ULBI 8-K
Ultralife Corp (ULBI)
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UNITED STATES
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SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
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FORM
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CURRENT REPORT
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Securities registered pursuant to Section 12(b) of the Act:
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934. Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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Exhibit
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Exhibit Description
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99.1
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104
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Cover Page Interactive Data File (embedded within the Inline XBRL document)
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Date: April 27, 2023
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ULTRALIFE CORPORATION
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By:
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/s/ Philip A. Fain
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Philip A. Fain
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Chief Financial Officer and Treasurer
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Exhibit 99.1
Ultralife Corporation Reports First Quarter Results
NEWARK, N.Y. – April 27, 2023 -- Ultralife Corporation (NASDAQ: ULBI) reported breakeven operating income and adjusted EBITDA of $1.2 million on revenue of $31.9 million for the first quarter ended March 31, 2023. The operating results for the first quarter of 2023 were negatively impacted by the cybersecurity attack announced by the Company on March 2, 2023. For the first quarter of 2022, the Company reported an operating loss of $0.3 million and adjusted EBITDA of $1.1 million on revenue of $30.4 million.
As disclosed on March 2, 2023, the Company discovered a cybersecurity ransomware attack at its Newark, NY and Virginia Beach, VA locations on January 25, 2023. The attack impacted our ability to process orders, ship products, provide services to customers and effectively manage our sales and operating planning process over a several week period at our Newark, NY location and an even longer period at our Virginia Beach, VA location. While production and shipping have been resumed in both locations, considerable time during the first quarter was devoted to data restoration, systems recovery, systems security augmentation and regulatory reporting of the attack. Management continues to work on its cybersecurity insurance claim covering the cost of engaging external cybersecurity experts and the business interruption impact. The Company’s deductible for its cyber-insurance policy of $0.1 million is included in our first quarter results. No ransom was paid.
“During the first quarter, while devoting considerable time and attention to dealing with the aftereffects of the cybersecurity event, we improved gross margin from the prior quarter primarily through price realization. Execution of lean manufacturing initiatives to improve production efficiency, continued price realization and qualification of alternate component suppliers to recapture gross margin remain our highest near-term priorities,” said Mike Manna, President and Chief Executive Officer. “In addition, we are focused on fulfilling orders that were held back in the first quarter due to the cybersecurity attack and meeting surging demand from our medical and government/defense customers while satisfying ongoing demand from other commercial end markets, particularly oil & gas. Our goal for 2023 remains to deliver high-quality, profitable growth through execution of operational improvements, and to generate incremental cash flow to pay down our acquisition debt.”
First Quarter 2023 Financial Results
Revenue was $31.9 million, an increase of $1.5 million, or 5.1%, compared to $30.4 million for the first quarter of 2022. Overall, government/defense sales increased 24.7% while commercial sales decreased 1.7% compared to the 2022 period. Battery & Energy Products sales decreased 2.3% to $28.5 million, compared to $29.2 million last year, reflecting the impact of the cybersecurity attack, primarily related to medical and government/defense shipments, partially offset by a 21.3% increase in oil & gas market sales. Communications Systems sales increased 181.8% to $3.4 million compared to $1.2 million for the same period last year, primarily attributable to shipments under a vehicle-amplifier adaptor order with a global defense contractor received in July 2022, partially offset by the impact of the cybersecurity attack. Our total backlog exiting the first quarter was $108.1 million, with $96.1 million due to ship over the remaining nine months of 2023 representing a 30.2% increase over the comparable $73.8 million for the same period last year. Total backlog decreased $2.9 million or 2.6% compared to the backlog exiting the prior quarter, the highest in the Company’s history.
Gross profit was $7.4 million, or 23.3% of revenue, compared to $7.0 million, or 22.9% of revenue, for the same quarter a year ago. Battery & Energy Products’ gross margin was 22.9%, compared to 23.1% last year, primarily due to inefficiencies resulting from the cybersecurity attack as well as lingering supply chain disruptions including higher material and logistics costs, and continued investments in the transition of new products to high volume production, partially offset by improved price realization. Communications Systems gross margin was 26.8% compared to 19.4% last year, primarily due to higher factory volume tempered by inefficiencies associated with the cybersecurity attack.
Operating expenses were $7.4 million compared to $7.3 million last year, an increase of 2.2%, reflecting continued investment in new product development and the recording of the $0.1 million deductible on our cyber-insurance policy for expenses incurred during the quarter. Operating expenses were 23.2% of revenue compared to 23.9% of revenue for the year-earlier period.
Operating income was breakeven for the first quarter of 2023 compared to an operating loss of $0.3 million last year.
Net loss was $0.3 million or $0.02 per diluted share, compared to net loss of $0.2 million or $0.01 per diluted share for the first quarter of 2022.
Adjusted EBITDA, defined as EBITDA including non-cash, stock-based compensation expense, was $1.2 million for the first quarter of 2023 or 3.6% of revenue, compared to $1.1 million or 3.6% of revenue for the year earlier period.
See the “Non-GAAP Financial Measures” 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 first quarter earnings conference call today at 8:30 AM ET.
To ensure a fast and reliable connection to our investor conference call, we now require participants dialing in by phone to register using the following link prior to the call: https://register.vevent.com/register/BId33ee3ac5fa74d2e946203064e7fb772. This will eliminate the need to speak with an operator. Once registered, dial-in information will be provided along with a personal identification number. Should you register early and misplace your details, you can simply click back on this same link at any time to register and view this information again. 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 the impact of COVID-19 and related supply chain disruptions, 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.
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ULTRALIFE CORPORATION AND SUBSIDIARIES |
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CONSOLIDATED BALANCE SHEETS (Dollars in Thousands) |
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(Unaudited) |
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ASSETS |
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March 31, 2023 |
December 31, 2022 |
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Current Assets: |
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Cash |
$ | 5,605 | $ | 5,713 | ||||
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Trade Accounts Receivable, Net |
24,463 | 27,779 | ||||||
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Inventories, Net |
47,311 | 41,192 | ||||||
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Prepaid Expenses and Other Current Assets |
3,973 | 4,304 | ||||||
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Total Current Assets |
81,352 | 78,988 | ||||||
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Property, Plant and Equipment, Net |
21,412 | 21,716 | ||||||
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Goodwill |
37,518 | 37,428 | ||||||
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Other Intangible Assets, Net |
15,747 | 15,921 | ||||||
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Deferred Income Taxes, Net |
12,965 | 12,069 | ||||||
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Other Non-Current Assets |
2,160 | 2,308 | ||||||
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Total Assets |
$ | 171,154 | $ | 168,430 | ||||
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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Current Liabilities: |
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Accounts Payable |
$ | 18,988 | $ | 16,074 | ||||
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Current Portion of Long-Term Debt |
2,000 | 2,000 | ||||||
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Accrued Compensation and Related Benefits |
2,321 | 2,890 | ||||||
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Accrued Expenses and Other Current Liabilities |
5,890 | 7,949 | ||||||
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Total Current Liabilities |
29,199 | 28,913 | ||||||
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Long-Term Debt, Net |
21,126 | 19,310 | ||||||
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Deferred Income Taxes, Net |
2,456 | 1,917 | ||||||
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Other Non-Current Liabilities |
1,969 | 1,887 | ||||||
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Total Liabilities |
54,750 | 52,027 | ||||||
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Shareholders' Equity: |
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Common Stock |
2,057 | 2,057 | ||||||
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Capital in Excess of Par Value |
187,544 | 187,405 | ||||||
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Accumulated Deficit |
(48,297 | ) | (47,951 | ) | ||||
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Accumulated Other Comprehensive Loss |
(3,553 | ) | (3,750 | ) | ||||
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Treasury Stock |
(21,484 | ) | (21,484 | ) | ||||
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Total Ultralife Equity |
116,267 | 116,277 | ||||||
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Non-Controlling Interest |
137 | 126 | ||||||
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Total Shareholders’ Equity |
116,404 | 116,403 | ||||||
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Total Liabilities and Shareholders' Equity |
$ | 171,154 | $ | 168,430 | ||||
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ULTRALIFE CORPORATION AND SUBSIDIARIES |
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CONSOLIDATED STATEMENTS OF INCOME (In Thousands Except Per Share Amounts) |
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(Unaudited) |
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Three-Month Period Ended |
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March 31, |
March 31, |
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2023 |
2022 |
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Revenues: |
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Battery & Energy Products |
$ | 28,470 | $ | 29,150 | ||||
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Communications Systems |
3,446 | 1,223 | ||||||
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Total Revenues |
31,916 | 30,373 | ||||||
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Cost of Products Sold: |
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Battery & Energy Products |
21,958 | 22,429 | ||||||
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Communications Systems |
2,522 | 986 | ||||||
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Total Cost of Products Sold |
24,480 | 23,415 | ||||||
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Gross Profit |
7,436 | 6,958 | ||||||
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Operating Expenses: |
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Research and Development |
2,032 | 1,857 | ||||||
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Selling, General and Administrative |
5,378 | 5,396 | ||||||
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Total Operating Expenses |
7,410 | 7,253 | ||||||
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Operating Income (Loss) |
26 | (295 | ) | |||||
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Other Expense |
(494 | ) | (117 | ) | ||||
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Loss Before Income Tax Provision |
(468 | ) | (412 | ) | ||||
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Income Tax Benefit |
(133 | ) | (251 | ) | ||||
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Net Loss |
(335 | ) | (161 | ) | ||||
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Net Income Attributable to Non-Controlling Interest |
(11 | ) | (7 | ) | ||||
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Net Loss Attributable to Ultralife Corporation |
$ | (346 | ) | $ | (168 | ) | ||
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Net Loss Per Share Attributable to Ultralife Common Shareholders – Basic |
$ | (0.02 | ) | $ | (0.01 | ) | ||
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Net Loss Per Share Attributable to Ultralife Common Shareholders – Diluted |
$ | (0.02 | ) | $ | (0.01 | ) | ||
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Weighted Average Shares Outstanding – Basic |
16,135 | 16,104 | ||||||
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Weighted Average Shares Outstanding – Diluted |
16,135 | 16,104 | ||||||
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 GAAP financial measures. We define adjusted EBITDA as net income (loss) 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 (loss) attributable to Ultralife Corporation, the most comparable financial measure under 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 (loss) attributable to Ultralife Corporation.
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ULTRALIFE CORPORATION AND SUBSIDIARIES |
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CALCULATION OF ADJUSTED EBITDA |
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(Dollars in Thousands) |
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(Unaudited) |
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Three-Month Period Ended |
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March 31, 2023 |
March 31, 2022 |
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Net Loss Attributable to Ultralife Corporation |
$ | (346 | ) | $ | (168 | ) | ||
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Adjustments: |
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Interest Expense, Net |
424 | 134 | ||||||
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Income Tax Benefit |
(133 | ) | (251 | ) | ||||
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Depreciation Expense |
762 | 816 | ||||||
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Amortization of Intangible Assets |
209 | 328 | ||||||
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Stock-Based Compensation Expense |
139 | 189 | ||||||
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Non-Recurring – Cyber Insurance Deductible |
100 | - | ||||||
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Non-Cash Purchase Accounting Adjustment |
- | 55 | ||||||
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Adjusted EBITDA |
$ | 1,155 | $ | 1,103 | ||||
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Company Contact: |
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Ultralife Corporation |
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Philip A. Fain |
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(315) 210-6110 |
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Investor Relations Contact: |
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LHA |
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Jody Burfening |
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(212) 838-3777 |