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Ultralife Corporation Reports Third Quarter Results

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Ultralife Corporation (ULBI) reported third-quarter 2022 results with revenue of $33.2 million, a 52.7% increase from $21.8 million a year prior. The operating loss was $0.6 million, an improvement from a $0.8 million loss last year. Government/defense revenue surged 99.8%, significantly contributing to total growth. Despite increased revenue, gross profit margins declined from 23.5% to 20.2% due to supply chain issues and inflation. The backlog grew to $106.2 million, indicating potential future growth.

Positive
  • Revenue increased by 52.7% to $33.2 million compared to Q3 2021.
  • Government/defense revenue doubled, reflecting higher demand.
  • Total backlog rose to $106.2 million, a 34.1% increase from the prior quarter.
Negative
  • Operating loss of $0.6 million, despite revenue growth.
  • Gross profit margin decreased from 23.5% to 20.2%.

NEWARK, N.Y., Oct. 27, 2022 (GLOBE NEWSWIRE) -- Ultralife Corporation (NASDAQ: ULBI) reported an operating loss of $0.6 million and adjusted EBITDA of $1.3 million on revenue of $33.2 million for the third quarter ended September 30, 2022. For the third quarter of 2021, the Company reported an operating loss of $0.8 million and adjusted EBITDA of $0.3 million on revenue of $21.8 million.

“For the third quarter, government/defense revenue doubled year-over-year reflecting higher demand from our customers in Battery & Energy Products and shipments of larger awards in Communications Systems. This increase in government/defense revenue along with the addition of Excell, resulted in a 53% increase in total Company revenue. While we benefited from the operating expense leverage of the sharp revenue gain, the combination of production inefficiencies associated with supply chain disruptions and input cost inflation severely pressured gross margins and profitability for the quarter,” said Michael D. Popielec, President and Chief Executive Officer. “We continue to work on offsetting inflation and manufacturing workflow challenges with price realization and productivity gains to restore profitable growth. With a backlog now over $100 million, we are positioned well for near-term revenue increases and remain committed to advancing several transformational projects and new product opportunities to drive long-term revenue growth.”

Third Quarter 2022 Financial Results

Revenue was $33.2 million, an increase of $11.5 million, or 52.7%, compared to $21.8 million for the third quarter of 2021. Overall, government/defense sales increased 99.8% and commercial sales increased 38.0% from the 2021 period. Battery & Energy Products revenue increased 42.9% to $28.6 million, compared to $20.0 million last year, reflecting $6.9 million of Excell sales coupled with organic increases of 66.4% in government/defense sales, 7.4% in oil & gas market sales and 2.4% in industrial market sales, partially offset by a 12.1% decrease in medical sales. Net organic sales for this segment increased 8.5%. Communications Systems sales increased 165.3% to $4.7 million compared to $1.8 million for the same period last year, despite lingering supply chain disruptions resulting in delays in our shipments to future periods.   Our total backlog exiting the third quarter grew to $106.2 million, which represents an increase of $27.0 million or 34.1% over the comparable backlog exiting the prior quarter and an increase of $64.2 million or 153.3% over that exiting the third quarter of 2021.

Gross profit was $6.7 million, or 20.2% of revenue, compared to $5.1 million, or 23.5% of revenue, for the same quarter a year ago.   Battery & Energy Products’ gross margin was 18.7% compared to 24.0% last year, primarily due to supply chain disruptions including component cost inflation, prolonged lead times and logistics delays, and the incremental costs of transitioning new products to high volume production. Communications Systems gross margin was 29.5% compared to 18.0% last year, primarily due to higher factory volume and more favorable sales mix.  

Operating expenses were $7.3 million compared to $5.9 million last year, an increase of 24.0% , reflecting $1.1 million for Excell. Operating expense ratio to revenue was 22.0%, a 510 basis-point improvement as compared to 27.1% of revenue for the year-earlier period.

Operating loss was $0.6 million compared to $0.8 million last year.

Net loss was $0.2 million or $0.01 per diluted share on a GAAP basis compared to a net loss of $0.6 million or $0.04 per diluted share for the third quarter of 2021.  

Adjusted EBITDA, defined as EBITDA including non-cash, stock-based compensation expense, was $1.3 million or 3.8% of sales for the third quarter of 2022, compared to $0.3 million or 1.3% 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 (loss) 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 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 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 CorporationLHA
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
    
                                                                September 30,
2022
 December 31,
2021
Current Assets:   
Cash$5,051 $8,413
Trade Accounts Receivable, Net26,876 20,232
Inventories, Net40,769 33,189
Prepaid Expenses and Other Current Assets6,241 4,690
Total Current Assets78,937 66,524
    
Property, Plant and Equipment, Net21,898 23,205
Goodwill37,066 38,068
Other Intangible Assets, Net16,095 17,390
Deferred Income Taxes, Net11,963 11,472
Other Non-Current Assets1,981 2,879
          

           Total Assets
$167,940 $159,538
     
LIABILITIES AND SHAREHOLDERS' EQUITY


Current Liabilities:
   
Accounts Payable$15,827 $9,823
Current Portion of Long-Term Debt2,000 2,000
Accrued Compensation and Related Benefits2,000 1,842
Accrued Expenses and Other Current Liabilities8,254 5,259
Total Current Liabilities28,081 18,924
Long-Term Debt, Net20,874 18,857
Deferred Income Taxes1,996 2,254
Other Non-Current Liabilities1,673 1,760
Total Liabilities52,624 41,795
    
Shareholders' Equity:   
Common Stock2,057 2,052
Capital in Excess of Par Value187,181 186,518
Accumulated Deficit(47,727) (47,832)
Accumulated Other Comprehensive Loss(4,842) (1,653)
Treasury Stock(21,480) (21,469)
Total Ultralife Equity115,189 117,616
Non-Controlling Interest127 127
Total Shareholders’ Equity115,316 117,743
    
Total Liabilities and Shareholders' Equity$167,940 $159,538

                                                                        

ULTRALIFE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF (LOSS) INCOME
(In Thousands Except Per Share Amounts)
(Unaudited)
        
 Three-Month Period Ended Nine-Month Period Ended
 September 30, September 30, September 30, September 30,
 2022 2021 2022  2021
Revenues:       
Battery & Energy Products$28,583 $20,008 $87,873 $64,994
Communications Systems4,651 1,753 7,860 9,510
Total Revenues33,234 21,761 95,733 74,504
        
Cost of Products Sold:       
Battery & Energy Products23,238 15,216 68,656 48,750
Communications Systems3,281 1,437 5,758 6,401
Total Cost of Products Sold26,519 16,653 74,414 55,151
        
Gross Profit6,715 5,108 21,319 19,353
        
Operating Expenses:       
Research and Development1,896 1,723 5,425 5,223
Selling, General and Administrative5,405 4,164 15,982 12,866
Total Operating Expenses7,301 5,887 21,407 18,089
        
Operating (Loss) Income(586) (779) (88) 1,264
        
Other (Income) Expense(254) (1) (22) 76
(Loss) Income Before Income Taxes(332) (778) (66) 1,188
        
Income Tax (Benefit) Provision(90) (175) (171) 290
        
Net (Loss) Income(242) (603) 105 898
        
Net (Loss) Income Attributable to Non-Controlling Interest(3) (18) - 1
        
Net (Loss) Income Attributable to Ultralife Corporation($239) ($585) $105 $897
        
        
Net (Loss) Income Per Share Attributable to Ultralife Common Shareholders – Basic($.01) ($.04) $.01 $.06
        
Net (Loss) Income Per Share Attributable to Ultralife Common Shareholders – Diluted($.01) ($.04) $.01 $.06
        
Weighted Average Shares Outstanding – Basic16,133 16,065 16,122 16,020
        
Weighted Average Shares Outstanding – Diluted16,133 16,065 16,144 16,200


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 GAAP financial measures. We define adjusted EBITDA as net income (loss) 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 (loss) 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, 2022 September 30, 2021 September 30, 2022 September 30, 2021
        
Net (Loss) Income Attributable to Ultralife Corporation($239) ($585) $105 $897
Adjustments:       
Interest and Financing Expense272 53 583 164
Income Tax (Benefit) Provision(90) (175) (171) 290
Depreciation Expense815 700 2,450 2,160
Amortization Expense318 148 969 458
Stock-Based Compensation Expense179 142 552 512
Non-Cash Purchase Accounting Adjustment- - 55 -
Adjusted EBITDA$1,255 $283 $4,543 $4,481

FAQ

What were Ultralife Corporation's Q3 2022 earnings results?

Ultralife Corporation reported Q3 2022 revenue of $33.2 million, an operating loss of $0.6 million, and adjusted EBITDA of $1.3 million.

How did Ultralife's revenue in Q3 2022 compare to Q3 2021?

Revenue for Q3 2022 increased by 52.7% from Q3 2021, rising from $21.8 million to $33.2 million.

What is Ultralife Corporation's current backlog value?

As of Q3 2022, Ultralife Corporation's backlog grew to $106.2 million, indicating significant future revenue potential.

What challenges did Ultralife face in Q3 2022?

Ultralife faced production inefficiencies due to supply chain disruptions and input cost inflation, which pressured gross margins.

Ultralife Corporation

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