us to eliminate a less efficient offsite warehouse. The facility will also accommodate a new expanded product development center to support our growing robotic-assisted surgery business. We are currently manufacturing products for seven different RES customers at this time and have a dozen more in the development stage. We also made progress fully in some of our key open positions, including a new VP GM of AJR and a senior leader in Ireland. Looking ahead, we will continue to navigate through our labor turnover-related inefficiencies at AJR, execute on our new program launches and transfers to DR, continue our efforts to evaluate and close strategic acquisitions that increase our value to customers, and as always, maintain our company-wide efforts aimed at continuously improving all aspects of our business, increasing our efficiencies and reducing costs. We are pleased with our progress and excited about our future. I'll now hand it over to Ron to provide some additional color on our finances. Thank you, Jeff. Before discussing our operating results, I'd like to provide a brief update on tariffs. As mentioned in our first quarter call, we do not expect to be directly subject to a material amount of tariffs, and that was true in our second quarter when we paid approximately $150,000 in tariffs to the government, of which virtually all was passed through to our customers. More meaningful is the inflationary impact of tariffs on the purchases of raw materials in the U.S. We estimate approximately $9 million annually based upon the tariffs in place as of today. Obviously, this is dynamic and could change. Like the direct tariffs, we anticipate passing through the raw material increases to our customers, some of which have already occurred. Switching to operating results, I would like to provide a bit more color. As Jeff mentioned, sales grew organically by 4.9%, slightly stronger than Q1. After a soft Q1, sales to our largest robotic-assisted surgery customer grew approximately 10% in Q2 and represented 27% of our overall sales. Gross profit as a percentage of sales, or gross margin, decreased to 28.8% for the second quarter of 2025, but was up on a sequential basis. Margins were impacted by approximately $1.2 million in costs at AJR, as described by Jeff. The quarter was also impacted by approximately $5 million in backlogged orders that were not completed again due to the labor issues at AJR. Also, as Jeff mentioned, we anticipate that this level of manufacturing inefficiency will increase in Q3, again impacting revenue and margins, and then begin to gradually improve as the new associates become more experienced. For modeling purposes, I would assume a $7 million impact on revenue and a $2.5 million impact on operating income in Q3. Adjusted operating margin for the second quarter was 18% of sales, comfortably within our target range. Our effective tax rate of 20.6% for the second quarter of 2025 was slightly lower than anticipated, reflecting higher anticipated income from our Dominican operations, which is taxed at a more favorable rate. Second quarter GAAP and adjusted diluted earnings per share increased 26.3% and 26.9% to $2.21 and $2.50, respectively. During our second quarter, we generated $25.3 million in cash from operations, paid down approximately $19 million in debt, and ended the quarter with a leverage ratio well below 1.5 times. Capital expenditures were $2.9 million. With regard to the acquisitions of UNIPEC and Techno Plastics Industries, you probably saw in the AK that we acquired them at attractive multiples. We anticipate they will both be accretive in the first year. With that, I now turn it back to the operator for questions. We will now begin the question and answer session. To ask a question, you may press star, then one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw it, please press star, then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Brett Fishbin of KeyBank Capital Markets. Please go ahead. Hey guys, thank you very much for taking the questions. Just wanted to start off with one on the broader robotic-assisted surgery business, thinking a little bit more broadly than just the single large customer. It sounds like you were talking about a very high number of potential customers that are in development. I think you mentioned a dozen. I was curious if you could expand a little bit on how you're viewing the opportunity broadly in robotics, like how you think those customers could eventually progress. Also, maybe related, if you could just expand on the two specific new products that you're working on in that segment and how you think they may impact trends over the next few quarters and into 2026. Thank you. Sure, Brett, thank you for the question. The robotic surgery market is an excellent fit for our skills, and as a result, most of the players in that market are finding their way to us. We have seven that are already in some form of manufacturing phase, and a bunch more, I think a dozen plus in the development phase. All of these will, assuming they're successful, slowly become bigger and bigger customers. It's a long-range development program with robotic-assisted surgery. For the major players, sort of the top four or five that are further along, I think that you'll see revenue coming from them in the next year or two that's meaningful. Some of the smaller ones may take longer, but we are an excellent fit, and we continue to develop, and we continue to get paid for development in this space. All right. I also wanted to ask just about the inorganic revenue trends in the quarter. It sounded like some of the dynamic may have been related to AJR and some of the labor movement. I noticed that the inorganic trend, $35 million or $36 million, was a little bit below what we were modeling and below the $41 million last quarter. If you could just dive in a little bit to that performance, it sounds like most of the sequential decline was maybe AJR related, if that's the right read, and then how the rest of the acquisitions have performed on a year-over-year basis. Yeah, you're exactly correct. The underperformance was related to AJR because the labor inefficiency is causing us to ship less product. We've already kind of hit the low point a few weeks back, and we're growing from there, but it did affect our ability to ship. That's why we pushed forward about $5 million in backlog that we normally would have shipped had we had the personnel trained and ready to go. We think that the low point of that is behind us, but the biggest impact will be on Q3. The rest of the acquisitions are all performing at or above expectations, and the integrations are all going smoothly. All right, perfect. Final question from me. I was just wondering if you could provide an update on where you stand in regards to the AJR product transfer, my belief to the Dominican facility. I was really just hoping you could discuss the timeframe for when the full transition is expected to occur, and maybe just at a high level, how you're thinking about the cost savings opportunities versus maybe some potential revenue headwinds by sharing those savings with the customer. Thanks again for taking the questions. Sure. It's a fourth quarter transition when it sort of takes off in earnest. The equipment's in place, we're going through PQ processes and supplying samples to customers, but there won't be any meaningful revenue until the end of the year, and then it'll continue to phase in. It's the fourth quarter into the beginning of next year, I would say, is the transition. I would say most of the pain related to having people employed and being trained and not shipping anything will be in the third quarter. That's the update on that one. Our next question comes from Jaeson Schmidt of Lake Street. Please go ahead. Hey guys, thanks for taking my questions. Just curious if you could comment on what you're seeing from a channel inventory perspective at your customers. Has that mostly cleared and is that behind you guys? Yes, thank you for that question. It appears, because we had robust growth in a bunch of different markets this year, and we believe the inventory to stocking issue is behind us. In the case of AJR, the channel inventory is getting very low. All our inventory is gone and they're working through theirs quickly. We need to restock that channel for them as soon as we get our feet underneath us. All indications are that the overstocking of inventory issues are behind us and that we can look forward to a nice smooth plus on the revenue side. Gotcha. I know you noted growing 10% at your large robotics customer. Just curious if you grew sequentially in Q2. Q1 with our largest customer was actually a small decline, but they're basically right on track for what they said they would do for the year with us. It smoothed out between the second and third quarters. Q1 with our largest customer was a small decline. Q2 was a fairly nice increase, and it sort of balanced out to what we anticipated. Gotcha. Last one for me, and I'll jump back to the Q. On the gross margin line, understanding the impact here in Q3, when we think about Q4 and kind of flowing through the dynamics of the tariff impact, would you expect to see a rebound in gross margin in Q4, or is it relatively going to be muted? Yeah, hey Jaeson, Ron here. Yeah, we will have some margin pressure in Q3, and I think it'll rebound in Q4. I really don't think the tariffs by themselves are going to have a material impact on our margins, but the labor issue in Illinois, as Jeff described, will impact Q3 and to a lesser degree Q4. Okay, great. Thanks a lot, guys. Thank you. The next question comes from Justin Ages of CJS Securities. Please go ahead. Hi, morning all. Morning. Hey Justin. Given some of the recent noise in the market, can you give us any update on any changes to drape production in terms of market share or any color there? Yeah, I mean, we believe our share is steady at about two-thirds, and it'll certainly be at that for the remainder of this year because our customer is excellent at forecasting. We think there's about a $12 million drape supply, and we're about $8 million of it this year. The other two pieces are split about equally with our customer and one other competitor. Got it. That's helpful. Switching gears a bit, I know you just did the two small acquisitions at positive multiples, but can you give us an update on activity in the M&A funnel, what you guys are looking at, what end markets might be hot right now? Yeah, we're spending quite a bit of time in the injection molded space. It was a key goal of our technology roadmap. One of those two acquisitions, Techno Plastics Industries, got us a bigger foothold. We were already doing injection molding in Illinois, but we're big procurers of injection molded parts, and it's a natural extension to our capabilities. A bunch of the deals that we're looking at are in that space. We're super finicky about what we're going to buy. It has to be a cultural fit. It has to be a strategic fit, and it has to make economic sense for our company and our shareholders. We have already gotten into the process on one and passed along the way. We have multiple more that we're looking at. I hope we'll be successful adding to that portfolio, but we won't stop looking until we get a good fit. All right, that's great. Thanks, Jeff. Thanks, Ron. Thank you, Justin. The next question comes from Andrew Cooper of Raymond James. Please go ahead. Hey everybody, thanks for the question. Maybe just one more on margins. Obviously, 3Q, you called out the employment headwinds in Illinois. You talked about some of the standup costs in the Dominican Republic as well. How should we think about the magnitude and the tariff pieces flowing in as well? How should we think about the magnitude of kind of margin movement from the 2Q base as we head into 3Q and then maybe stepping up a little bit into 4Q? Yeah, Andrew, it's Ron here. You saw in Q2 we were at 28.8, to speak the $1.2 million penalty. The penalty will increase in Q3, so I think you could expect something lower than what we hit in Q2, but I don't think it's going to be material. I would think the low 28s is where I'd sort of model. Okay, that's helpful. Maybe just touching on part of the answer to a prior question on TPI, it sounds like certainly some synergy there maybe on the cost side as you're a buyer of some of those materials. How should we think about that business and kind of what you're going to sell outside versus what's for internal use and how you think about the accretion there for TPI specifically, knowing it's small, but kind of directionally? The internal use component will evolve over time because some of the more sophisticated stuff, you know, the materials, the vendors, and everybody is spec'd in. There are some components that we do that are more commodity in nature that we could buy almost immediately, that they're for ourselves, that we're currently doing in Illinois, but most of them will be longer term. Now, when we're in development on a new program that has injection molded parts, we'll try to specify our own internal supply base, but we can't just instantly switch from buying from somebody else to our own supplier because of the qualifications required. Okay, that makes sense. Maybe just lastly, I know a couple of folks have asked on the Stryker dynamics and the transition to Santiago, but when we think about the inventory piece there, I know, I think Ron, you said they're getting pretty tight. Is there any kind of drag that the customer might be feeling knowing you're talking about some $12 million worth of product that they may be a little bit short between 2Q and 3Q and obviously needing to make back up down the road? Yeah, we have a really good relationship with Stryker, and despite the fact that we're letting them down on this supply chain issue right now, they're super appreciative that we went through it. They saw the vulnerability that ICE could have swept in and closed down a factory essentially, and they would have had tremendous vulnerability. They do have other supply points. It's pain for them to use them. For example, some of the business that we had been winning over time was from a company in China. They can switch back over. There's pain to them to doing that. They've sort of even asked our permission, you know, hey, if we need to buy a small amount of product from our Chinese competitor, is that okay? They have to do the right thing for their company, but they do have outlets to survive this so that they don't lose any customers of their own. The faster that we get our feet underneath us, the faster we can supply more and more of their stuff. A good relationship. They have a safety valve. I think that they'll use it for some of that backlog. Our job will be in the fourth quarter to really start to rebuild their inventory and supply all their needs on our own. Okay, great. I'll stop there. Thank you. This concludes our question and answer session. I would like to turn the conference back over to Mr. Jeff Bailly for any closing remarks. Thank you all for joining the call. I know there were a lot of questions around our two biggest customers. I want to just add one more point. We do business across multiple sectors of all these customers. Although we have some single customer concentration issues, in the case of Stryker, for example, we're dealing with their orthopedic division, their patient services division, their infection prevention division, their safe patient handling division, and the robotic surgery division. Very diverse. Similarly with Intuitive Surgical, we're supplying multiple components beyond the drape. We feel like we have excellent relationships with these two customers and that they're actually a huge bonus for us going forward. We're working hard to do more and more for them. We don't see the concentration as exposure. We see the relationships as opportunity. Thank you for attending the call. We look forward to talking to you again one quarter from now, if not before. Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.