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United-Guardian Q1 Earnings Fall 39% Y/Y as Cosmetic Sales Tumble 63%
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Shares of United-Guardian, Inc. (UG - Free Report) have gained 1.4% since reporting results for the first quarter of 2025. This compares with the S&P 500 index’s 4.6% growth over the same time frame. Over the past month, the stock has declined 3.2% against the S&P 500’s 11.3% rally.
United-Guardian posted first-quarter net sales of $2.48 million, marking a 24% decline from $3.25 million in the year-ago period. Net income for the quarter also fell 39% to $560,895 or 12 cents per share from $925,442 or 20 cents per share in the same quarter last year. The decline in both top and bottom lines was primarily attributed to weakness in the company’s cosmetic ingredients business, which more than offset gains in its pharmaceutical and medical lubricant segments.
United-Guardian, Inc. Price, Consensus and EPS Surprise
The sharpest decline occurred in United-Guardian’s cosmetic ingredients line, which posted a 63% year-over-year drop in sales to $698,998 from $1.88 million. The company cited a steep reduction in orders from Ashland Specialty Ingredients (“ASI”), its largest distributor, whose orders fell nearly 74%. According to ASI, the downturn was driven by excess inventory in China and timing issues related to ordering. United-Guardian emphasized that no major loss of customers or business was reported by ASI.
Pharmaceutical Sales Rebound on Supply Normalization
Net sales of the company’s two pharmaceutical products, Renacidin and Clorpactin WCS-90, increased 23% to $1.17 million from $950,323 in the year-ago quarter. Gross sales rose 26% due to the normalization of Renacidin supply. The product had previously faced delivery disruptions due to a temporary shutdown at the contract manufacturer’s facility. Renacidin gross sales rose 38% year over year to $1.23 million, while Clorpactin sales declined approximately 30%.
Medical Lubricants Deliver Double-Digit Growth
Medical lubricant sales increased 43% year over year to $613,671 in the first quarter, benefiting from higher demand from customers in India and China. This segment was the strongest performer in the quarter, reflecting growth initiatives and expanded distribution efforts in international markets.
Management Commentary
President Donna Vigilante acknowledged the challenging start to the year, attributing the revenue shortfall largely to weakness in the cosmetic ingredient business. However, she pointed to the strength in medical lubricant and pharmaceutical sales as positive indicators. Management reaffirmed that inventory normalization and timing were the primary causes behind reduced cosmetic sales and confirmed that there was no structural change in customer demand or business relationships with ASI.
Vigilante also raised concerns about evolving trade policy and tariff measures by the U.S. government, noting that these could introduce further uncertainty, especially for product lines tied to China markets. However, she emphasized that the company was closely monitoring these risks and adapting its supply-chain strategies accordingly.
Factors Impacting Results
Cost of sales declined year over year in absolute terms to $1.12 million from $1.56 million, but as a percentage of revenues, the metric improved slightly to 45% from 48%. Operating expenses increased 11% to $632,735 due to higher payroll and marketing expenditure. Research and development costs also rose 11% to $114,394, reflecting the company’s continued investment in product innovation, particularly in specialty and sustainable ingredients.
Investment income and gains on marketable securities fell to $97,037 from $139,569 a year earlier due to lower interest income on U.S. Treasury Bills and reduced unrealized gains on mutual fund investments.
Guidance
United-Guardian expressed confidence in its long-term strategy, particularly in product development and expansion into new markets through partnerships like the one with Brenntag Specialties for its Natrajel line. Manufacturing and sales of the Natrajel product are expected to begin in 2025, although no contribution was recorded in the first quarter.
Other Developments
In February 2025, the company expanded its partnership with distributor Azelis Group NV to include South Korea for personal care products and broadened coverage in the U.K. and Ireland to include medical products. Additionally, the company is nearing completion of a building sprinkler system upgrade, with expected total costs of $195,000.
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United-Guardian Q1 Earnings Fall 39% Y/Y as Cosmetic Sales Tumble 63%
Shares of United-Guardian, Inc. (UG - Free Report) have gained 1.4% since reporting results for the first quarter of 2025. This compares with the S&P 500 index’s 4.6% growth over the same time frame. Over the past month, the stock has declined 3.2% against the S&P 500’s 11.3% rally.
United-Guardian posted first-quarter net sales of $2.48 million, marking a 24% decline from $3.25 million in the year-ago period. Net income for the quarter also fell 39% to $560,895 or 12 cents per share from $925,442 or 20 cents per share in the same quarter last year. The decline in both top and bottom lines was primarily attributed to weakness in the company’s cosmetic ingredients business, which more than offset gains in its pharmaceutical and medical lubricant segments.
United-Guardian, Inc. Price, Consensus and EPS Surprise
United-Guardian, Inc. price-consensus-eps-surprise-chart | United-Guardian, Inc. Quote
Business Segment Performance
Cosmetic Ingredients Drag Overall Results
The sharpest decline occurred in United-Guardian’s cosmetic ingredients line, which posted a 63% year-over-year drop in sales to $698,998 from $1.88 million. The company cited a steep reduction in orders from Ashland Specialty Ingredients (“ASI”), its largest distributor, whose orders fell nearly 74%. According to ASI, the downturn was driven by excess inventory in China and timing issues related to ordering. United-Guardian emphasized that no major loss of customers or business was reported by ASI.
Pharmaceutical Sales Rebound on Supply Normalization
Net sales of the company’s two pharmaceutical products, Renacidin and Clorpactin WCS-90, increased 23% to $1.17 million from $950,323 in the year-ago quarter. Gross sales rose 26% due to the normalization of Renacidin supply. The product had previously faced delivery disruptions due to a temporary shutdown at the contract manufacturer’s facility. Renacidin gross sales rose 38% year over year to $1.23 million, while Clorpactin sales declined approximately 30%.
Medical Lubricants Deliver Double-Digit Growth
Medical lubricant sales increased 43% year over year to $613,671 in the first quarter, benefiting from higher demand from customers in India and China. This segment was the strongest performer in the quarter, reflecting growth initiatives and expanded distribution efforts in international markets.
Management Commentary
President Donna Vigilante acknowledged the challenging start to the year, attributing the revenue shortfall largely to weakness in the cosmetic ingredient business. However, she pointed to the strength in medical lubricant and pharmaceutical sales as positive indicators. Management reaffirmed that inventory normalization and timing were the primary causes behind reduced cosmetic sales and confirmed that there was no structural change in customer demand or business relationships with ASI.
Vigilante also raised concerns about evolving trade policy and tariff measures by the U.S. government, noting that these could introduce further uncertainty, especially for product lines tied to China markets. However, she emphasized that the company was closely monitoring these risks and adapting its supply-chain strategies accordingly.
Factors Impacting Results
Cost of sales declined year over year in absolute terms to $1.12 million from $1.56 million, but as a percentage of revenues, the metric improved slightly to 45% from 48%. Operating expenses increased 11% to $632,735 due to higher payroll and marketing expenditure. Research and development costs also rose 11% to $114,394, reflecting the company’s continued investment in product innovation, particularly in specialty and sustainable ingredients.
Investment income and gains on marketable securities fell to $97,037 from $139,569 a year earlier due to lower interest income on U.S. Treasury Bills and reduced unrealized gains on mutual fund investments.
Guidance
United-Guardian expressed confidence in its long-term strategy, particularly in product development and expansion into new markets through partnerships like the one with Brenntag Specialties for its Natrajel line. Manufacturing and sales of the Natrajel product are expected to begin in 2025, although no contribution was recorded in the first quarter.
Other Developments
In February 2025, the company expanded its partnership with distributor Azelis Group NV to include South Korea for personal care products and broadened coverage in the U.K. and Ireland to include medical products. Additionally, the company is nearing completion of a building sprinkler system upgrade, with expected total costs of $195,000.