Ultralife Corporation (NASDAQ: ULBI) reported operating
income of $1.3 million on revenue of $27.5 million for the third
quarter ended September 29, 2019. For the third quarter of
2018, the Company reported operating income of $1.5 million on
revenue of $20.3 million.
“Third quarter revenue increased 35% boosted by the contribution
of Battery & Energy Products’ recent acquisition, Southwest
Electronic Energy Corporation ('SWE'), and including 62% higher
Communications Systems sales. These gains offset a decline in
Battery & Energy’s core government/defense sales, reflecting
timing of orders. Despite strong revenue growth,
profitability was negatively impacted by late cycle product changes
and rework in fulfilling a major award for Communications Systems,
and the transition of several Battery & Energy new product
development projects to high volume production. In addition,
we continued to invest in engineering resources to support new
product development projects that are designed to capture new
diversified revenue streams,” said Michael D. Popielec, President
and Chief Executive Officer. “As we near the end of 2019, we remain
focused on delivering profitable growth in 2019 by continuing to
fulfill Communications Systems’ vehicle amplifier adapter system
orders in our backlog, solid SWE performance, and ongoing new
product development projects in our end markets.”
Third Quarter 2019 Financial Results
Revenue was $27.5 million, an increase of $7.2 million, or
35.2%, compared to $20.3 million for the third quarter of 2018
reflecting the addition of SWE and higher Communications Systems
sales. Overall, commercial sales increased 74.6% while
government/defense sales decreased 3.8% from the 2018 period.
Battery & Energy Products revenues were $22.6 million, compared
to $17.3 million last year, reflecting the contribution of $7.2
million of SWE sales and a $0.3 million or 3.0% increase in core
commercial sales. This was partially offset by a $2.3 million
or 31.6% reduction in government/defense sales as the third quarter
of 2018 included a large 5390 order which was completed in 2018 and
the timing of sales to global defense primes.
Communications Systems sales grew 61.6% to $4.9 million
compared to $3.0 million for the same period last year primarily
reflecting shipments of vehicle amplifier adapter systems to
support the U.S. Army’s Network Modernization initiatives under the
delivery orders announced in October 2018.
Gross profit was $7.9 million, or 28.6% of revenue, compared to
$6.0 million, or 29.7% of revenue, for the same quarter a year
ago. Battery & Energy Products’ gross margin was 27.1%,
compared to 27.2% last year, reflecting incremental costs
associated with the transitioning of new products to higher volume
production. Included in Battery & Energy Products’ gross
margin was a negative 21 basis point impact of non-cash purchase
accounting adjustments related to the acquisition of SWE.
Communications Systems gross margin was 35.5%, compared to 44.0%
last year, due primarily to late cycle product changes and rework
relating to the vehicle amplifier adapter systems for the U.S. Army
as well as sales mix.
Operating expenses were $6.6 million compared to $4.5 million
last year reflecting the addition of SWE and a 32.1% increase in
engineering and technology expenses for new product development and
testing. Operating expenses were 23.8% of revenue compared to
22.3% of revenue for the year-earlier period.
Operating income was $1.3 million compared to $1.5 million last
year, and operating margin was 4.8% compared to 7.4% last
year.
Net income was $0.9 million or $0.06 per share, compared to net
income of $1.4 million, or $0.09 per share, for the third quarter
of 2018. As a result of reversing the allowance on deferred
tax assets at year-end 2018, net income reflects an effective tax
rate of 19.6% for the third quarter of 2019 compared to an
effective tax rate of 5.7% for the year-earlier quarter.
Adjusted EPS was $0.07 for the third quarter of 2019 compared to
$0.09 for the third quarter of 2018. 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.
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, uncertain global
economic conditions and acceptance of our new products on a global
basis. 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 |
|
|
|
|
December 31, |
|
September 29, 2019 |
|
2018As Adjusted (1) |
Current
Assets: |
|
|
|
Cash |
$7,089 |
|
$25,934 |
Trade
Accounts Receivable, Net |
26,573 |
|
16,015 |
Inventories, Net |
32,396 |
|
22,843 |
Prepaid
Expenses and Other Current Assets |
2,949 |
|
2,368 |
Total Current Assets |
69,007 |
|
67,160 |
|
|
|
|
Property,
Equipment and Improvements, Net |
22,599 |
|
10,744 |
Goodwill |
26,373 |
|
20,109 |
Other Intangible
Assets, Net |
9,683 |
|
6,504 |
Deferred Income
Taxes, Net |
13,556 |
|
15,444 |
Other Non-Current
Assets |
2,086 |
|
887 |
Total Assets |
$143,304 |
|
$120,848 |
|
LIABILITIES AND SHAREHOLDERS'
EQUITY |
|
Current
Liabilities: |
|
|
|
Accounts
Payable |
$10,451 |
|
$9,919 |
Current
Portion of Long-Term Debt |
1,326 |
|
- |
Accrued
Compensation and Related Benefits |
1,534 |
|
1,494 |
Accrued
Expenses and Other Current Liabilities |
4,962 |
|
3,973 |
Total Current Liabilities |
18,273 |
|
15,386 |
Long-Term
Debt |
16,257 |
|
- |
Deferred Income
Taxes |
504 |
|
591 |
Other Non-Current
Liabilities |
1,419 |
|
408 |
Total Liabilities |
36,453 |
|
16,385 |
|
|
|
|
Shareholders'
Equity: |
|
|
|
Common
Stock |
2,025 |
|
2,005 |
Capital in
Excess of Par Value |
183,995 |
|
182,630 |
Accumulated
Deficit |
(54,456) |
|
(58,035) |
Accumulated
Other Comprehensive Loss |
(3,471) |
|
(2,786) |
Treasury
Stock |
(21,231) |
|
(19,266) |
Total Ultralife Equity |
106,862 |
|
104,548 |
Non-Controlling
Interest |
(11) |
|
(85) |
Total Shareholders’ Equity |
106,851 |
|
104,463 |
|
|
|
|
Total Liabilities and Shareholders' Equity |
$143,304 |
|
$120,848 |
(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.
|
ULTRALIFE
CORPORATION AND SUBSIDIARIES |
CONSOLIDATED
STATEMENTS OF INCOME |
(In
Thousands Except Per Share Amounts) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
Three-Month
Period Ended |
|
Nine-Month
Period Ended |
|
September 29, |
|
September 30, |
|
September 29, |
|
September 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Revenues: |
|
|
|
|
|
|
|
Battery & Energy Products |
$22,578 |
|
$17,289 |
|
$58,876 |
|
$52,344 |
Communications Systems |
4,915 |
|
3,041 |
|
16,896 |
|
13,919 |
Total Revenues |
27,493 |
|
20,330 |
|
75,772 |
|
66,263 |
|
|
|
|
|
|
|
|
Cost of Products Sold: |
|
|
|
|
|
|
|
Battery & Energy Products |
16,461 |
|
12,587 |
|
42,694 |
|
37,680 |
Communications Systems |
3,171 |
|
1,702 |
|
11,268 |
|
8,710 |
Total Cost of Products Sold |
19,632 |
|
14,289 |
|
53,962 |
|
46,390 |
|
|
|
|
|
|
|
|
Gross Profit |
7,861 |
|
6,041 |
|
21,810 |
|
19,873 |
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
|
Research and Development |
2,029 |
|
1,099 |
|
4,652 |
|
3,417 |
Selling, General and Administrative |
4,526 |
|
3,442 |
|
12,262 |
|
10,968 |
Total Operating Expenses |
6,555 |
|
4,541 |
|
16,914 |
|
14,385 |
|
|
|
|
|
|
|
|
Operating Income |
1,306 |
|
1,500 |
|
4,896 |
|
5,488 |
|
|
|
|
|
|
|
|
Other Expense (Income) |
160 |
|
(21) |
|
301 |
|
27 |
Income Before Income Tax Provision |
1,146 |
|
1,521 |
|
4,595 |
|
5,461 |
|
|
|
|
|
|
|
|
Income Tax Provision |
225 |
|
86 |
|
942 |
|
219 |
|
|
|
|
|
|
|
|
Net Income |
921 |
|
1,435 |
|
3,653 |
|
5,242 |
|
|
|
|
|
|
|
|
Net Income Attributable to Non-Controlling Interest |
23 |
|
27 |
|
74 |
|
57 |
|
|
|
|
|
|
|
|
Net Income Attributable to Ultralife
Corporation |
$898 |
|
$1,408 |
|
$3,579 |
|
$5,185 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Per Share Attributable to Ultralife Common
Shareholders – Basic |
$.06 |
|
$.09 |
|
$.23 |
|
$.33 |
|
|
|
|
|
|
|
|
Net Income Per Share Attributable to Ultralife Common
Shareholders – Diluted |
$.06 |
|
$.09 |
|
$.22 |
|
$.32 |
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding –
Basic |
15,785 |
|
15,952 |
|
15,756 |
|
15,859 |
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding –
Diluted |
16,162 |
|
16,523 |
|
16,138 |
|
16,407 |
|
|
|
|
|
|
|
|
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.
|
ULTRALIFE CORPORATION AND SUBSIDIARIES |
CALCULATION OF ADJUSTED EPS |
(In Thousands Except Per Share Amounts) |
(Unaudited) |
|
|
|
Three-Month Period Ended |
|
September 29, 2019 |
|
September 30, 2018 |
|
Amount |
|
Per Basic Share |
|
Per Diluted Share |
|
Amount |
|
Per Basic Share |
|
Per Diluted Share |
Net Income Attributable to
Ultralife Corporation |
$898 |
|
$.06 |
|
$.06 |
|
$1,408 |
|
$.09 |
|
$.09 |
Deferred Tax Provision |
165 |
|
.01 |
|
.01 |
|
18 |
|
- |
|
- |
Adjusted Net Income |
$1,063 |
|
$.07 |
|
$.07 |
|
$1,426 |
|
$.09 |
|
$.09 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares
Outstanding |
|
|
15,785 |
|
16,162 |
|
|
|
15,952 |
|
16,523 |
|
Nine-Month Period Ended |
|
September 29, 2019 |
|
September 30, 2018 |
|
Amount |
|
Per Basic Share |
|
Per Diluted Share |
|
Amount |
|
Per Basic Share |
|
Per Diluted Share |
Net Income Attributable to
Ultralife Corporation |
$3,579 |
|
$.23 |
|
$.22 |
|
$5,185 |
|
$.33 |
|
$.32 |
Deferred Tax Provision |
801 |
|
.05 |
|
.05 |
|
54 |
|
- |
|
- |
Adjusted Net Income |
$4,380 |
|
$.28 |
|
$.27 |
|
$5,239 |
|
$.33 |
|
$.32 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares
Outstanding |
|
|
15,756 |
|
16,138 |
|
|
|
15,859 |
|
16,407 |
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
ULTRALIFE CORPORATION AND SUBSIDIARIES |
CALCULATION OF ADJUSTED EBITDA |
(Dollars in Thousands) |
(Unaudited) |
|
|
|
Three-Month Period Ended |
|
Nine-Month Period Ended |
|
September 29, 2019 |
|
September 30, 2018 |
|
September 29, 2019 |
|
September 30, 2018 |
|
|
|
|
|
|
|
|
Net Income Attributable to
Ultralife Corporation |
$898 |
|
$1,408 |
|
$3,579 |
|
$5,185 |
Adjustments: |
|
|
|
|
|
|
|
Interest and Financing Expense, Net |
220 |
|
13 |
|
339 |
|
67 |
Income Tax Provision |
225 |
|
86 |
|
942 |
|
219 |
Depreciation Expense |
586 |
|
496 |
|
1,548 |
|
1,476 |
Amortization of Intangible Assets and Financing Fees |
160 |
|
106 |
|
404 |
|
327 |
Stock-Based Compensation Expense |
159 |
|
363 |
|
519 |
|
707 |
Non-Cash Purchase Accounting Adjustments |
59 |
|
- |
|
264 |
|
- |
Adjusted EBITDA |
$2,307 |
|
$2,472 |
|
$7,595 |
|
$7,981 |
|
|
|
|
|
|
|
|
Company Contact: Ultralife
Corporation Philip A. Fain
(315) 210-6110
pfain@ulbi.com
Investor Relations Contact:LHA Jody
Burfening(212)
838-3777jburfening@lhai.com
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