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Ultralife Corporation Reports Second Quarter Results

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NEWARK, N.Y., July 29, 2021 (GLOBE NEWSWIRE) -- Ultralife Corporation (NASDAQ: ULBI) reported operating income of $1.1 million on revenue of $26.8 million for the second quarter ended June 30, 2021. For the second quarter of 2020, the Company reported operating income of $2.3 million on revenue of $28.6 million.

“Ultralife’s end-market diversification strategy continues to serve us well. For the second quarter, sales increased sequentially 3% from the first quarter as our oil & gas revenues rebounded, growing 49% year over year. Medical sales abated from last year’s COVID-related demand spike yet were above pre-pandemic levels, and sales from government/defense customers were soft relative to last year’s strong shipment flows,” said Michael D. Popielec, President and Chief Executive Officer. “Given our solid liquidity position, we increased investments in capex and critical engineering resources to support new contracts and completion of transformational new products. Although these investments weighed on operating and net income year-over-year comparisons, sequential EPS grew 20% on the strength of gains in commercial sales.”

Added Mr. Popielec, “Supply chains and logistics continue to be the source of operational challenges, delaying some shipments and increasing freight costs, and clouding our visibility for the second half of the year. Nevertheless, activity in our end markets remains high and our goal is to continue improving our financial performance each quarter. We remain focused on executing near-term growth initiatives and developing long-term growth opportunities while adhering to our proven and profitable business model.”

Second Quarter 2021 Financial Results

Revenue was $26.8 million, a decrease of $1.8 million, or 6.3%, compared to $28.6 million for the second quarter of 2020. Overall, commercial sales decreased 1.0% and government/defense sales decreased 13.2% from the 2020 period. Battery & Energy Products declined 4.8% to $22.9 million, compared to $24.0 million last year, with a 48.6% increase in oil & gas market sales and a 23.2% increase in 9-Volt sales offset by a 27.9% decrease in medical battery sales and a 12.7% decrease in government/defense sales. Communications Systems sales decreased 13.9% to $3.9 million compared to $4.5 million for the same period last year, primarily due to 2020 shipments of vehicle amplifier-adaptor systems to support the U.S. Army’s Network Modernization initiatives completing the delivery orders announced in October 2018. During the 2021 second 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 second quarter by approximately $1.5 million.

Gross profit was $7.3 million, or 27.1% of revenue, compared to $8.0 million, or 27.9% of revenue, for the same quarter a year ago. Battery & Energy Products’ gross margin was 26.3%, compared to 25.1% last year, as a result of favorable sales product mix and lower scrap and rework on new products transitioning to high volume production. Communications Systems gross margin was 32.1%, compared to 42.8% last year, primarily due to the favorable sales mix in 2020 of the vehicle amplifier-adaptor systems for the U.S. Army.

Operating expenses were $6.2 million compared to $5.7 million last year, representing an increase of 9.0%, 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 23.1% of revenue compared to 19.8% of revenue for the year-earlier period.

Operating income was $1.1 million compared to $2.3 million last year, and operating margin was 4.1% compared to 8.0% last year. We estimate that delayed shipments resulting from supply chain and other COVID-19 related logistics matters adversely impacted operating income for the 2021 second quarter by approximately $0.5 million.

Net income was $0.8 million or $0.05 per diluted share using the U.S. statutory tax rate, compared to net income of $1.7 million or $0.10 per diluted share for the second quarter of 2020. Adjusted EPS was $0.06 on a diluted basis for the second quarter of 2021, compared to $0.13 for the 2020 period. Adjusted EPS excludes the provision for deferred taxes which primarily represents non-cash charges of $.2 million for U.S. taxes which will be fully offset by net operating loss carryforwards and other tax credits for the foreseeable future. We estimate that delayed shipments resulting from supply chain and other COVID-19 related logistics matters adversely impacted Adjusted EPS for the 2021 second quarter by approximately $0.03.

During the second quarter of 2021, our cash-on-hand increased by 15.9% to $15.8 million and our debt was reduced by 36.6% to $0.7 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 second 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)

ASSETS

June 30,
2021

December 31,
2020

Current Assets:

Cash

$15,828

$10,653

Trade Accounts Receivable, Net

18,712

21,054

Inventories, Net

27,414

28,193

Prepaid Expenses and Other Current Assets

2,351

4,596

Total Current Assets

64,305

64,496

Property, Plant and Equipment, Net

22,720

22,850

Goodwill

27,115

27,018

Other Intangible Assets, Net

8,936

9,209

Deferred Income Taxes, Net

11,459

11,836

Other Non-Current Assets

1,985

2,292

Total Assets

$136,520

$137,701

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:

Accounts Payable

$9,545

$10,839

Current Portion of Long-Term Debt, Net

624

1,361

Accrued Compensation and Related Benefits

1,396

1,748

Accrued Expenses and Other Current Liabilities

3,966

4,758

Total Current Liabilities

15,531

18,706

Deferred Income Taxes

492

515

Other Non-Current Liabilities

1,260

1,557

Total Liabilities

17,283

20,778

Shareholders' Equity:

Common Stock

2,047

2,037

Capital in Excess of Par Value

186,138

185,464

Accumulated Deficit

(46,116)

(47,598)

Accumulated Other Comprehensive Loss

(1,586)

(1,782)

Treasury Stock

(21,388)

(21,321)

Total Ultralife Equity

119,095

116,800

Non-Controlling Interest

142

123

Total Shareholders’ Equity

119,237

116,923

Total Liabilities and Shareholders' Equity

$136,520

$137,701



ULTRALIFE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In Thousands Except Per Share Amounts)

(Unaudited)

Three-Month Period Ended

Six-Month Period Ended

June 30,

June 30,

June 30,

June 30,

2021

2020

2021

2020

Revenues:

Battery & Energy Products

$22,875

$24,036

$44,986

$44,797

Communications Systems

3,895

4,524

7,757

9,577

Total Revenues

26,770

28,560

52,743

54,374

Cost of Products Sold:

Battery & Energy Products

16,859

18,010

33,534

33,455

Communications Systems

2,644

2,587

4,964

5,622

Total Cost of Products Sold

19,503

20,597

38,498

39,077

Gross Profit

7,267

7,963

14,245

15,297

Operating Expenses:

Research and Development

1,853

1,275

3,500

2,823

Selling, General and Administrative

4,323

4,394

8,702

8,695

Total Operating Expenses

6,176

5,669

12,202

11,518

Operating Income

1,091

2,294

2,043

3,779

Other Expense

21

117

77

209

Income Before Income Tax Provision

1,070

2,177

1,966

3,570

Income Tax Provision

248

499

465

818

Net Income

822

1,678

1,501

2,752

Net Income Attributable to Non-Controlling Interest

11

20

19

35

Net Income Attributable to Ultralife Corporation

$811

$1,658

$1,482

$2,717

Net Income Per Share Attributable to Ultralife Common Shareholders – Basic

$.05

$.10

$.09

$.17

Net Income Per Share Attributable to Ultralife Common Shareholders – Diluted

$.05

$.10

$.09

$.17

Weighted Average Shares Outstanding – Basic

16,019

15,882

15,997

15,880

Weighted Average Shares Outstanding – Diluted

16,260

16,133

16,194

16,114


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 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 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 attributable to Ultralife Corporation.


ULTRALIFE CORPORATION AND SUBSIDIARIES

CALCULATION OF ADJUSTED EPS

(In Thousands Except Per Share Amounts)

(Unaudited)


Three-Month Period Ended

June 30, 2021

June 30, 2020

Amount

Per
Basic
Share

Per
Diluted
Share

Amount

Per
Basic
Share

Per
Diluted
Share

Net Income

$811

$.05

$.05

$1,658

$.10

$.10

Deferred Tax Provision

177

.01

.01

391

.03

.03

Adjusted Net Income

$988

$.06

$.06

$2,049

$.13

$.13

Weighted Average Shares Outstanding

16,019

16,260

15,882

16,133


Six-Month Period Ended

June 30, 2021

June 30, 2020

Amount

Per
Basic
Share

Per
Diluted
Share

Amount

Per
Basic
Share

Per
Diluted
Share

Net Income

$1,482

$.09

$.09

$2,717

$.17

$.17

Deferred Tax Provision

345

.02

.02

633

.04

.04

Adjusted Net Income

$1,827

$.11

$.11

$3,350

$.21

$.21

Weighted Average Shares Outstanding

15,997

16,194

15,880

16,114


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 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

Six-Month Period Ended

June 30,
2021

June 30,
2020

June 30,
2021

June 30,
2020

Net Income Attributable to Ultralife Corporation

$811

$1,658

$1,482

$2,717

Adjustments:

Interest and Financing Expense, Net

55

106

111

280

Income Tax Provision

248

499

465

818

Depreciation Expense

730

582

1,460

1,161

Amortization Expense

156

158

310

319

Stock-Based Compensation Expense

186

304

370

534

Adjusted EBITDA

$2,186

$3,307

$4,198

$5,829


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


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