Ultralife Corporation (NASDAQ: ULBI) reported operating results for
the second quarter ended June 30, 2023 with the following
highlights:
- Sales of $42.7 million representing
a 32.9% year-over-year increase
- Operating income of $3.7 million
compared to $0.8 million for the 2022 second quarter
- Adjusted EPS of $0.29 compared to
$0.03 for the 2022 second quarter
- Adjusted EBITDA of $6.3 million or
14.7% of sales versus $2.2 million or 6.8% last year
- Backlog increase to $110.9 million,
the highest level in the Company’s history
“Driven by surging demand from our
government/defense and medical customers, we delivered a 33%
year-over-year sales increase to $42.7 million for the second
quarter. Leveraged by a sequential improvement in gross margin and
disciplined spending, operating profit more than quadrupled from
the year-earlier quarter to $3.7 million, the highest level since
the third quarter of 2010. With backlog increasing to $110.9
million and durable demand across our diverse end markets, the
near-term highest priority remains to recapture gross margin
through continued execution of price realization activities,
qualification of alternate component suppliers, and lean
manufacturing initiatives,” said Mike Manna, President and Chief
Executive Officer. “These actions position us to deliver
high-quality, sustainable profitable growth for 2023 generating
incremental cash flow to pay down our acquisition debt and further
invest in our businesses. We continue to strengthen our
relationships with our key customers using our global new product
development and sales resources to support future growth in target
markets.”
Second Quarter 2023 Financial
Results
Revenue was $42.7 million, an increase of $10.6
million, or 32.9%, as compared to revenue of $32.1 million for the
second quarter of 2022. Overall, government/defense sales increased
111.5% and commercial sales increased 9.2% over the 2022 period.
Battery & Energy Products sales increased 12.3% to $33.9
million, compared to $30.1 million last year, reflecting increases
of 26.6% in government/defense sales, 25.2% in medical battery
sales, and 17.9% in oil & gas market sales, partially offset by
an 18.8% decrease in other commercial sales. Communications Systems
sales increased more than four-fold to $8.8 million compared to
$2.0 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 second quarter was $110.9 million representing a 40.1% increase
over the comparable period last year with $76.4 million of the
total backlog due to ship over the remaining six months of 2023.
Total backlog increased $2.8 million or 2.6% compared to the
backlog exiting the first quarter.
Gross profit was $10.6 million, or 24.8% of
revenue, compared to $7.6 million, or 23.8% of revenue, for the
same quarter a year ago. Battery & Energy Products’ gross
margin was 22.3%, compared to 23.7% last year, primarily due to
lingering inefficiencies resulting from the first quarter
cyber-attack, disposition of certain non-conforming materials and
continued investments in the transition of new products to high
volume production, partially offset by improved price realization.
Communications Systems gross margin was 34.5% compared to 24.9%
last year, primarily due to higher factory volume and favorable
product mix.
Operating expenses were $6.9 million, the same
as that reported for the 2022 second quarter. Operating expenses
were 16.2% of revenue compared to 21.3% of revenue for the
year-earlier period.
The combination of higher gross profit and flat
operating expenses resulted in a $2.9 million increase in operating
income to $3.7 million from $0.8 million last year.
Other income, reported below operating income,
includes an Employee Retention Credit (“ERC”) for $1.5 million
under Section 2301 of the Coronavirus Aid, Relief and Economic
Security Act of 2020 and the American Rescue Plan of 2021 which was
filed with the Internal Revenue Service during the second quarter
of 2023.
Net income was $3.3 million or $0.21 per diluted
share on a GAAP basis, compared to net income of $0.5 million or
$0.03 per diluted share for the second quarter of 2022. Adjusted
EPS was $0.29 on a diluted basis for the second quarter of 2023,
compared to $0.03 for the 2022 period. Adjusted EPS excludes the
provision for deferred taxes of $1.3 million which primarily
represents non-cash charges for U.S. taxes which 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 $6.3 million for
the second quarter of 2023, or 14.7% of sales, including the ERC,
compared to $2.2 million, or 6.8% 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 second 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/BI05d612e50dae4c4f91cf91687da98603.
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.
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 |
ULTRALIFE CORPORATION AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
(Dollars in Thousands) |
(Unaudited) |
|
ASSETS |
|
|
|
|
|
June 30, |
|
December 31, |
|
2023 |
|
2022 |
Current
Assets: |
|
|
|
Cash |
$8,283 |
|
$5,713 |
Trade Accounts Receivable, Net |
28,630 |
|
27,779 |
Inventories, Net |
46,063 |
|
41,192 |
Prepaid Expenses and Other Current Assets |
4,850 |
|
4,304 |
Total Current Assets |
87,826 |
|
78,988 |
|
|
|
|
Property, Plant
and Equipment, Net |
21,122 |
|
21,716 |
Goodwill |
37,501 |
|
37,428 |
Other Intangible
Assets, Net |
15,552 |
|
15,921 |
Deferred Income
Taxes, Net |
11,084 |
|
12,069 |
Other Non-Current
Assets |
2,307 |
|
2,308 |
|
|
|
|
Total Assets |
$175,392 |
|
$168,430 |
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
Current
Liabilities: |
Accounts Payable |
$18,541 |
|
$16,074 |
Current Portion of Long-Term Debt |
2,000 |
|
2,000 |
Accrued Compensation and Related Benefits |
2,320 |
|
2,890 |
Accrued Expenses and Other Current Liabilities |
6,342 |
|
7,949 |
Total Current Liabilities |
29,203 |
|
28,913 |
Long-Term Debt,
Net |
22,642 |
|
19,310 |
Deferred Income
Taxes |
1,876 |
|
1,917 |
Other Non-Current
Liabilities |
1,996 |
|
1,887 |
Total Liabilities |
55,717 |
|
52,027 |
|
|
|
|
Shareholders’
Equity: |
|
|
|
Common Stock |
2,059 |
|
2,057 |
Capital in Excess of Par Value |
187,758 |
|
187,405 |
Accumulated Deficit |
(44,957) |
|
(47,951) |
Accumulated Other Comprehensive Loss |
(3,846) |
|
(3,750) |
Treasury Stock |
(21,484) |
|
(21,484) |
Total Ultralife Equity |
119,530 |
|
116,277 |
Non-Controlling
Interest |
145 |
|
126 |
Total Shareholders’ Equity |
119,675 |
|
116,403 |
|
|
|
|
Total Liabilities and Shareholders’ Equity |
$175,392 |
|
$168,430 |
ULTRALIFE CORPORATION AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF INCOME |
(In Thousands Except Per Share Amounts) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
Three-Month Period Ended |
|
Six-Month Period Ended |
|
June 30, |
|
June 30, |
|
June 30, |
|
June 30, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Revenues: |
|
|
|
|
|
|
|
Battery & Energy Products |
$33,861 |
|
$30,140 |
|
$62,331 |
|
$59,290 |
Communications Systems |
8,831 |
|
1,986 |
|
12,277 |
|
3,209 |
Total Revenues |
42,692 |
|
32,126 |
|
74,608 |
|
62,499 |
|
|
|
|
|
|
|
|
Cost of Products Sold: |
|
|
|
|
|
|
|
Battery & Energy Products |
26,318 |
|
22,989 |
|
48,276 |
|
45,418 |
Communications Systems |
5,786 |
|
1,491 |
|
8,308 |
|
2,477 |
Total Cost of Products Sold |
32,104 |
|
24,480 |
|
56,584 |
|
47,895 |
|
|
|
|
|
|
|
|
Gross Profit |
10,588 |
|
7,646 |
|
18,024 |
|
14,604 |
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
|
Research and Development |
1,778 |
|
1,672 |
|
3,810 |
|
3,529 |
Selling, General and Administrative |
5,145 |
|
5,181 |
|
10,523 |
|
10,577 |
Total Operating Expenses |
6,923 |
|
6,853 |
|
14,333 |
|
14,106 |
|
|
|
|
|
|
|
|
Operating Income |
3,665 |
|
793 |
|
3,691 |
|
498 |
|
|
|
|
|
|
|
|
Other Income (Expense) |
1,058 |
|
(115) |
|
564 |
|
(232) |
Income Before Income Taxes |
4,723 |
|
678 |
|
4,255 |
|
266 |
|
|
|
|
|
|
|
|
Income Tax Provision (Benefit) |
1,375 |
|
170 |
|
1,242 |
|
(81) |
|
|
|
|
|
|
|
|
Net Income |
3,348 |
|
508 |
|
3,013 |
|
347 |
|
|
|
|
|
|
|
|
Net
Income (Loss) Income Attributable to Non-Controlling Interest |
8 |
|
(4) |
|
19 |
|
3 |
|
|
|
|
|
|
|
|
Net Income Attributable to Ultralife
Corporation |
$3,340 |
|
$512 |
|
$2,994 |
|
$344 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Per Share Attributable to Ultralife Common
Shareholders – Basic |
$.21 |
|
$.03 |
|
$.19 |
|
$.02 |
|
|
|
|
|
|
|
|
Net Income Per Share Attributable to Ultralife Common
Shareholders – Diluted |
$.21 |
|
$.03 |
|
$.19 |
|
$.02 |
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding – Basic |
16,141 |
|
16,129 |
|
16,138 |
|
16,116 |
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding – Diluted |
16,144 |
|
16,149 |
|
16,141 |
|
16,141 |
|
|
|
|
|
|
|
|
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 |
|
Six-Month Period Ended |
|
June 30, 2023 |
|
June 30, 2022 |
|
June 30, 2023 |
|
June 30, 2022 |
|
|
|
|
|
|
|
|
Net Income Attributable to
Ultralife Corporation |
$3,340 |
|
$512 |
|
$2,994 |
|
$344 |
Adjustments: |
|
|
|
|
|
|
|
Interest Expense, Net |
440 |
|
177 |
|
864 |
|
311 |
Income Tax Provision (Benefit) |
1,375 |
|
170 |
|
1,242 |
|
(81) |
Depreciation Expense |
760 |
|
819 |
|
1,522 |
|
1,635 |
Amortization Expense |
227 |
|
323 |
|
436 |
|
651 |
Stock-Based Compensation Expense |
154 |
|
184 |
|
293 |
|
373 |
Cyber-Insurance Policy Deductible |
- |
|
- |
|
100 |
|
- |
Non-Cash Purchase Accounting Adjustment |
- |
|
- |
|
- |
|
55 |
Adjusted EBITDA |
$6,296 |
|
$2,185 |
|
$7,451 |
|
$3,288 |
|
|
|
|
|
|
|
|
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 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.
ULTRALIFE CORPORATION AND SUBSIDIARIES |
CALCULATION OF ADJUSTED EPS |
(In Thousands Except Per Share Amounts) |
(Unaudited) |
|
|
Three-Month Period Ended |
|
June 30, 2023 |
|
June 30, 2022 |
|
Amount |
|
Per Basic Share |
|
Per Diluted Share |
|
Amount |
|
Per Basic Share |
|
Per Diluted Share |
Net
Income |
$3,340 |
|
$.21 |
|
$.21 |
|
$512 |
|
$.03 |
|
$.03 |
Deferred
Tax Provision |
1,278 |
|
.08 |
|
.08 |
|
27 |
|
- |
|
- |
Adjusted
Net Income |
$4,618 |
|
$.29 |
|
$.29 |
|
$539 |
|
$.03 |
|
$.03 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares
Outstanding |
|
|
16,141 |
|
16,144 |
|
|
|
16,129 |
|
16,149 |
|
Six-Month Period Ended |
|
June 30, 2023 |
|
June 30, 2022 |
|
Amount |
|
Per Basic Share |
|
Per Diluted Share |
|
Amount |
|
Per Basic Share |
|
Per Diluted Share |
Net
Income |
$2,994 |
|
$.19 |
|
$.19 |
|
$344 |
|
$.02 |
|
$.02 |
Deferred
Tax Provision (Benefit) |
888 |
|
.05 |
|
.05 |
|
(375) |
|
(.02) |
|
(.02) |
Adjusted
Net Income (Loss) |
$3,882 |
|
$.24 |
|
$.24 |
|
($31) |
|
$.00 |
|
$.00 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares
Outstanding |
|
|
16,138 |
|
16,141 |
|
|
|
16,116 |
|
16,141 |
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