Ultralife(US:ULBI)2023-07-28 02:25Financial Data and Key Metrics Changes - Consolidated revenues for Q2 2023 totaled $42.7 million, an increase of 32.9% compared to $32.1 million in Q2 2022 [8] - Operating profit increased over 360% year-over-year, reaching $3.7 million compared to $0.8 million in the previous year [6][13] - Adjusted EPS was $0.29 for Q2 2023, up from $0.03 in Q2 2022 [15][38] - Net income was $3.3 million or $0.21 per share, compared to $0.2 million or $0.03 per share in the prior year [38] Business Line Data and Key Metrics Changes - Battery & Energy Products segment revenues were $33.9 million, a 12.3% increase from $30.1 million last year, with government/defense sales up 26.6% and medical battery sales up 25.2% [9] - Communications Systems segment revenues were $8.8 million, a more than four-fold increase from $2.0 million last year, driven by defense contracts [10] Market Data and Key Metrics Changes - The commercial to government/defense sales split was 63-37, compared to 71-29 for the full year 2022 [11] - The backlog exiting Q2 increased 2.6% over Q1 to $110.9 million, the highest in company history, representing a 40.1% increase year-over-year [32] - The backlog for Battery & Energy Products increased 12.1% over Q1 to $98.5 million, while the Communications Systems backlog decreased 38.8% to $12.3 million [33][34] Company Strategy and Development Direction - The company is focused on executing its backlog and improving gross margins, with operational initiatives in place to enhance production flow and manage materials [41][42] - There is an emphasis on organic growth through new product development, particularly in the Battery & Energy segment, targeting medical and telemetry applications [43][44] - The company is exploring opportunities in the electrification and 5G market spaces, leveraging cell design expertise [58] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery from the Q1 cyber-attack, noting that the attack did not disrupt manufacturing systems significantly [49][62] - Supply chain conditions have improved, with lead times for many components reduced to manageable levels [50][63] - The company anticipates continued revenue growth in defense contracts, supported by long-term agreements [56] Other Important Information - The company confirmed its eligibility for the Employee Retention Credit, with a receivable of $1.5 million reported [37] - The total backlog is diverse across commercial and government defense customers, with expectations for approximately 70% to ship in the second half of 2023 [32] Q&A Session Summary Question: How did the company recover from the cyber-attack? - Management highlighted the team's efforts and external resources that facilitated a quick recovery, with minimal disruption to technology and manufacturing systems [49] Question: What details can be provided about supply chain bottlenecks? - Management noted that lead times have improved, allowing for better execution on backlogs, although some components still face long lead times [50] Question: What is the outlook for government/defense sales? - Management indicated a strong backlog in defense contracts, with expectations for continued revenue growth from long-term agreements [56]