Ultralife(ULBI) - 2024 Q1 - Quarterly Results

First Quarter 2024 Financial Results Ultralife achieved strong Q1 2024 results, driven by gross margin improvements and robust demand from key customer segments Overview of Q1 2024 Performance Ultralife reported strong Q1 2024 results, driven by gross margin initiatives and sustained demand from core customers - The CEO attributed the strong Q1 results to teamwork, gross margin improvement initiatives, and continued demand from core government/defense and medical customers[2] Q1 2024 Key Performance Indicators (in millions) | Metric | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | Sales | $41.9M | $31.9M | +31.4% | | Gross Profit | $11.5M | $7.4M | +55.4% | | Gross Margin | 27.4% | 23.3% | +410 bps | | Operating Income | $4.1M | $0.0M | N/A | | GAAP EPS | $0.18 | ($0.02) | N/A | | Adjusted EBITDA | $5.2M | $1.2M | +333.3% | | Backlog | $97.4M | N/A | N/A | Detailed Financial Analysis A detailed review of revenue, profitability, and non-GAAP measures reveals significant financial improvements Revenue Analysis Total revenue increased significantly, propelled by strong government/defense sales and growth in the medical market Revenue by Segment (in millions) | Segment | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | Battery & Energy Products | $35.0 | $28.5 | +22.9% | | Communications Systems | $6.9 | $3.4 | +101.3% | | Total Revenue | $41.9 | $31.9 | +31.4% | - Growth was primarily driven by an 83.4% increase in government/defense sales and an 8.6% increase in commercial sales[3] - Within commercial sales, the medical battery market was a key contributor with 54.7% growth, while oil & gas market sales declined by 13.9%[3] Profitability Analysis Profitability improved substantially due to higher volume, production efficiencies, and a favorable product mix Gross Margin by Segment | Segment | Q1 2024 Gross Margin | Q1 2023 Gross Margin | | :--- | :--- | :--- | | Battery & Energy Products | 25.7% | 22.9% | | Communications Systems | 35.8% | 26.8% | | Total Gross Margin | 27.4% | 23.3% | - Operating expenses remained flat at $7.4 million year-over-year, representing 17.7% of revenue compared to 23.2% in the prior year, demonstrating strong operating leverage[6] Operating and Net Income (in millions) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Operating Income | $4.1 | $0.0 | | Net Income | $2.9 | ($0.3) | | Diluted EPS (GAAP) | $0.18 | ($0.02) | Non-GAAP Measures Non-GAAP performance showed strong growth in Adjusted EBITDA and a significant turnaround in Adjusted EPS - Adjusted EBITDA, which includes non-cash stock-based compensation, reached $5.2 million (12.5% of sales), a four-fold increase from $1.2 million (3.6% of sales) in Q1 2023[5][9] - Adjusted EPS, which excludes non-cash deferred tax provisions, was $0.21 per diluted share, compared to a loss of $0.05 in the prior-year period[8] Financial Statements Key financial statements provide a comprehensive overview of the company's assets, liabilities, equity, and income Consolidated Balance Sheets The balance sheet reflects a slight increase in total assets and shareholders' equity, with a decrease in liabilities Key Balance Sheet Items (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $94,302 | $90,203 | | Total Assets | $180,551 | $178,276 | | Total Current Liabilities | $23,376 | $23,730 | | Total Liabilities | $51,606 | $52,849 | | Total Shareholders' Equity | $128,945 | $125,427 | Consolidated Statements of Income Income statements highlight substantial revenue growth and a significant turnaround from a net loss to net income Consolidated Income Statement Highlights (in thousands) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Total Revenues | $41,927 | $31,916 | | Gross Profit | $11,470 | $7,436 | | Operating Income (Loss) | $4,063 | $26 | | Net Income (Loss) Attributable to Ultralife | $2,891 | ($346) | | Diluted EPS | $0.18 | ($0.02) | Reconciliation of Non-GAAP Financial Measures Reconciliations provide clarity on the adjustments made to derive non-GAAP financial metrics like EBITDA and EPS Adjusted EBITDA Reconciliation Net Income is reconciled to Adjusted EBITDA, showing a substantial increase in this key profitability metric Adjusted EBITDA Calculation (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Income (Loss) Attributable to Ultralife | $2,891 | ($346) | | Interest Expense, Net | $520 | $424 | | Income Tax Provision (Benefit) | $703 | ($133) | | Depreciation Expense | $740 | $762 | | Amortization of Intangible Assets | $228 | $209 | | Stock-Based Compensation Expense | $161 | $139 | | Non-Recurring – Cyber Insurance Deductible | $0 | $100 | | Adjusted EBITDA | $5,243 | $1,155 | Adjusted EPS Reconciliation GAAP EPS is adjusted to exclude deferred tax provisions, resulting in a positive adjusted earnings per share Adjusted EPS Calculation (in thousands, except per share) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Income (Loss) Attributable to Ultralife | $2,891 | ($346) | | Diluted EPS (GAAP) | $0.18 | ($0.02) | | Deferred Tax Provision (Benefit) | $650 | ($390) | | Adjusted Net Income (Loss) | $3,541 | ($736) | | Adjusted Diluted EPS | $0.21 | ($0.05) | Company Information and Forward-Looking Statements Essential company details, conference call logistics, and important forward-looking statement disclaimers are provided About Ultralife Corporation Ultralife Corporation provides power solutions and communications systems to government/defense and commercial customers globally - Ultralife serves government/defense and commercial markets with products ranging from power solutions to communications and electronics systems[10] - The company's business is organized into two segments: Battery & Energy Products and Communications Systems, with operations in North America, Europe, and Asia[11] Conference Call Information Ultralife scheduled an earnings conference call and provided access details for participants and webcast viewers - A conference call to discuss Q1 earnings was held at 8:30 AM ET on the day of the announcement[12] - Dial-in participants were required to pre-register, and a live webcast was also made available for investors[13] Forward-Looking Statements This press release contains forward-looking statements subject to various risks and uncertainties, as detailed in SEC filings - The press release includes forward-looking statements that are based on current expectations and involve a number of risks and uncertainties[14] - Potential risks cited include uncertain global economic conditions, reductions in military spending, and supply chain disruptions[14]