Ultralife Corporation (NASDAQ: ULBI) reported operating results for
the third quarter ended September 30, 2023 with the following
highlights:
- Sales of $39.5 million representing
an 18.8% year-over-year increase
- Operating income of $2.1 million
versus a loss of $0.6 million for the 2022 third quarter
- Adjusted EPS of $0.10 compared to a
loss of $0.03 for the 2022 third quarter
- Adjusted EBITDA of $3.5 million
representing a 177.3% year-over-year increase
- Backlog of $101.1 million exiting
the 2023 third quarter
“Driven by continuing strong demand from our
government/defense and medical customers, sales grew 19% for both
the 2023 third quarter and the first nine months to $39.5 million
and $114.1 million, respectively, over the prior year periods. We
continue to focus on recapturing gross margin through price
realization, lean manufacturing initiatives and level-loaded
production, which resulted in a year-over-year improvement in gross
margin of 460 basis points to 24.8% for the third quarter. On the
strength of higher sales, gross margin improvement and disciplined
spending, operating profit of $2.1 million far exceeded the
operating loss of $0.6 million from the year-earlier quarter.
Finally, our efforts to strengthen our relationships with key
customers using our global new product development resources are
bearing fruit as we continue to sustain our backlog in excess of
$100 million,” said Mike Manna, President and Chief Executive
Officer. “As we close out 2023 with a strong backlog, we are well
positioned to continue our profitable growth and to generate
incremental cashflow to reduce our acquisition debt and further
invest in our businesses, including new product development,
strategic capital expenditures and accretive acquisitions.”
Third Quarter 2023 Financial
Results
Revenue was $39.5 million, an increase of $6.3
million, or 18.8%, as compared to revenue of $33.2 million for the
third quarter of 2022. Overall, government/defense sales increased
48.1% and commercial sales increased 5.6% over the 2022 period.
Battery & Energy Products sales increased 11.7% to $31.9
million compared to $28.6 million last year, reflecting increases
of 36.2% in government/defense sales and 37.9% in medical battery
sales, partially offset by decreases of 1.8% in oil & gas
market sales and 14.9% in other commercial sales. Communications
Systems sales increased by 62.7% to $7.6 million compared to $4.7
million for the same period last year, primarily attributable to
shipments of vehicle-amplifier adaptors to a global defense
contractor for the U.S. Army and of integrated systems of
amplifiers and radio vehicle mounts to a major international
defense contractor under an ongoing allied country
government/defense modernization program. Our total backlog exiting
the 2023 third quarter was $101.1 million with over $35 million of
the total backlog due to ship over the remaining three months of
2023.
Gross profit was $9.8 million, or 24.8% of
revenue, compared to $6.7 million, or 20.2% of revenue, for the
same quarter a year ago. Battery & Energy Products gross margin
was 24.2%, compared to 18.7% last year, primarily due to more
efficiencies and higher cost absorption resulting from a concerted
effort to level-load production more evenly across the 2023
quarter, as well as improved price realization. Communications
Systems gross margin was 27.0% compared to 29.5% last year,
primarily due to inefficiencies caused by component delays from
suppliers, partially offset by higher factory volume.
Operating expenses were $7.6 million, compared
to $7.3 million for the 2022 third quarter. Operating expenses were
19.3% of revenue compared to 22.0% of revenue for the year-earlier
period.
The combination of higher gross profit and
leveraging of operating expenses resulted in a $2.7 million
increase in operating income to $2.1 million from an operating loss
of $0.6 million last year.
Net income was $1.3 million or $0.08 per diluted
share on a GAAP basis, compared to a net loss of $0.2 million or
$0.01 per diluted share for the third quarter of 2022. Adjusted EPS
was $0.10 on a diluted basis for the third quarter of 2023,
compared to a loss of $0.03 for the 2022 period. Adjusted EPS
excludes the provision for deferred taxes of $0.4 million which
primarily represents non-cash charges for U.S. taxes which we
expect will be fully offset by net operating loss carryforwards and
other tax credits for the foreseeable future.
Adjusted EBITDA, defined as EBITDA including
non-cash, stock-based compensation expense, was $3.5 million for
the third quarter of 2023, or 8.8% of sales, compared to $1.3
million, or 3.8% of sales, for the year-earlier period.
See the “Non-GAAP Financial Measures” section of
this release for a reconciliation of adjusted EPS to EPS and
adjusted EBITDA to net income attributable to Ultralife
Corporation.
About Ultralife Corporation
Ultralife Corporation serves its markets with
products and services ranging from power solutions to
communications and electronics systems. Through its engineering and
collaborative approach to problem solving, Ultralife serves
government/defense and commercial customers across the globe.
Headquartered in Newark, New York, the Company's
business segments include Battery & Energy Products and
Communications Systems. Ultralife has operations in North America,
Europe and Asia. For more information, visit
www.ultralifecorporation.com.
Conference Call Information
Ultralife will hold its third quarter earnings
conference call today at 8:30 AM ET.
To ensure a fast and reliable connection to our
investor conference call, we now require participants dialing in by
phone to register using the following link prior to the
call: https://register.vevent.com/register/BI7f14d2264d2242c1adb217d21d75ab21.
This will eliminate the need to speak with an operator. Once
registered, dial-in information will be provided along with a
personal identification number. Should you register early and
misplace your details, you can simply click back on this same link
at any time to register and view this information again. A live
webcast of the conference call will be available to investors in
the Events & Presentations section of the Company's website at
http://investor.ultralifecorporation.com. For those who cannot
listen to the live broadcast, a replay of the webcast will be
available shortly after the call at the same location.
This press release may contain forward-looking
statements based on current expectations that involve a number of
risks and uncertainties. The potential risks and uncertainties that
could cause actual results to differ materially include the impact
of COVID-19 and related supply chain disruptions, potential
reductions in revenues from key customers, acceptance of our new
products on a global basis and uncertain global economic
conditions. The Company cautions investors not to place undue
reliance on forward-looking statements, which reflect the Company's
analysis only as of today's date. The Company undertakes no
obligation to publicly update forward-looking statements to reflect
subsequent events or circumstances. Further information on these
factors and other factors that could affect Ultralife’s financial
results is included in Ultralife’s Securities and Exchange
Commission (SEC) filings, including the latest Annual Report on
Form 10-K.
|
ULTRALIFE CORPORATION AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS(Dollars in
Thousands) |
(Unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
September 30, 2023 |
|
December 31,2022 |
Current
Assets: |
|
|
|
Cash |
$9,301 |
|
$5,713 |
Trade Accounts Receivable, Net |
|
27,189 |
|
|
|
27,779 |
|
Inventories, Net |
|
46,634 |
|
|
|
41,192 |
|
Prepaid Expenses and Other Current Assets |
|
6,429 |
|
|
|
4,304 |
|
Total Current Assets |
|
89,553 |
|
|
|
78,988 |
|
|
|
|
|
Property, Plant
and Equipment, Net |
|
21,166 |
|
|
|
21,716 |
|
Goodwill |
|
37,357 |
|
|
|
37,428 |
|
Other Intangible
Assets, Net |
|
15,270 |
|
|
|
15,921 |
|
Deferred Income
Taxes, Net |
|
10,728 |
|
|
|
12,069 |
|
Other Non-Current
Assets |
|
2,035 |
|
|
|
2,308 |
|
Total Assets |
$176,109 |
|
$168,430 |
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
Current Liabilities: |
|
|
|
Accounts Payable |
$13,470 |
|
$16,074 |
Current Portion of Long-Term Debt |
|
2,000 |
|
|
|
2,000 |
|
Accrued Compensation and Related Benefits |
|
2,467 |
|
|
|
2,890 |
|
Accrued Expenses and Other Current Liabilities |
|
8,449 |
|
|
|
7,949 |
|
Total Current Liabilities |
|
26,386 |
|
|
|
28,913 |
|
Long-Term Debt,
Net |
|
24,108 |
|
|
|
19,310 |
|
Deferred Income
Taxes |
|
1,825 |
|
|
|
1,917 |
|
Other Non-Current
Liabilities |
|
2,032 |
|
|
|
1,887 |
|
Total Liabilities |
|
54,351 |
|
|
|
52,027 |
|
|
|
|
|
Shareholders'
Equity: |
|
|
|
Common Stock |
|
2,075 |
|
|
|
2,057 |
|
Capital in Excess of Par Value |
|
188,852 |
|
|
|
187,405 |
|
Accumulated Deficit |
|
(43,627) |
|
|
|
(47,951) |
|
Accumulated Other Comprehensive Loss |
|
(4,176) |
|
|
|
(3,750) |
|
Treasury Stock |
|
(21,484) |
|
|
|
(21,484) |
|
Total Ultralife Equity |
|
121,640 |
|
|
|
116,277 |
|
Non-Controlling
Interest |
|
118 |
|
|
|
126 |
|
Total Shareholders’ Equity |
|
121,758 |
|
|
|
116,403 |
|
|
|
|
|
Total Liabilities and Shareholders' Equity |
$176,109 |
|
$168,430 |
ULTRALIFE CORPORATION AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF INCOME |
(In Thousands Except Per Share Amounts) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
Three-Month Period Ended |
|
Nine-Month Period Ended |
|
September 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenues: |
|
|
|
|
|
|
|
Battery & Energy Products |
$31,919 |
|
$28,583 |
|
$94,250 |
|
$87,873 |
Communications Systems |
|
7,569 |
|
|
|
4,651 |
|
|
|
19,846 |
|
|
|
7,860 |
|
Total Revenues |
|
39,488 |
|
|
|
33,234 |
|
|
|
114,096 |
|
|
|
95,733 |
|
|
|
|
|
|
|
|
|
Cost of Products Sold: |
|
|
|
|
|
|
|
Battery & Energy Products |
|
24,191 |
|
|
|
23,238 |
|
|
|
72,467 |
|
|
|
68,656 |
|
Communications Systems |
|
5,523 |
|
|
|
3,281 |
|
|
|
13,831 |
|
|
|
5,758 |
|
Total Cost of Products Sold |
|
29,714 |
|
|
|
26,519 |
|
|
|
86,298 |
|
|
|
74,414 |
|
|
|
|
|
|
|
|
|
Gross Profit |
|
9,774 |
|
|
|
6,715 |
|
|
|
27,798 |
|
|
|
21,319 |
|
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
|
Research and Development |
|
1,869 |
|
|
|
1,896 |
|
|
|
5,679 |
|
|
|
5,425 |
|
Selling, General and Administrative |
|
5,770 |
|
|
|
5,405 |
|
|
|
16,293 |
|
|
|
15,982 |
|
Total Operating Expenses |
|
7,639 |
|
|
|
7,301 |
|
|
|
21,972 |
|
|
|
21,407 |
|
|
|
|
|
|
|
|
|
Operating Income (Loss) |
|
2,135 |
|
|
|
(586) |
|
|
|
5,826 |
|
|
|
(88) |
|
|
|
|
|
|
|
|
|
Other Income (Expense) |
|
(386) |
|
|
|
254 |
|
|
|
178 |
|
|
|
22 |
|
Income (Loss) Before Income Taxes |
|
1,749 |
|
|
|
(332) |
|
|
|
6,004 |
|
|
|
(66) |
|
|
|
|
|
|
|
|
|
Income Tax Provision (Benefit) |
|
446 |
|
|
|
(90) |
|
|
|
1,688 |
|
|
|
(171) |
|
|
|
|
|
|
|
|
|
Net Income (Loss) |
|
1,303 |
|
|
|
(242) |
|
|
|
4,316 |
|
|
|
105 |
|
|
|
|
|
|
|
|
|
Net
(Loss) Income Attributable to Non-Controlling Interest |
|
(27) |
|
|
|
(3) |
|
|
|
(8) |
|
|
|
- |
|
|
|
|
|
|
|
|
|
Net Income (Loss) Attributable to Ultralife
Corporation |
$1,330 |
|
|
($239) |
|
|
$4,324 |
|
$105 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) Per Share Attributable to Ultralife
Common Shareholders – Basic |
$.08 |
|
($.01) |
|
$.27 |
|
$.01 |
|
|
|
|
|
|
|
|
Net Income (Loss) Per Share Attributable to Ultralife
Common Shareholders – Diluted |
$.08 |
|
($.01) |
|
$.27 |
|
$.01 |
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding – Basic |
|
16,238 |
|
|
|
16,133 |
|
|
|
16,172 |
|
|
|
16,122 |
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding – Diluted |
|
16,303 |
|
|
|
16,133 |
|
|
|
16,174 |
|
|
|
16,144 |
|
Non-GAAP Financial Measures
Adjusted EBITDA
In evaluating our business, we consider and use
adjusted EBITDA, a non-GAAP financial measure, as a supplemental
measure of our operating performance in addition to U.S. Generally
Accepted Accounting Principles (“GAAP”) financial measures. We
define adjusted EBITDA as net income attributable to Ultralife
Corporation before net interest expense, provision (benefit) for
income taxes, depreciation and amortization, and stock-based
compensation expense, plus/minus expense/income that we do not
consider reflective of our ongoing continuing operations. We
reconcile adjusted EBITDA to net income attributable to Ultralife
Corporation, the most comparable financial measure under GAAP.
Neither current nor potential investors in our securities should
rely on adjusted EBITDA as a substitute for any GAAP measures and
we encourage investors to review the following reconciliation of
adjusted EBITDA to net income attributable to Ultralife
Corporation.
|
ULTRALIFE CORPORATION AND SUBSIDIARIES |
CALCULATION OF ADJUSTED EBITDA |
(Dollars in Thousands) |
(Unaudited) |
|
Three-Month Period Ended |
|
Nine-Month Period Ended |
|
September 30, 2023 |
|
September 30, 2022 |
|
September 30, 2023 |
|
September 30, 2022 |
|
|
|
|
|
|
|
|
Net Income (Loss) Attributable
to Ultralife Corporation |
$1,330 |
|
($239) |
|
$4,324 |
|
$105 |
Adjustments: |
|
|
|
|
|
|
|
Interest Expense, Net |
586 |
|
272 |
|
1,450 |
|
583 |
Income Tax Provision (Benefit) |
446 |
|
(90) |
|
1,688 |
|
(171) |
Depreciation Expense |
760 |
|
815 |
|
2,282 |
|
2,450 |
Amortization Expense |
227 |
|
318 |
|
663 |
|
969 |
Stock-Based Compensation Expense |
131 |
|
179 |
|
424 |
|
552 |
Cyber-Insurance Policy Deductible |
- |
|
- |
|
100 |
|
- |
Non-Cash Purchase Accounting Adjustment |
- |
|
- |
|
- |
|
55 |
Adjusted EBITDA |
$3,480 |
|
$1,255 |
|
$10,931 |
|
$4,543 |
Adjusted Earnings Per Share
In evaluating our business, we consider and use
adjusted EPS, a non-GAAP financial measure, as a supplemental
measure of our business performance. We define adjusted EPS as net
income attributable to Ultralife Corporation excluding the
provision (benefit) for deferred income taxes divided by our
weighted average shares outstanding on both a basic and
diluted basis. We believe that this information is useful
in providing period-to-period comparisons of our results by
reflecting the portion of our tax provision that we expect
will be predominantly offset by our U.S. net operating loss
carryforwards and other tax credits for the foreseeable future. We
reconcile adjusted EPS to EPS, the most comparable financial
measure under GAAP. Neither current nor potential investors in our
securities should rely on adjusted EPS as a substitute for any GAAP
measures and we encourage investors to review the following
reconciliation of adjusted EPS to EPS and net income attributable
to Ultralife Corporation.
|
ULTRALIFE CORPORATION AND SUBSIDIARIES |
CALCULATION OF ADJUSTED EPS |
(In Thousands Except Per Share Amounts) |
(Unaudited) |
|
Three-Month Period Ended |
|
September 30, 2023 |
|
September 30, 2022 |
|
Amount |
|
Per Basic Share |
|
Per Diluted Share |
|
Amount |
|
Per Basic Share |
|
Per Diluted Share |
Net Income (Loss) |
$1,330 |
|
$.08 |
|
$.08 |
|
($239) |
|
($.01) |
|
($.01) |
Attributable to Ultralife Corporation |
|
|
|
|
|
|
|
|
|
|
|
Deferred
Tax Provision (Benefit) |
357 |
|
.02 |
|
.02 |
|
( 308) |
|
(.02) |
|
(.02) |
Adjusted
Net Income (Loss) |
$1,687 |
|
$.10 |
|
$.10 |
|
($547) |
|
($.03) |
|
($.03) |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares
Outstanding |
|
|
16,238 |
|
16,303 |
|
|
|
16,133 |
|
16,133 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine-Month Period Ended |
|
September 30, 2023 |
|
September 30, 2022 |
|
Amount |
|
Per Basic Share |
|
Per Diluted Share |
|
Amount |
|
Per Basic Share |
|
Per Diluted Share |
Net Income Attributable to Ultralife Corporation |
$4,324 |
|
$.27 |
|
$.27 |
|
$105 |
|
$.01 |
|
$.01 |
Deferred
Tax Provision (Benefit) |
1,245 |
|
.07 |
|
.07 |
|
(683) |
|
(.05) |
|
(.05) |
Adjusted
Net Income (Loss) |
$5,569 |
|
$.34 |
|
$.34 |
|
($578) |
|
($.04) |
|
($.04) |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares
Outstanding |
|
|
16,172 |
|
16,174 |
|
|
|
16,122 |
|
16,144 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company Contact: |
Investor Relations Contact: |
Ultralife Corporation |
LHA |
Philip A. Fain |
Jody Burfening |
(315) 210-6110 |
(212) 838-3777 |
pfain@ulbi.com |
jburfening@lhai.com |
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