Ultralife(US:ULBI)2023-03-03 01:31Financial Data and Key Metrics Changes - Consolidated revenues for Q4 2022 totaled $36.1 million, a 51.9% increase from $23.8 million in Q4 2021, marking the highest quarterly sales in over 10 years [9][10] - Gross profit for Q4 2022 was $8.1 million, up 52.8% from the previous year, with a gross margin of 22.4% compared to 22.3% in Q4 2021 [14] - Net loss for Q4 2022 was $0.2 million or $0.01 per share, an improvement from a net loss of $1.1 million or $0.07 per share in Q4 2021 [16] Business Line Data and Key Metrics Changes - Battery & Energy Products segment revenues were $32.1 million, a 45.4% increase from $22.1 million last year, with government defense sales up 67.5% and oil and gas market sales up 26.9% [12] - Communications Systems segment revenues increased by 138.1% to $4 million, driven by large international and U.S. orders [13] Market Data and Key Metrics Changes - Total backlog at the end of Q4 2022 reached $111 million, a 74.2% increase from the previous year, indicating strong demand across various markets [11] - The sales split between commercial and government defense for the battery business was 71-29, reflecting growth in U.S. government defense sales [13] Company Strategy and Development Direction - The company aims to diversify its business across multiple markets and enhance value for stakeholders, focusing on improving gross margins and executing its backlog [5][20] - Strategic initiatives include enhancing product development, particularly in medical and IoT markets, and leveraging existing capabilities to capture new opportunities [23][24] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing supply chain disruptions and inflationary pressures but expressed optimism about gradual improvements in the second half of 2023 [21][32] - The company is committed to executing its backlog and improving gross margins while navigating the challenges posed by the current economic environment [20][28] Other Important Information - The company experienced a cybersecurity incident that caused partial disruptions in operations, but no ransom was paid, and recovery efforts are ongoing [18][19] - Inventory levels increased significantly to support the backlog, with a focus on reducing working capital in the future [17][35] Q&A Session Summary Question: What tactical opportunities might be executed externally? - Management emphasized the need for internal improvements to enhance gross margins and execution of the backlog [29] Question: How durable is the backlog given supply chain issues? - Management reported strong demand across various sectors, with no significant declines in backlog anticipated [30] Question: What are the expectations for supply chain improvements? - Management expects supply chain conditions to improve by Q3 or Q4 2023, but challenges remain [32] Question: Will there be further costs related to the cyber event? - Management indicated that costs related to the cyber incident would be isolated to Q1, with potential additional costs for enhancing security measures [42][45] Question: What were the other expenses for the quarter? - Management detailed that other expenses included interest and foreign currency impacts, totaling approximately $600,000 [46][48]