Results

Ultralife Corporation

10/28/2021 | Press release | Distributed by Public on 10/28/2021 05:02

Ultralife Corporation Reports Third Quarter Results - Form 8-K

Ultralife Corporation Reports Third Quarter Results

NEWARK, N.Y. - October 28, 2021 -- Ultralife Corporation (NASDAQ: ULBI)reported an operating loss of $0.8 million on revenue of $21.8 million for the third quarter ended September 30, 2021. For the third quarter of 2020, the Company reported operating income of $0.7 million on revenue of $24.4 million.

"Supply chain bottlenecks intensified during the third quarter which extended both our own and our customers' product manufacturing schedules and delayed shipments, thereby impacting third quarter revenue and earnings. The 11% year-over-year decrease in revenue, primarily related to the government/defense sector, masked a 5% increase in commercial sales led by a continued rebound in oil & gas revenue and our new ER and thin cell products. Medical sales grew 11% sequentially over the second quarter reflecting the continued solid demand for our products," said Michael D. Popielec, President and Chief Executive Officer. "In addition to implementing price increases in response to higher supply chain costs, we are working collectively and closely with our customers and suppliers to best navigate through these increasingly complex business conditions."

Added Mr. Popielec, "At the same time, order flow remained solid primarily in our medical and military end markets, and backlog at quarter end was substantially higher than at the end of the second quarter. We also continued to invest in new product development during the quarter and advanced our transformational projects. As we look ahead, our strong balance sheet and liquidity position, new product initiatives, and durable customer relationships anchor our view that our long-term growth drivers and strategy are sound and achievable."

Third Quarter 2021 Financial Results

Revenue was $21.8 million, a decrease of $2.6 million, or 10.7%, compared to $24.4 million for the third quarter of 2020. Overall, commercial sales increased 5.1% and government/defense sales decreased 39.7% from the 2020 period. Battery & Energy Products declined 8.3% to $20.0 million, compared to $21.8 million last year, with an 89.5% increase in oil & gas market sales and an 115.8% increase in our new ER and thin cell battery sales offset by a 43.3% decrease in government/defense sales and a 28.3% decrease in medical battery sales. Communications Systems sales decreased 31.1% to $1.8 million compared to $2.5 million for the same period last year. During the 2021 third quarter, increased lead times on components from suppliers and other COVID-19 related logistics matters resulted in delays in our shipments to future periods. We estimate that the delayed shipments adversely impacted revenue for the 2021 third quarter by approximately $4.1 million, with approximately $2.5 million and $1.6 million impacting Battery & Energy Products and Communications Systems, respectively. Conversely, the backlog exiting the third quarter of 2021 increased by approximately 22% over the second quarter.

Gross profit was $5.1 million, or 23.5% of revenue, compared to $6.5 million, or 26.7% of revenue, for the same quarter a year ago. Battery & Energy Products' gross margin was 24.0%, compared to 26.0% last year, primarily due to lower factory volume and sales product mix. Communications Systems gross margin was 18.0%, compared to 32.8% last year, primarily due to lower factory volume.

Operating expenses were $5.9 million compared to $5.8 million last year, representing an increase of 1.4%, primarily relating to our continued investment in engineering resources for new product development, including resources dedicated to the Conformal Wear Battery IDIQ contract awarded in May 2021. Operating expenses were 27.1% of revenue compared to 23.8% of revenue for the year-earlier period.

Operating loss was $0.8 million compared to income of $0.7 million last year. We estimate that delayed shipments resulting from supply chain disruptions and other COVID-19 related logistics matters adversely impacted operating income for the 2021 third quarter by approximately $1.3 million.

Net loss was $0.6 million or $0.04 per diluted share using the U.S. statutory tax rate, compared to net income of $0.4 million or $0.03 per diluted share for the third quarter of 2020. We estimate that delayed shipments resulting from supply chain disruptions and other COVID-19 related logistics matters adversely impacted Adjusted EPS for the 2021 third quarter by approximately $0.08.

For the third quarter of 2021, our cash-on-hand was $15.9 million, slightly above the second quarter and an increase of 48.8% over year-end 2020, and our debt was further reduced to $0.3 million.

See the "Non-GAAP Financial Measures" section of this release for a reconciliation of Adjusted EPS to EPS and Adjusted EBITDA to net income (loss) 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, 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)

September 30,

2021

December 31,

2020

ASSETS

Current Assets:

Cash

$ 15,853 $ 10,653

Trade Accounts Receivable, Net

16,235 21,054

Inventories, Net

28,179 28,193

Prepaid Expenses and Other Current Assets

4,271 4,596

Total Current Assets

64,538 64,496

Property, Plant and Equipment, Net

23,035 22,850

Goodwill

26,998 27,018

Other Intangible Assets, Net

8,725 9,209

Deferred Income Taxes, Net

11,700 11,836

Other Non-Current Assets

1,816 2,292

Total Assets

$ 136,812 $ 137,701

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:

Accounts Payable

$ 9,206 $ 10,839

Current Portion of Long-Term Debt, Net

253 1,361

Accrued Compensation and Related Benefits

1,153 1,748

Accrued Expenses and Other Current Liabilities

6,076 4,758

Total Current Liabilities

16,688 18,706

Deferred Income Taxes

475 515

Other Non-Current Liabilities

1,103 1,557

Total Liabilities

18,266 20,778

Shareholders' Equity:

Common Stock

2,051 2,037

Capital in Excess of Par Value

186,360 185,464

Accumulated Deficit

(46,701 ) (47,598 )

Accumulated Other Comprehensive Loss

(1,819 ) (1,782 )

Treasury Stock

(21,469 ) (21,321 )

Total Ultralife Equity

118,422 116,800

Non-Controlling Interest

124 123

Total Shareholders' Equity

118,546 116,923

Total Liabilities and Shareholders' Equity

$ 136,812 $ 137,701

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,

2021

2020

2021

2020

Revenues:

Battery & Energy Products

$ 20,008 $ 21,819 $ 64,994 $ 66,616

Communications Systems

1,753 2,543 9,510 12,120

Total Revenues

21,761 24,362 74,504 78,736

Cost of Products Sold:

Battery & Energy Products

15,216 16,142 48,750 49,597

Communications Systems

1,437 1,709 6,401 7,331

Total Cost of Products Sold

16,653 17,851 55,151 56,928

Gross Profit

5,108 6,511 19,353 21,808

Operating Expenses:

Research and Development

1,723 1,606 5,223 4,429

Selling, General and Administrative

4,164 4,198 12,866 12,893

Total Operating Expenses

5,887 5,804 18,089 17,322

Operating (Loss) Income

(779 ) 707 1,264 4,486

Other (Income) Expense

(1 ) 53 76 262

(Loss) Income Before Income Tax (Benefit) Provision

(778 ) 654 1,188 4,224

Income Tax (Benefit) Provision

(175 ) 192 290 1,010

Net (Loss) Income

(603 ) 462 898 3,214

Net (Loss) Income Attributable to Non-Controlling Interest

(18 ) 55 1 90

Net (Loss) Income Attributable to Ultralife Corporation

$ (585 ) $ 407 $ 897 $ 3,124

Net (Loss) Income Per Share Attributable to Ultralife Common Shareholders - Basic

$ (.04 ) $ .03 $ .06 $ .20

Net (Loss) Income Per Share Attributable to Ultralife Common Shareholders - Diluted

$ (.04 ) $ .03 $ .06 $ .19

Weighted Average Shares Outstanding - Basic

16,065 15,908 16,020 15,889

Weighted Average Shares Outstanding - Diluted

16,065 16,089 16,200 16,103

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 in addition to GAAP financial measures. We define Adjusted EPS as net (loss) income attributable to Ultralife Corporation excluding the provision (benefit) 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 (benefit) that we expect 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 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 (loss) 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, 2021

September 30, 2020

Amount

Per Basic Share

Per Diluted Share

Amount

Per Basic Share

Per Diluted Share

Net (Loss) Income Attributable to Ultralife Corporation

$ (585 ) $ (.04 ) $ (.04 ) $ 407 $ .03 $ .03

Deferred Income Tax (Benefit) Provision

(218 ) (.01 ) (.01 ) 188 .01 .01

Adjusted Net (Loss) Income Attributable to Ultralife Corporation

$ (803 ) $ (.05 ) $ (.05 ) $ 595 $ .04 $ .04

Weighted Average Shares Outstanding

16,065 16,065 15,908 16,089

Nine-Month Period Ended

September 30, 2021

September 30, 2020

Amount

Per Basic Share

Per Diluted Share

Amount

Per Basic Share

Per Diluted Share

Net Income Attributable to Ultralife Corporation

$ 897 $ .06 $ .06 $ 3,124 $ .20 $ .19

Deferred Income Tax Provision

127 - - 821 .05 .05

Adjusted Net Income Attributable to Ultralife Corporation

$ 1,024 $ .06 $ .06 $ 3,945 $ .25 $ .24

Weighted Average Shares Outstanding

16,020 16,200 15,889 16,103

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, 2021

September 30, 2020

September 30, 2021

September 30, 2020

Net (Loss) Income Attributable to Ultralife Corporation

$ (585 ) $ 407 $ 897 $ 3,124

Adjustments:

Interest and Financing Expense, Net

53 92 164 372

Income Tax (Benefit) Provision

(175 ) 192 290 1,010

Depreciation Expense

700 582 2,160 1,743

Amortization Expense

148 161 458 480

Stock-Based Compensation Expense

142 222 512 756

Adjusted EBITDA

$ 283 $ 1,656 $ 4,481 $ 7,485

Company Contact:

Ultralife Corporation

Philip A. Fain

(315) 210-6110

[email protected]

Investor Relations Contact:

LHA

Jody Burfening

(212) 838-3777

[email protected]