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UNITED STATES |
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SECURITIES AND EXCHANGE COMMISSION |
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Washington, D.C. 20549 |
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FORM 8-K |
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CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
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February 6, 2020 |
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Date of Report (Date of Earliest Event Reported) |
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ULTRALIFE CORPORATION |
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(Exact name of registrant as specified in its charter) |
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Delaware |
000-20852 |
16-1387013 |
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(State of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
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2000 Technology Parkway, Newark, New York 14513 |
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(Address of principal executive offices) (Zip Code) |
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(315) 332-7100 |
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(Registrant’s telephone number, including area code) |
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None |
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(Former name or former address, if changed since last report) |
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Securities registered pursuant to Section 12(b) of the Act: |
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Common Stock, $0.10 par value per share |
ULBI |
NASDAQ |
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(Title of each class) |
(Trading Symbol) |
(Name of each exchange on which registered) |
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |
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☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934. Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ |
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Item 2.02 Results of Operations and Financial Condition
On February 6, 2020, Ultralife Corporation issued a press release regarding the financial results for its fourth quarter ended December 31, 2019. A copy of this press release is attached hereto as Exhibit 99.1 and is incorporated herein by this reference.
The information set forth in this Form 8-K and the attached exhibit is being furnished to and not filed with the Securities and Exchange Commission and shall not be deemed as incorporated by reference in any filing under the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended, except to the extent specifically provided in any such filing.
Item 9.01 Financial Statements, Pro Forma Financials and Exhibits
(d) Exhibits.
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Exhibit Number |
Exhibit Description |
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99.1 |
Press Release of Ultralife Corporation dated February 6, 2020 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Date: February 6, 2020 |
ULTRALIFE Corporation |
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By: |
/s/ Philip A. Fain |
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Philip A. Fain |
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Chief Financial Officer and Treasurer |
Exhibit 99.1
Ultralife Corporation Reports Fourth Quarter Results
NEWARK, N.Y. – February 6, 2020 -- Ultralife Corporation (NASDAQ: ULBI) reported operating income of $2.5 million on revenue of $31.0 million for the fourth quarter ended December 31, 2019 compared to operating income of $1.1 million on revenue of $20.9 million for the fourth quarter of 2018. For fiscal 2019, Ultralife produced operating income of $7.4 million on revenue of $106.8 million compared to operating income of $6.6 million on revenue of $87.2 million for 2018.
“Ultralife capped a year of strategic, operational and financial accomplishment with strong fourth quarter results,” said Michael D. Popielec, President and Chief Executive Officer. “Revenue for the fourth quarter increased in Battery & Energy Products and Communications Systems, and in both commercial and government/defense end markets, for a total gain of 48%. Battery & Energy Products grew 38% reflecting a solid contribution from Southwest Electronic Energy Corporation (‘SWE’) and higher core business sales. Communications Systems grew revenue by 113% due to increased shipments under existing contracts for the U.S. Army’s Network Modernization initiatives. Higher revenue and favorable mix drove a leveraged year-over-year operating profit increase of 132%, while absorbing expenses associated with transitioning new products to higher volume production and new product development initiatives.”
Concluded Mr. Popielec, “For the year, we met our goal of delivering another year of profitable growth and grew revenue by 22% to $106.8 million. Having invested in engineering resources to support new product development, we are focused on capturing new opportunities and continued end-market diversification in 2020. These new opportunities combined with a Battery & Energy Products backlog that is higher than the beginning of 2019 give us confidence that we will extend our track record of profitable growth.”
Fourth Quarter 2019 Financial Results
Revenue was $31.0 million, an increase of $10.1 million, or 48.2%, compared to $20.9 million for the fourth quarter of 2018 reflecting the addition of SWE and higher Communications Systems sales and Battery & Energy Products core sales. Overall, commercial sales increased 53.6% while government/defense sales increased 42.3% from the 2018 period. Battery & Energy Products revenues were $25.1 million, compared to $18.2 million last year, primarily reflecting the SWE acquisition and a 14.9% increase in government/defense sales. Communications Systems sales grew 112.8% to $5.9 million compared to $2.8 million for the same period last year primarily reflecting shipments of vehicle amplifier-adaptor systems to support the U.S. Army’s Network Modernization initiatives under the delivery orders announced in October 2018.
Gross profit was $9.4 million, or 30.2% of revenue, compared to $5.7 million, or 27.3% of revenue, for the same quarter a year ago. Battery & Energy Products’ gross margin was 26.4%, compared to 27.0% last year, reflecting incremental costs associated with the transitioning of new products to higher volume production. Communications Systems gross margin was 46.1%, compared to 28.8% last year, due to the successful transition of vehicle amplifier-adaptor systems for the U.S. Army to higher volume production as well as sales mix.
Operating expenses were $6.9 million compared to $4.6 million last year reflecting the addition of SWE and a 49.5% increase in engineering and technology expenses for new product development and testing. Operating expenses were 22.2% of revenue, the same as the year-earlier period.
Operating income was $2.5 million compared to $1.1 million last year, and operating margin was 8.0% compared to 5.1% last year.
Net income was $1.6 million or $0.10 per share, compared to net income of $1.0 million, or $0.07 per share, for the fourth quarter of 2018 excluding last year’s non-cash tax benefit of $18.7 million, or $1.17 per share, resulting from the release of the valuation allowance on U.S. deferred tax assets. As a result, net income reflects an effective tax rate of 23.7% for the fourth quarter of 2019 compared to an effective tax rate of 4.1% for the year-earlier quarter when excluding the impact of the release of the allowance.
Adjusted EPS was $0.13 on a fully diluted basis for the fourth quarter of 2019, representing a 95.3% increase over the 2018 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.
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.
Adjusted EBITDA, defined as EBITDA including non-cash, stock-based compensation expense, was $3.4 million for the fourth quarter of 2019, an increase of 77.7% over the year-earlier period. Adjusted EBITDA margin was 11.0% compared to 9.2% for the fourth quarter of 2018.
See the “Non-GAAP Financial Measure – Adjusted EBITDA” section of this release for a reconciliation of 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 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.
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ULTRALIFE CORPORATION AND SUBSIDIARIES |
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CONSOLIDATED BALANCE SHEETS (Dollars in Thousands) |
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(Unaudited) |
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ASSETS |
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December 31, |
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December 31, 2019 |
2018 As Adjusted (1) |
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Current Assets: |
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Cash |
$ | 7,405 | $ | 25,934 | ||||
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Trade Accounts Receivable, Net |
30,106 | 16,015 | ||||||
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Inventories, Net |
29,759 | 22,843 | ||||||
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Prepaid Expenses and Other Current Assets |
3,103 | 2,368 | ||||||
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Total Current Assets |
70,373 | 67,160 | ||||||
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Property, Equipment and Improvements, Net |
22,525 | 10,744 | ||||||
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Goodwill |
26,753 | 20,109 | ||||||
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Other Intangible Assets, Net |
9,721 | 6,504 | ||||||
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Deferred Income Taxes, Net |
13,222 | 15,444 | ||||||
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Other Non-Current Assets |
1,963 | 887 | ||||||
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Total Assets |
$ | 144,557 | $ | 120,848 | ||||
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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Current Liabilities: |
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Accounts Payable |
$ | 9,388 | $ | 9,919 | ||||
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Current Portion of Long-Term Debt |
1,372 | - | ||||||
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Accrued Compensation and Related Benefits |
1,655 | 1,494 | ||||||
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Accrued Expenses and Other Current Liabilities |
4,775 | 3,973 | ||||||
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Total Current Liabilities |
17,190 | 15,386 | ||||||
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Long-Term Debt |
15,780 | - | ||||||
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Deferred Income Taxes |
559 | 591 | ||||||
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Other Non-Current Liabilities |
1,278 | 408 | ||||||
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Total Liabilities |
34,807 | 16,385 | ||||||
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Shareholders' Equity: |
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Common Stock |
2,026 | 2,005 | ||||||
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Capital in Excess of Par Value |
184,292 | 182,630 | ||||||
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Accumulated Deficit |
(52,830 | ) | (58,035 | ) | ||||
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Accumulated Other Comprehensive Loss |
(2,531 | ) | (2,786 | ) | ||||
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Treasury Stock |
(21,231 | ) | (19,266 | ) | ||||
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Total Ultralife Equity |
109,726 | 104,548 | ||||||
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Non-Controlling Interest |
24 | (85 | ) | |||||
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Total Shareholders’ Equity |
109,750 | 104,463 | ||||||
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Total Liabilities and Shareholders' Equity |
$ | 144,557 | $ | 120,848 | ||||
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(1) |
Effective January 1, 2019, the Company adopted Accounting Standards Codification Topic 842 (ASC 842), Leases. Pursuant to ASC 842, lease liabilities and right-of-use assets for the Company’s operating leases have been recognized on the consolidated balance sheet. Lease liabilities are recorded as other current and other noncurrent liabilities. Right-of-use assets are recorded as other noncurrent assets. For comparability, the Company has elected to recast the prior year comparative period to recognize the effects of ASC 842 including the recognition to equity of a $71 cumulative effect adjustment. |
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ULTRALIFE CORPORATION AND SUBSIDIARIES |
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CONSOLIDATED STATEMENTS OF INCOME |
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(In Thousands Except Per Share Amounts) |
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(Unaudited) |
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Three-Month Period Ended |
Year Ended |
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December 31, |
December 31, |
December 31, |
December 31, |
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2019 |
2018 |
2019 |
2018 |
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Revenues: |
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Battery & Energy Products |
$ | 25,120 | $ | 18,153 | $ | 83,996 | $ | 70,497 | ||||||||
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Communications Systems |
5,903 | 2,774 | 22,799 | 16,693 | ||||||||||||
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Total Revenues |
31,023 | 20,927 | 106,795 | 87,190 | ||||||||||||
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Cost of Products Sold: |
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Battery & Energy Products |
18,489 | 13,243 | 61,183 | 50,923 | ||||||||||||
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Communications Systems |
3,179 | 1,974 | 14,447 | 10,684 | ||||||||||||
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Total Cost of Products Sold |
21,668 | 15,217 | 75,630 | 61,607 | ||||||||||||
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Gross Profit |
9,355 | 5,710 | 31,165 | 25,583 | ||||||||||||
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Operating Expenses: |
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Research and Development |
2,153 | 1,092 | 6,805 | 4,508 | ||||||||||||
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Selling, General and Administrative |
4,730 | 3,551 | 16,992 | 14,520 | ||||||||||||
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Total Operating Expenses |
6,883 | 4,643 | 23,797 | 19,028 | ||||||||||||
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Operating Income |
2,472 | 1,067 | 7,368 | 6,555 | ||||||||||||
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Other Expense (Income) |
296 | (85 | ) | 597 | (58 | ) | ||||||||||
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Income Before Income Tax Provision |
2,176 | 1,152 | 6,771 | 6,613 | ||||||||||||
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Income Tax Provision |
515 | (18,605 | ) | 1,457 | (18,386 | ) | ||||||||||
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Net Income |
1,661 | 19,757 | 5,314 | 24,999 | ||||||||||||
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Net Income Attributable to Non-Controlling Interest |
35 | 12 | 109 | 69 | ||||||||||||
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Net Income Attributable to Ultralife Corporation |
$ | 1,626 | $ | 19,745 | $ | 5,205 | $ | 24,930 | ||||||||
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Net Income Per Share Attributable to Ultralife Common Shareholders – Basic |
$ | .10 | $ | 1.24 | $ | .33 | $ | 1.57 | ||||||||
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Net Income Per Share Attributable to Ultralife Common Shareholders – Diluted |
$ | .10 | $ | 1.21 | $ | .32 | $ | 1.53 | ||||||||
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Weighted Average Shares Outstanding – Basic |
15,861 | 15,950 | 15,783 | 15,882 | ||||||||||||
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Weighted Average Shares Outstanding – Diluted |
16,205 | 16,292 | 16,179 | 16,347 | ||||||||||||
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 U.S. GAAP financial measures. 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 Corporation.
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ULTRALIFE CORPORATION AND SUBSIDIARIES |
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CALCULATION OF ADJUSTED EPS |
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(In Thousands Except Per Share Amounts) |
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(Unaudited) |
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Three-Month Period Ended |
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December 31, 2019 |
December 31, 2018 |
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Amount |
Per Basic Share |
Per Diluted Share |
Amount |
Per Basic Share |
Per Diluted Share |
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Net Income Attributable to Ultralife Corporation |
$ | 1,626 | $ | .10 | $ | .10 | $ | 19,745 | $ | 1.24 | $ | 1.21 | ||||||||||||
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Deferred Tax Provision |
410 | .03 | .03 | (18,697 | ) | (1.17 | ) | (1.15 | ) | |||||||||||||||
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Adjusted Net Income |
$ | 2,036 | $ | .13 | $ | .13 | $ | 1,048 | $ | .07 | $ | .06 | ||||||||||||
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Weighted Average Shares Outstanding |
15,861 | 16,205 | 15,950 | 16,292 | ||||||||||||||||||||
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Year Ended |
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December 31, 2019 |
December 31, 2018 |
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Amount |
Per Basic Share |
Per Diluted Share |
Amount |
Per Basic Share |
Per Diluted Share |
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Net Income Attributable to Ultralife Corporation |
$ | 5,205 | $ | .33 | $ | .32 | $ | 24,930 | $ | 1.57 | $ | 1.53 | ||||||||||||
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Deferred Tax Provision |
1,211 | .08 | .08 | (18,643 | ) | (1.17 | ) | (1.15 | ) | |||||||||||||||
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Adjusted Net Income |
$ | 6,416 | $ | .41 | $ | .40 | $ | 6,287 | $ | .40 | $ | .38 | ||||||||||||
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Weighted Average Shares Outstanding |
15,783 | 16,179 | 15,882 | 16,347 | ||||||||||||||||||||
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. 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 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 Corporation.
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ULTRALIFE CORPORATION AND SUBSIDIARIES |
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CALCULATION OF ADJUSTED EBITDA |
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(Dollars in Thousands) |
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(Unaudited) |
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Three-Month Period Ended |
Year Ended |
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December 31, 2019 |
December 31, 2018 |
December 31, 2019 |
December 31, 2018 |
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Net Income Attributable to Ultralife Corporation |
$ | 1,626 | $ | 19,745 | $ | 5,205 | $ | 24,930 | ||||||||
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Adjustments: |
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Interest and Financing Expense, Net |
200 | (4 | ) | 539 | 63 | |||||||||||
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Income Tax Provision |
515 | (18,605 | ) | 1,457 | (18,386 | ) | ||||||||||
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Depreciation Expense |
672 | 496 | 2,220 | 1,972 | ||||||||||||
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Amortization of Intangible Assets and Financing Fees |
165 | 106 | 569 | 433 | ||||||||||||
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Stock-Based Compensation Expense |
235 | 183 | 753 | 890 | ||||||||||||
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Non-Cash Purchase Accounting Adjustments |
- | - | 264 | - | ||||||||||||
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Adjusted EBITDA |
$ | 3,413 | $ | 1,921 | $ | 11,007 | $ | 9,902 | ||||||||
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Company Contact: |
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Ultralife Corporation |
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Philip A. Fain |
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(315) 210-6110 |
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pfain@ulbi.com |
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Investor Relations Contact: |
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LHA |
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Jody Burfening |
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(212) 838-3777 |
jburfening@lhai.com