Ultralife(US:ULBI)2023-04-30 20:52Financial Data and Key Metrics - Consolidated revenues for Q1 2023 totaled $31.9 million, a 5.1% increase compared to $30.4 million in Q1 2022 [8] - Government defense sales increased by 24.7%, while commercial sales decreased by 1.7% compared to the same period last year [8] - Consolidated gross profit for Q1 2023 was $7.4 million, up 6.9% from the previous year, with a gross margin of 23.3% compared to 22.9% in Q1 2022 [10] - Operating profit was breakeven, inclusive of a $0.1 million one-time insurance deductible, compared to an operating loss of $0.3 million in Q1 2022 [11] - Net loss for Q1 2023 was $0.3 million or $0.02 per share, compared to a net loss of $0.2 million or $0.01 per share in Q1 2022 [12] - Adjusted EBITDA for Q1 2023 was $1.2 million or 3.6% of sales, compared to $1.1 million or 3.6% in Q1 2022 [12] Business Segment Performance - Battery & Energy Products segment revenues were $28.5 million, a 2.3% decrease compared to $29.2 million in Q1 2022 [8] - Medical and government defense businesses within this segment declined by 8.5% and 4.7%, respectively, partially offset by a 21.3% increase in oil and gas market sales [8] - Gross margin for this segment was 22.9%, a sequential increase of 130 basis points from Q4 2022 [10] - Communications Systems segment revenues were $3.4 million, a 181.8% increase compared to $1.2 million in Q1 2022 [9] - Gross margin for this segment was 26.8%, up from 19.4% in Q1 2022 [11] Market and Backlog Data - Total backlog at the end of Q1 2023 was $108.1 million, with $96.1 million due to ship over the remaining 9 months of 2023, representing a 30.2% increase compared to $73.8 million in the same period last year [8] - Battery & Energy Products backlog was $87.9 million, virtually identical to the $88.6 million backlog at the end of Q4 2022 [9] - Communications Systems backlog was $20.2 million, down 9.8% from $22.4 million at the end of Q4 2022 [9] Strategic Direction and Industry Competition - The company is focused on executing its backlog and improving gross margins, with initiatives such as price realization activities, extending the sales and operations planning process, and improving new product launches [14][15] - On the Battery & Energy side, the company is developing products for medical wearables, IoT, and utility monitoring applications, with new products expected to launch in 2023 [16][17][18] - On the Communications Systems side, the company is working on advanced amplification and power products for military applications and is close to initial commercial orders for its EL8000 server case and power system [19] - The company is also exploring opportunities in electrification and 5G markets, leveraging its cell design expertise and power system capabilities [19] Management Commentary on Operating Environment and Outlook - The company faced operational inefficiencies in Q1 due to a cybersecurity attack, which delayed production and impacted the ability to take full advantage of the backlog [4][5] - Despite the challenges, the company saw improvement in gross margins and remains focused on returning to profitable growth [14][20] - Supply chain issues persist, particularly with specialty parts, but there are signs of improvement in component lead times and part availability [14] Other Important Information - The cybersecurity attack resulted in a $100,000 insurance deductible, which was recognized in operating expenses [7] - Inventory increased by $6.1 million or 14.9% over Q4 2022, with $5.1 million of the increase occurring at the Newark and Virginia Beach locations [12] - The company ended Q1 2023 with working capital of $52.5 million and a current ratio of 2.8 [13] Q&A Session Summary - No specific questions were asked during the Q&A session, and the call concluded with closing remarks from the CEO [20][21][22]