Ultralife Corporation (NASDAQ: ULBI) reported operating income of
$2.3 million on revenue of $28.6 million for the second quarter
ended June 30, 2020. For the second quarter of 2019, the Company
reported operating income of $3.0 million on revenue of $29.4
million.
“Ultralife’s second quarter adjusted earnings per share of $0.13
cents reflects the benefits of our end-market diversity and
resilient business model in the face of continued business
disruptions caused by the pandemic,” said Michael D. Popielec,
President and Chief Executive Officer. “Our Battery and Energy
Products’ medical sales and government/defense sales increased 72%
and 50% year over year, respectively, and when combined with the
contribution from SWE, nearly offset Communications Systems sales
which were lower due to the completion of shipments on a major
contract. Altogether, our second quarter performance reinforces our
view that Ultralife is durably positioned both to sustain
profitability and positive cash flow/liquidity through a period of
economic weakness and to execute on initiatives to drive future
growth opportunities.”
Second Quarter 2020 Financial Results
Revenue was $28.6 million, a decrease of $0.8 million, or 2.8%,
compared to $29.4 million for the second quarter of 2019, as a
significant increase in battery sales across diversified end
markets was offset by higher Communications Systems sales in 2019.
Overall, commercial sales increased 7.5% and government/defense
sales decreased 13.7% from the 2019 period. Battery & Energy
Products revenues grew 18.4% to $24.0 million, compared to $20.3
million last year, reflecting a 71.7% increase in medical battery
sales and a 49.8% increase in government/defense sales, partially
offset by a 33.7% decline in oil & gas market sales.
Communications Systems sales decreased 50.3% to $4.5 million
compared to $9.1 million for the same period last year, primarily
reflecting higher 2019 shipments of mounted power amplifiers to
support the U.S. Army’s Network Modernization initiatives under the
delivery orders announced in October 2018. These orders were
completed in the second quarter of 2020.
Gross profit was $8.0 million, or 27.9% of revenue, compared to
$8.9 million, or 30.2% of revenue, for the same quarter a year ago.
Battery & Energy Products’ gross margin was 25.1%, compared to
27.9% last year, reflecting incremental costs in 2020 associated
with the transition of new products to higher volume production and
supply chain disruptions relating to COVID-19. Communications
Systems gross margin was 42.8%, compared to 35.3% last year, due to
efficiencies and improved productivity in the production of vehicle
amplifier-adaptor systems for the U.S. Army.
Operating expenses were $5.7 million compared to $5.8 million
last year. Included in operating expenses for the 2019 quarter was
$0.2 million of non-recurring expenses related to the acquisition
of SWE. Operating expenses were 19.8% of revenue for both the 2020
and 2019 periods.
Operating income was $2.3 million compared to $3.0 million last
year, and operating margin was 8.0% compared to 10.3% last
year.
Net income was $1.7 million or $0.10 per diluted share using the
U.S. statutory tax rate, compared to net income of $2.3 million, or
$0.14 per diluted share for the second quarter of 2019. Adjusted
EPS was $0.13 on a diluted basis for the second quarter of 2020,
compared to $0.18 for the 2019 period. Adjusted EPS excludes the
provision for deferred taxes which primarily represents non-cash
charges of $0.4 million 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 $3.3 million for the second
quarter of 2020, or 11.6% of sales, compared to $4.1 million for
the second quarter of 2019, or 13.9% of sales. For the trailing
twelve-month period, Adjusted EBITDA was $11.6 million or 10.2% of
sales.
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 participate in the live call, please dial
(800) 915-4836 at least ten minutes before the scheduled start
time, identify yourself and ask for the Ultralife call. 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 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
SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS(Dollars in
Thousands)(Unaudited)
ASSETS
|
June 30,2020 |
|
December 31,2019 |
Current Assets: |
|
|
|
Cash |
$8,389 |
|
$7,405 |
Trade Accounts Receivable, Net |
26,405 |
|
30,106 |
Inventories, Net |
28,064 |
|
29,759 |
Prepaid Expenses and Other Current Assets |
2,144 |
|
3,103 |
Total Current Assets |
65,002 |
|
70,373 |
|
|
|
|
Property, Equipment and Improvements, Net |
22,713 |
|
22,525 |
Goodwill |
26,459 |
|
26,753 |
Other Intangible Assets, Net |
9,250 |
|
9,721 |
Deferred Income Taxes, Net |
12,526 |
|
13,222 |
Other Non-Current Assets |
1,638 |
|
1,963 |
Total Assets |
$137,588 |
|
$144,557 |
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
Current Liabilities: |
|
|
|
Accounts Payable |
$7,766 |
|
$9,388 |
Current Portion of Long-Term Debt |
1,482 |
|
1,372 |
Accrued Compensation and Related Benefits |
1,382 |
|
1,655 |
Accrued Expenses and Other Current Liabilities |
3,840 |
|
4,775 |
Total Current Liabilities |
14,470 |
|
17,190 |
Long-Term Debt |
9,284 |
|
15,780 |
Deferred Income Taxes |
501 |
|
559 |
Other Non-Current Liabilities |
999 |
|
1,278 |
Total Liabilities |
25,254 |
|
34,807 |
|
|
|
|
Shareholders' Equity: |
|
|
|
Common Stock |
2,030 |
|
2,026 |
Capital in Excess of Par Value |
184,900 |
|
184,292 |
Accumulated Deficit |
(50,113) |
|
(52,830) |
Accumulated Other Comprehensive Loss |
(3,296) |
|
(2,531) |
Treasury Stock |
(21,246) |
|
(21,231) |
Total Ultralife Equity |
112,275 |
|
109,726 |
Non-Controlling Interest |
59 |
|
24 |
Total Shareholders’ Equity |
112,334 |
|
109,750 |
|
|
|
|
Total Liabilities and Shareholders' Equity |
$137,588 |
|
$144,557 |
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, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Revenues: |
|
|
|
|
|
|
|
Battery & Energy Products |
$24,036 |
|
$20,300 |
|
$44,797 |
|
$36,298 |
Communications Systems |
4,524 |
|
9,097 |
|
9,577 |
|
11,981 |
Total Revenues |
28,560 |
|
29,397 |
|
54,374 |
|
48,279 |
|
|
|
|
|
|
|
|
Cost of Products
Sold: |
|
|
|
|
|
|
|
Battery & Energy Products |
18,010 |
|
14,645 |
|
33,455 |
|
26,233 |
Communications Systems |
2,587 |
|
5,887 |
|
5,622 |
|
8,097 |
Total Cost of Products Sold |
20,597 |
|
20,532 |
|
39,077 |
|
34,330 |
|
|
|
|
|
|
|
|
Gross Profit |
7,963 |
|
8,865 |
|
15,297 |
|
13,949 |
|
|
|
|
|
|
|
|
Operating
Expenses: |
|
|
|
|
|
|
|
Research and Development |
1,275 |
|
1,587 |
|
2,823 |
|
2,623 |
Selling, General and Administrative |
4,394 |
|
4,236 |
|
8,695 |
|
7,736 |
Total Operating Expenses |
5,669 |
|
5,823 |
|
11,518 |
|
10,359 |
|
|
|
|
|
|
|
|
Operating
Income |
2,294 |
|
3,042 |
|
3,779 |
|
3,590 |
|
|
|
|
|
|
|
|
Other
Expense |
117 |
|
83 |
|
209 |
|
141 |
Income Before Income
Tax Provision |
2,177 |
|
2,959 |
|
3,570 |
|
3,449 |
|
|
|
|
|
|
|
|
Income Tax Provision |
499 |
|
676 |
|
818 |
|
717 |
|
|
|
|
|
|
|
|
Net
Income |
1,678 |
|
2,283 |
|
2,752 |
|
2,732 |
|
|
|
|
|
|
|
|
Net Income Attributable to
Non-Controlling Interest |
20 |
|
27 |
|
35 |
|
51 |
|
|
|
|
|
|
|
|
Net Income
Attributable to Ultralife Corporation |
$1,658 |
|
$2,256 |
|
$2,717 |
|
$2,681 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Per Share
Attributable to Ultralife Common Shareholders – Basic |
$.10 |
|
$.14 |
|
$.17 |
|
$.17 |
|
|
|
|
|
|
|
|
Net Income Per Share
Attributable to Ultralife Common Shareholders –
Diluted |
$.10 |
|
$.14 |
|
$.17 |
|
$.17 |
|
|
|
|
|
|
|
|
Weighted Average
Shares Outstanding – Basic |
15,882 |
|
15,742 |
|
15,880 |
|
15,741 |
|
|
|
|
|
|
|
|
Weighted Average
Shares Outstanding – Diluted |
16,133 |
|
16,193 |
|
16,114 |
|
16,180 |
Non-GAAP Financial Measures:
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 for
deferred 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 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 U.S. Generally Accepted
Accounting Principles (“U.S. 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, 2020 |
|
June 30, 2019 |
|
Amount |
|
PerBasicShare |
|
PerDilutedShare |
|
Amount |
|
PerBasicShare |
|
PerDilutedShare |
Net Income |
$1,658 |
|
$.10 |
|
$.10 |
|
$2,256 |
|
$.14 |
|
$.14 |
Deferred Tax Provision |
391 |
|
.03 |
|
.03 |
|
641 |
|
.04 |
|
.04 |
Adjusted Net Income |
$2,049 |
|
$.13 |
|
$.13 |
|
$2,897 |
|
$.18 |
|
$.18 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares
Outstanding |
|
|
15,882 |
|
16,133 |
|
|
|
15,742 |
|
16,193 |
|
Six-Month Period Ended |
|
June 30, 2020 |
|
June 30, 2019 |
|
Amount |
|
PerBasicShare |
|
PerDilutedShare |
|
Amount |
|
PerBasicShare |
|
PerDilutedShare |
Net Income |
$2,717 |
|
$.17 |
|
$.17 |
|
$2,681 |
|
$.17 |
|
$.17 |
Deferred Tax Provision |
633 |
|
.04 |
|
.04 |
|
636 |
|
.04 |
|
.04 |
Adjusted Net Income |
$3,350 |
|
$.21 |
|
$.21 |
|
$3,317 |
|
$.21 |
|
$.21 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares
Outstanding |
|
|
15,880 |
|
16,114 |
|
|
|
15,741 |
|
16,180 |
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. 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
expenses/income that we do not consider reflective of our ongoing
operations. We reconcile Adjusted EBITDA to net income attributable
to Ultralife Corporation, the most comparable financial measure
under U.S. 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.
ULTRALIFE CORPORATION AND SUBSIDIARIES |
CALCULATION OF ADJUSTED EBITDA |
(Dollars in Thousands) |
(Unaudited) |
|
Three-Month Period Ended |
|
Six-Month Period Ended |
|
June 30,2020 |
|
June 30,2019 |
|
June 30,2020 |
|
June 30,2019 |
|
|
|
|
|
|
|
|
Net Income Attributable to
Ultralife Corporation |
$1,658 |
|
$2,256 |
|
$2,717 |
|
$2,681 |
Adjustments: |
|
|
|
|
|
|
|
Interest and Financing Expense, Net |
106 |
|
114 |
|
280 |
|
119 |
Income Tax Provision |
499 |
|
676 |
|
818 |
|
717 |
Depreciation Expense |
582 |
|
515 |
|
1,161 |
|
962 |
Amortization of Intangible Assets and Financing Fees |
158 |
|
143 |
|
319 |
|
244 |
Stock-Based Compensation Expense |
304 |
|
175 |
|
534 |
|
360 |
Non-Cash Purchase Accounting Adjustments |
- |
|
205 |
|
- |
|
205 |
Adjusted EBITDA |
$3,307 |
|
$4,084 |
|
$5,829 |
|
$5,288 |
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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