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.
ULTRALIFE CORPORATION AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS(Dollars in
Thousands) |
(Unaudited) |
|
ASSETS |
|
|
|
December 31, |
|
December 31, 2019 |
|
2018 As Adjusted (1) |
Current Assets: |
|
|
|
Cash |
$7,405 |
|
$25,934 |
Trade Accounts Receivable, Net |
30,106 |
|
16,015 |
Inventories, Net |
29,759 |
|
22,843 |
Prepaid Expenses and Other Current Assets |
3,103 |
|
2,368 |
Total Current Assets |
70,373 |
|
67,160 |
|
|
|
|
Property, Equipment and
Improvements, Net |
22,525 |
|
10,744 |
Goodwill |
26,753 |
|
20,109 |
Other Intangible Assets,
Net |
9,721 |
|
6,504 |
Deferred Income Taxes,
Net |
13,222 |
|
15,444 |
Other Non-Current Assets |
1,963 |
|
887 |
Total Assets |
$144,557 |
|
$120,848 |
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
Current Liabilities: |
|
|
|
Accounts Payable |
$9,388 |
|
$9,919 |
Current Portion of Long-Term Debt |
1,372 |
|
- |
Accrued Compensation and Related Benefits |
1,655 |
|
1,494 |
Accrued Expenses and Other Current Liabilities |
4,775 |
|
3,973 |
Total Current Liabilities |
17,190 |
|
15,386 |
Long-Term Debt |
15,780 |
|
- |
Deferred Income Taxes |
559 |
|
591 |
Other Non-Current
Liabilities |
1,278 |
|
408 |
Total Liabilities |
34,807 |
|
16,385 |
|
|
|
|
Shareholders' Equity: |
|
|
|
Common Stock |
2,026 |
|
2,005 |
Capital in Excess of Par Value |
184,292 |
|
182,630 |
Accumulated Deficit |
(52,830) |
|
(58,035) |
Accumulated Other Comprehensive Loss |
(2,531) |
|
(2,786) |
Treasury Stock |
(21,231) |
|
(19,266) |
Total Ultralife Equity |
109,726 |
|
104,548 |
Non-Controlling Interest |
24 |
|
(85) |
Total Shareholders’ Equity |
109,750 |
|
104,463 |
|
|
|
|
Total Liabilities and Shareholders' Equity |
$144,557 |
|
$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 |
|
Year
Ended |
|
December 31, |
|
December 31, |
|
December 31, |
|
December 31, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Revenues: |
|
|
|
|
|
|
|
Battery & Energy Products |
$25,120 |
|
$18,153 |
|
$83,996 |
|
$70,497 |
Communications Systems |
5,903 |
|
2,774 |
|
22,799 |
|
16,693 |
Total Revenues |
31,023 |
|
20,927 |
|
106,795 |
|
87,190 |
|
|
|
|
|
|
|
|
Cost of Products Sold: |
|
|
|
|
|
|
|
Battery & Energy Products |
18,489 |
|
13,243 |
|
61,183 |
|
50,923 |
Communications Systems |
3,179 |
|
1,974 |
|
14,447 |
|
10,684 |
Total Cost of Products Sold |
21,668 |
|
15,217 |
|
75,630 |
|
61,607 |
|
|
|
|
|
|
|
|
Gross Profit |
9,355 |
|
5,710 |
|
31,165 |
|
25,583 |
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
|
Research and Development |
2,153 |
|
1,092 |
|
6,805 |
|
4,508 |
Selling, General and Administrative |
4,730 |
|
3,551 |
|
16,992 |
|
14,520 |
Total Operating Expenses |
6,883 |
|
4,643 |
|
23,797 |
|
19,028 |
|
|
|
|
|
|
|
|
Operating Income |
2,472 |
|
1,067 |
|
7,368 |
|
6,555 |
|
|
|
|
|
|
|
|
Other Expense (Income) |
296 |
|
(85) |
|
597 |
|
(58) |
Income Before Income Tax Provision |
2,176 |
|
1,152 |
|
6,771 |
|
6,613 |
|
|
|
|
|
|
|
|
Income Tax Provision |
515 |
|
(18,605) |
|
1,457 |
|
(18,386) |
|
|
|
|
|
|
|
|
Net Income |
1,661 |
|
19,757 |
|
5,314 |
|
24,999 |
|
|
|
|
|
|
|
|
Net Income Attributable to Non-Controlling Interest |
35 |
|
12 |
|
109 |
|
69 |
|
|
|
|
|
|
|
|
Net Income Attributable to Ultralife
Corporation |
$1,626 |
|
$19,745 |
|
$5,205 |
|
$24,930 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Per Share Attributable to Ultralife Common
Shareholders – Basic |
$.10 |
|
1.24 |
|
$.33 |
|
1.57 |
|
|
|
|
|
|
|
|
Net Income Per Share Attributable to Ultralife Common
Shareholders – Diluted |
$.10 |
|
1.21 |
|
$.32 |
|
1.53 |
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding –
Basic |
15,861 |
|
15,950 |
|
15,783 |
|
15,882 |
|
|
|
|
|
|
|
|
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.
ULTRALIFE CORPORATION AND SUBSIDIARIES |
CALCULATION OF ADJUSTED EPS |
(In Thousands Except Per Share Amounts) |
(Unaudited) |
|
Three-Month Period Ended |
|
December 31, 2019 |
|
December 31, 2018 |
|
Amount |
|
Per Basic Share |
|
Per Diluted Share |
|
Amount |
|
Per Basic Share |
|
Per Diluted Share |
Net Income Attributable to
Ultralife Corporation |
$1,626 |
|
$.10 |
|
$.10 |
|
$19,745 |
|
$1.24 |
|
$1.21 |
Deferred Tax Provision |
410 |
|
.03 |
|
.03 |
|
(18,697) |
|
(1.17) |
|
(1.15) |
Adjusted Net Income |
$2,036 |
|
$.13 |
|
$.13 |
|
$1,048 |
|
$.07 |
|
$.06 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares
Outstanding |
|
|
15,861 |
|
16,205 |
|
|
|
15,950 |
|
16,292 |
|
Year Ended |
|
December 31, 2019 |
|
December 31, 2018 |
|
Amount |
|
Per Basic Share |
|
Per Diluted Share |
|
Amount |
|
Per Basic Share |
|
Per Diluted Share |
Net
Income Attributable to Ultralife Corporation |
$5,205 |
|
$.33 |
|
$.32 |
|
$24,930 |
|
$1.57 |
|
$1.53 |
Deferred Tax Provision |
1,211 |
|
.08 |
|
.08 |
|
(18,643) |
|
(1.17) |
|
(1.15) |
Adjusted Net Income |
$6,416 |
|
$.41 |
|
$.40 |
|
$6,287 |
|
$.40 |
|
$.38 |
|
|
|
|
|
|
|
|
|
|
|
|
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.
ULTRALIFE CORPORATION AND SUBSIDIARIES |
CALCULATION OF ADJUSTED EBITDA |
(Dollars in Thousands) |
(Unaudited) |
|
Three-Month Period Ended |
|
Year Ended |
|
December 31, 2019 |
|
December 31, 2018 |
|
December 31, 2019 |
|
December 31, 2018 |
|
|
|
|
|
|
|
|
Net Income Attributable to
Ultralife Corporation |
$1,626 |
|
$19,745 |
|
$5,205 |
|
$24,930 |
Adjustments: |
|
|
|
|
|
|
|
Interest and Financing Expense, Net |
200 |
|
(4) |
|
539 |
|
63 |
Income Tax Provision |
515 |
|
(18,605) |
|
1,457 |
|
(18,386) |
Depreciation Expense |
672 |
|
496 |
|
2,220 |
|
1,972 |
Amortization of Intangible Assets and Financing Fees |
165 |
|
106 |
|
569 |
|
433 |
Stock-Based Compensation Expense |
235 |
|
183 |
|
753 |
|
890 |
Non-Cash Purchase Accounting Adjustments |
- |
|
- |
|
264 |
|
- |
Adjusted EBITDA |
$3,413 |
|
$1,921 |
|
$11,007 |
|
$9,902 |
Company Contact:
Investor Relations
Contact:Ultralife
Corporation
LHA Philip A. Fain
Jody
Burfening(315) 210-6110
(212) 838-3777pfain@ulbi.com
jburfening@lhai.com
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