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Ultralife Corporation Reports Fourth Quarter Results
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Ultralife Corporation Reports Fourth Quarter Results

NEWARK, N.Y., Feb. 15, 2024 (GLOBE NEWSWIRE) —  Ultralife Corporation (NASDAQ:   ULBI) reported operating results for the fourth quarter and full year ended December 31, 2023.

Fourth Quarter Highlights:

  • Sales of $44.5 million representing a 23.4% year-over-year increase
  • Highest medical sales quarter in Company’s history
  • Operating income of $3.6 million versus $0.2 million for the 2022 fourth quarter
  • Adjusted EPS of $0.18 compared to a loss of $0.03 for the 2022 fourth quarter
  • Adjusted EBITDA of $4.8 million representing a 134.8% year-over-year increase
  • Backlog of $103.5 million exiting 2023, a 2.4% sequential increase over third quarter

Fiscal Year 2023 Highlights:

  • Sales of $158.6 million representing a 20.3% year-over-year increase
  • Operating income of $9.5 million versus $0.1 million for 2022
  • Adjusted EPS of $0.52 compared to a loss of $0.07 for 2022
  • Adjusted EBITDA of $15.7 million representing a 138.8% year-over-year increase

“Ultralife performed exceedingly well in the fourth quarter, delivering higher Communications Systems revenue, a 360-basis point expansion of Battery & Energy Products’ gross margin and operating expense leverage. In addition, medical sales reached the highest quarterly level since we entered this market in 2012. With adjusted EBITDA more than doubling and inventory levels lower, we are well positioned to commence paying down our acquisition debt,” said Mike Manna, President and Chief Executive Officer.

“Our strong fourth quarter performance caps a year of accomplishment against our stated highest priority of recapturing gross margin through price realization activities, supply chain improvements, level-loaded production and lean manufacturing initiatives. These actions resulted in a 240-basis point expansion of gross margin for the year to 24.7% and a swing from a loss to adjusted EPS of $0.52. Finally, our efforts to strengthen our commercial relationships launching customer-driven new products into the market have been bearing fruit and sustained our backlog in excess of $100 million,” added Mr. Manna.

“As we enter 2024 with a healthy backlog and a significantly stronger balance sheet, we are focused on driving additional gross margin expansion, organic growth in our end markets and operating leverage. We will continue to invest in new product development for commercial expansion. Our focus in 2024 is to build upon our 2023 momentum, sustain profitable growth and generate incremental cash flow to reduce debt, and support strategic capital expenditures and accretive acquisitions,” concluded Mr. Manna.

Fourth Quarter 2023 Financial Results

Revenue was $44.5 million, an increase of $8.4 million, or 23.4%, as compared to revenue of $36.1 million for the fourth quarter of 2022. Overall, government/defense sales increased 28.8% and commercial sales increased 20.2% over the 2022 period. Battery & Energy Products sales increased 11.1% to $35.7 million compared to $32.1 million last year reflecting increases of 20.2% in commercial sales, including a 118.0% increase in medical battery sales, partially offset by decreases of 11.3% in oil & gas market sales and 11.4% in government/defense sales.   Communications Systems sales increased by 121.9% to $8.8 million compared to $4.0 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 2023 fourth quarter was $103.5 million representing a 2.4% sequential increase over that reported for the third quarter.

Gross profit was $11.4 million, or 25.6% of revenue, compared to $8.1 million, or 22.4% of revenue, for the same quarter a year ago. Battery & Energy Products gross margin was 25.2%, compared to 21.6% 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 27.2% compared to 28.7% last year, primarily due to inefficiencies caused by component delays from suppliers, partially offset by higher factory volume.

Operating expenses were $7.8 million, compared to $7.9 million for the 2022 fourth quarter. Operating expenses were 17.4% of revenue compared to 21.8% of revenue for the year-earlier period.

The combination of higher sales leveraged by improved gross margin and operating expenses resulted in a $3.4 million increase in operating income to $3.6 million from $0.2 million last year.

Net income was $2.9 million or $0.17 per diluted share on a GAAP basis, compared to a net loss of $0.2 million or $0.01 per diluted share for the fourth quarter of 2022. Adjusted EPS was $0.18 on a diluted basis for the fourth quarter of 2023, compared to a loss of $0.03 for the 2022 period. Adjusted EPS excludes the provision for deferred taxes 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 $4.8 million for the fourth quarter of 2023, or 10.7% of sales, compared to $2.0 million, or 5.6% 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 fourth 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/BI9f2b6fae66954f53b4517cbe89148738. 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
         
                                                                 December 31,
2023
  December 31,
2022
 
Current Assets:        
Cash $ 10,278     $ 5,713    
Trade Accounts Receivable, Net   31,761       27,779    
Inventories, Net   42,215       41,192    
Prepaid Expenses and Other Current Assets   5,949       4,304    
Total Current Assets   90,203       78,988    
         
Property, Plant and Equipment, Net   21,117       21,716    
Goodwill   37,571                 37,428    
Other Intangible Assets, Net   15,107       15,921    
Deferred Income Taxes, Net   10,567       12,069    
Other Non-Current Assets   3,711       2,308    
          

           Total Assets

$ 178,276     $ 168,430    
           

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current Liabilities:

     
Accounts Payable $ 11,336     $ 16,074    
Current Portion of Long-Term Debt   2,000       2,000    
Accrued Compensation and Related Benefits   3,115       2,890    
Accrued Expenses and Other Current Liabilities   7,279       7,949    
Total Current Liabilities   23,730       28,913    
Long-Term Debt, Net   23,624       19,310    
Deferred Income Taxes   1,714       1,917    
Other Non-Current Liabilities   3,781       1,887    
Total Liabilities   52,849       52,027    
         
Shareholders’ Equity:        
Common Stock   2,078       2,057    
Capital in Excess of Par Value   189,160       187,405    
Accumulated Deficit   (40,754 )     (47,951 )  
Accumulated Other Comprehensive Loss   (3,660 )     (3,750 )  
Treasury Stock   (21,492 )     (21,484 )  
Total Ultralife Equity   125,332       116,277    
Non-Controlling Interest   95       126    
Total Shareholders’ Equity   125,427       116,403    
         
Total Liabilities and Shareholders’ Equity $ 178,276     $ 168,430    

                                                                        

ULTRALIFE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
(In Thousands Except Per Share Amounts)
(Unaudited)

               
  Three-Month Period Ended   Year Ended
  December
31,
  December
31,
  December
31,
  December
31,
    2023       2022       2023       2022  
Revenues:              
Battery & Energy Products $ 35,703     $ 32,122     $ 129,953     $ 119,995  
Communications Systems   8,845       3,985       28,691       11,845  
Total Revenues   44,548       36,107       158,644       131,840  
               
Cost of Products Sold:              
Battery & Energy Products   26,711       25,185       99,178       93,841  
Communications Systems   6,435       2,841       20,266       8,599  
Total Cost of Products Sold   33,146       28,026       119,444       102,440  
               
Gross Profit   11,402       8,081       39,200       29,400  
               
Operating Expenses:              
Research and Development   1,852       1,656       7,531       7,081  
Selling, General and Administrative   5,901       6,208       22,194       22,190  
Total Operating Expenses   7,753       7,864       29,725       29,271  
               
Operating Income   3,649       217       9,475       129  
               
Other Expense   536       597       358       575  
Income (Loss) Before Income Taxes   3,113       (380 )     9,117       (446

)

               
Income Tax Provision (Benefit)   263       (155 )     1,951       (326 )
               
Net Income (Loss)   2,850       (225 )     7,166       (120 )
               
Net Loss Attributable to Non-Controlling Interest   (23 )     (1 )     (31 )     (1 )
               
Net Income (Loss) Attributable to Ultralife Corporation $ 2,873     ($ 224 )   $ 7,197     ($ 119 )
               
               
Net Income (Loss) Per Share Attributable to Ultralife
Common Shareholders – Basic
$.18   ($.01)   $.44   ($.01)
               
Net Income (Loss) Per Share Attributable to Ultralife
Common Shareholders – Diluted
$.17   ($.01)   $.44   ($.01)
               
Weighted Average Shares Outstanding – Basic   16,338       16,135       16,214       16,125  
               
Weighted Average Shares Outstanding – Diluted   16,479       16,135       16,226       16,125  

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   Year Ended
  December 31, 2023   December 31, 2022   December 31, 2023   December 31, 2022
               
Net Income (Loss) Attributable to Ultralife Corporation $ 2,873   ($ 224 )   $ 7,197   ($ 119 )
Adjustments:              
Interest Expense, Net   566     368       2,016     951    
Income Tax Provision (Benefit)   263     (155 )     1,951     (326 )  
Depreciation Expense   740     727       3,022     3,177    
Amortization Expense   226     313       889     1,282    
Stock-Based Compensation Expense   104     224       528     776  
Cyber-Insurance Policy Deductible             100      
Non-Cash Purchase Accounting Adjustment                 55  
Severance to Former President & CEO       779           779  
Adjusted EBITDA $ 4,772   $ 2,032     $ 15,703   $ 6,575  

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
  December 31, 2023   December 31, 2022
  Amount   Per Basic Share   Per Diluted Share   Amount   Per Basic Share   Per Diluted Share
Net Income (Loss) Attributable to Ultralife Corporation $ 2,873   $.18   $.17   ($ 224 )   ($.01)   ($.01)
Deferred Tax Provision (Benefit)   56     .01     (279 )   (.02)   (.02)
Adjusted Net Income (Loss) $ 2,929   $.18   $.18   ($ 503 )   ($.03)   ($.03)
                       
Weighted Average Shares Outstanding     16,338   16,479       16,135   16,135
                       

  Year Ended
  December 31, 2023   December 31, 2022
  Amount   Per Basic Share   Per Diluted Share   Amount   Per Basic Share   Per Diluted Share
Net Income Attributable to Ultralife Corporation $ 7,197   $.44   $.44   ($ 119 )   ($.01)   ($.01)
Deferred Tax Provision (Benefit)   1,301   .08   .08     (962 )   (.06)   (.06)
Adjusted Net Income (Loss) $ 8,498   $.52   $.52   ($ 1,081 )   ($.07)   ($.07)
                       
Weighted Average Shares Outstanding     16,214   16,226       16,125   16,125

Company Contact:                                                     
Ultralife Corporation                                                    
Philip A. Fain                                                        
(315) 210-6110                                                        
pfain@ulbi.com                                                       

Investor Relations Contact:
LHA
Jody Burfening
(212) 838-3777
jburfening@lhai.com 

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