News Releases

Ultralife Corporation
Oct 29, 2020
Ultralife Corporation Reports Third Quarter Results

NEWARK, N.Y. , Oct. 29, 2020 (GLOBE NEWSWIRE) -- Ultralife Corporation (NASDAQ: ULBI) reported operating income of $0.7 million on revenue of $24.4 million for the third quarter ended September 30, 2020. For the third quarter of 2019, the Company reported operating income of $1.3 million on revenue of $27.5 million.

“Effective execution of both our end-market diversification strategy and operating discipline during the third quarter sustained profitability and positive cash flows, despite a reduction in total Company results largely due to the continuing global economic impact of the pandemic,” said Michael D. Popielec, President and Chief Executive Officer. “Within Battery & Energy Products, we posted record quarterly medical sales which increased 102% over last year, and a 23% increase in government/defense sales. These strong gains were offset by economic weakness in the oil and gas sector and lower sales for our Communications Systems business.   In response, we continued our spending control, matching the overall percentage decline in our revenue with a comparable reduction in operating expenses.   By preserving profitability and continuing to improve working capital management, during the quarter we also further reduced debt by $7.1 million. Supported by a solid balance sheet and resilient business model, we are committed to completing our strategic growth projects and are well positioned to withstand current economic headwinds.”

Third Quarter 2020 Financial Results

Revenue was $24.4 million, a decrease of $3.1 million, or 11.4%, compared to $27.5 million for the third quarter of 2019, as a 22.2% increase in core battery sales across diversified end-markets was offset by lower oil & gas market and Communications Systems sales. Total Company commercial sales decreased 10.8% and government/defense sales decreased 12.5% from the 2019 period.    Battery & Energy Products revenues declined 3.4% to $21.8 million, compared to $22.6 million last year, as a 102.1% increase in medical battery sales, especially those used in ventilators, respirators and infusion pumps, and a 23.4% increase in government/defense sales, were offset by a 68.7% decline in oil & gas market sales. Communications Systems sales decreased 48.3% to $2.5 million compared to $4.9 million for the same period last year, primarily reflecting 2019 shipments of vehicle amplifier-adaptor systems 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.   The net adverse impact of COVID-19 on revenues for the 2020 period was approximately $2.9 million as a substantial increase in demand for medical batteries was more than offset by weakened demand in the oil & gas and international industrial markets. Logistics disruptions also delayed certain shipments.

Gross profit was $6.5 million, or 26.7% of revenue, compared to $7.9 million, or 28.6% of revenue, for the same quarter a year ago.   Battery & Energy Products’ gross margin was 26.0%, compared to 27.1% last year, primarily due to the mix impact of lower oil & gas market sales in 2020. Communications Systems gross margin was 32.8%, compared to 35.5% last year, due to lower factory throughput in 2020 and sales mix.        

Operating expenses were $5.8 million compared to $6.6 million last year, a reduction of 11.5%. Operating expenses were 23.8% of revenue equal to that of the year-earlier period.

Operating income was $0.7 million compared to $1.3 million last year, and operating margin was 2.9% compared to 4.8% last year. The net adverse impact of COVID-19 on operating income for the 2020 period was approximately $1.0 million.

Net income was $0.4 million or $0.03 per diluted share on a GAAP basis using the U.S. statutory tax rate, compared to net income of $0.9 million, or $0.06 per diluted share for the third quarter of 2019. Adjusted EPS was $0.04 on a diluted basis for the third quarter of 2020, compared to $0.07 for the 2019 period. Adjusted EPS excludes the provision for deferred taxes which primarily represents non-cash charges of $0.2 million for U.S. taxes which will be fully offset by net operating loss carryforwards and other tax credits for the foreseeable future. The net adverse impact of COVID-19 on Adjusted EPS for the 2020 period was approximately $0.06.

Adjusted EBITDA, defined as EBITDA including non-cash, stock-based compensation expense, for the trailing twelve-month period was $10.9 million or 9.9% of sales.

During the third quarter of 2020, the Company continued its strong working capital management reducing the debt related to the May 2019 acquisition of Southwest Electronic Energy Corporation by $7.1 million, or 64.6%, to $3.9 million while increasing its cash on hand by $5.4 million, or 64.2%, to $13.8 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 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 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
 
     
 September 30, December 31, 
2020 2019
Current Assets:    
    Cash$13,777 $7,405 
    Trade Accounts Receivable, Net 15,012  30,106 
    Inventories, Net 29,746  29,759 
    Prepaid Expenses and Other Current Assets 3,661  3,103 
          Total Current Assets 62,196  70,373 
     
Property, Equipment and Improvements, Net 22,605  22,525 
Goodwill 26,705  26,753 
Other Intangible Assets, Net 9,212  9,721 
Deferred Income Taxes, Net 12,425  13,222 
Other Non-Current Assets 2,411  1,963 
          Total Assets$135,554 $144,557 
     
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
    
Current Liabilities:
    Accounts Payable$8,875 $9,388 
    Current Portion of Long-Term Debt 1,537  1,372 
    Accrued Compensation and Related Benefits 1,258  1,655 
    Accrued Expenses and Other Current Liabilities 5,702  4,775 
           Total Current Liabilities 17,372  17,190 
Long-Term Debt 2,190  15,780 
Deferred Income Taxes 480  559 
Other Non-Current Liabilities 1,675
  1,278 
           Total Liabilities 21,717  34,807 
     
Shareholders' Equity:    
    Common Stock 2,033  2,026 
    Capital in Excess of Par Value 185,261  184,292 
    Accumulated Deficit (49,706 (52,830
    Accumulated Other Comprehensive Loss (2,619 (2,531
    Treasury Stock (21,246 (21,231
          Total Ultralife Equity 113,723  109,726 
Non-Controlling Interest 114  24 
          Total Shareholders’ Equity 113,837  109,750 
     
          Total Liabilities and Shareholders' Equity$135,554 $144,557 
           

 

 





ULTRALIFE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands Except Per Share Amounts)
(Unaudited)
 
 Three-Month Period Ended Nine-Month Period Ended
 September  September September September
 30,  29,  30, 29,
  2020  2019  2020  2019
Revenues:       
   Battery & Energy Products$21,819 $22,578 $66,616 $58,876
   Communications Systems 2,543  4,915  12,120  16,896
      Total Revenues 24,362  27,493  78,736  75,772
        
Cost of Products Sold:       
   Battery & Energy Products 16,142  16,461  49,597  42,694
   Communications Systems 1,709  3,171  7,331  11,268
      Total Cost of Products Sold 17,851  19,632  56,928  53,962
        
     Gross Profit 6,511  7,861  21,808  21,810
        
Operating Expenses:       
  Research and Development 1,606  2,029  4,429  4,652
  Selling, General and Administrative 4,198  4,526  12,893  12,262
     Total Operating Expenses 5,804  6,555  17,322  16,914
        
Operating Income  707  1,306  4,486  4,896
        
Other Expense 53  160  262  301
Income Before Income Tax Provision 654  1,146  4,224  4,595
Income Tax Provision 192  225  1,010  942
        
Net Income  462  921  3,214  3,653
        
Net Income Attributable to Non-Controlling Interest 55  23  90  74
        
Net Income Attributable to Ultralife Corporation$407 $898 $3,124 $3,579
        
        
Net Income Per Share Attributable to Ultralife Common Shareholders – Basic$0.03 $0.06 $0.20 $0.23
        
Net Income Per Share Attributable to Ultralife Common Shareholders – Diluted$0.03 $0.06 $0.19 $0.22
        
Weighted Average Shares Outstanding – Basic 15,908  15,785  15,889  15,756
        
Weighted Average Shares Outstanding – Diluted 16,089  16,162  16,103  16,138
        

 

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
 September 30, 2020 September 29, 2019
 Amount Per Basic Share Per Diluted Share Amount Per Basic Share Per Diluted Share
Net Income$407 $.03 $.03 $898 $.06 $.06
Deferred Tax Provision 188 .01 .01  165 .01 .01
Adjusted Net Income$595 $.04 $.04 $1,063 $.07 $.07
            
Weighted Average Shares Outstanding  15,908 16,089   15,785 16,162
            


 Nine-Month Period Ended
 September 30, 2020 September 29, 2019
 Amount Per Basic Share Per Diluted Share Amount Per Basic Share Per Diluted Share
Net Income$3,124 $.20 $.19 $3,579 $.23 $.22
Deferred Tax Provision 821 .05 .05  801 .05 .05
Adjusted Net Income$3,945 $.25 $.24 $4,380 $.28 $.27
            
Weighted Average Shares Outstanding  15,889 16,103   15,756 16,138
            
            

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 Nine-Month Period Ended
 September
30,
2020
 September
29, 2019
 September
30, 2020
 September
29, 2019
        
Net Income Attributable to Ultralife Corporation$407 $898 $3,124 $3,579
Adjustments:       
Interest and Financing Expense, Net 92  220  372  339
Income Tax Provision 192  225  1,010  942
Depreciation Expense 582  586  1,743  1,548
Amortization of Intangible Assets and Financing Fees 161  160  480  404
Stock-Based Compensation Expense 222  159  756  519
Non-Cash Purchase Accounting Adjustments -  59  -  264
Adjusted EBITDA$1,656 $2,307 $7,485 $7,595


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