GlobeNewswire Inc | Oct 28, 2021 07:00AM EDT

October 28, 2021

NEWARK, N.Y., Oct. 28, 2021 (GLOBE NEWSWIRE) -- Ultralife Corporation (NASDAQ: ULBI) reported an operating loss of $0.8 million on revenue of $21.8 million for the third quarter ended September 30, 2021. For the third quarter of 2020, the Company reported operating income of $0.7 million on revenue of $24.4 million.

Supply chain bottlenecks intensified during the third quarter which extended both our own and our customers product manufacturing schedules and delayed shipments, thereby impacting third quarter revenue and earnings. The 11% year-over-year decrease in revenue, primarily related to the government/defense sector, masked a 5% increase in commercial sales led by a continued rebound in oil & gas revenue and our new ER and thin cell products. Medical sales grew 11% sequentially over the second quarter reflecting the continued solid demand for our products, said Michael D. Popielec, President and Chief Executive Officer. In addition to implementing price increases in response to higher supply chain costs, we are working collectively and closely with our customers and suppliers to best navigate through these increasingly complex business conditions.

Added Mr. Popielec, At the same time, order flow remained solid primarily in our medical and military end markets, and backlog at quarter end was substantially higher than at the end of the second quarter. We also continued to invest in new product development during the quarter and advanced our transformational projects. As we look ahead, our strong balance sheet and liquidity position, new product initiatives, and durable customer relationships anchor our view that our long-term growth drivers and strategy are sound and achievable.

Third Quarter 2021 Financial Results

Revenue was $21.8 million, a decrease of $2.6 million, or 10.7%, compared to $24.4 million for the third quarter of 2020. Overall, commercial sales increased 5.1% and government/defense sales decreased 39.7% from the 2020 period. Battery & Energy Products declined 8.3% to $20.0 million, compared to $21.8 million last year, with an 89.5% increase in oil & gas market sales and an 115.8% increase in our new ER and thin cell battery sales offset by a 43.3% decrease in government/defense sales and a 28.3% decrease in medical battery sales. Communications Systems sales decreased 31.1% to $1.8 million compared to $2.5 million for the same period last year. During the 2021 third quarter, increased lead times on components from suppliers and other COVID-19 related logistics matters resulted in delays in our shipments to future periods. We estimate that the delayed shipments adversely impacted revenue for the 2021 third quarter by approximately $4.1 million, with approximately $2.5 million and $1.6 million impacting Battery & Energy Products and Communications Systems, respectively. Conversely, the backlog exiting the third quarter of 2021 increased by approximately 22% over the second quarter.

Gross profit was $5.1 million, or 23.5% of revenue, compared to $6.5 million, or 26.7% of revenue, for the same quarter a year ago. Battery & Energy Products gross margin was 24.0%, compared to 26.0% last year, primarily due to lower factory volume and sales product mix. Communications Systems gross margin was 18.0%, compared to 32.8% last year, primarily due to lower factory volume.

Operating expenses were $5.9 million compared to $5.8 million last year, representing an increase of 1.4%, primarily relating to our continued investment in engineering resources for new product development, including resources dedicated to the Conformal Wear Battery IDIQ contract awarded in May 2021. Operating expenses were 27.1% of revenue compared to 23.8% of revenue for the year-earlier period.

Operating loss was $0.8 million compared to income of $0.7 million last year. We estimate that delayed shipments resulting from supply chain disruptions and other COVID-19 related logistics matters adversely impacted operating income for the 2021 third quarter by approximately $1.3 million.

Net loss was $0.6 million or $0.04 per diluted share using the U.S. statutory tax rate, compared to net income of $0.4 million or $0.03 per diluted share for the third quarter of 2020. We estimate that delayed shipments resulting from supply chain disruptions and other COVID-19 related logistics matters adversely impacted Adjusted EPS for the 2021 third quarter by approximately $0.08.

For the third quarter of 2021, our cash-on-hand was $15.9 million, slightly above the second quarter and an increase of 48.8% over year-end 2020, and our debt was further reduced to $0.3 million.

See the Non-GAAP Financial Measures section of this release for a reconciliation of Adjusted EPS to EPS and Adjusted EBITDA to net income (loss) 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 third quarter earnings conference call today at 8:30 AM ET. To participate in the live call, please dial (800) 915-4836 at least ten minutes before the scheduled start time, identify yourself and ask for the Ultralife call.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, 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 Ultralifes financial results is included in Ultralifes Securities and Exchange Commission (SEC) filings, including the latest Annual Report on Form 10-K.

ULTRALIFE CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Dollars in Thousands)(Unaudited)

ASSETS

September 30, December 31, 2021 2020Current Assets: Cash $15,853 $10,653Trade Accounts Receivable, Net 16,235 21,054Inventories, Net 28,179 28,193Prepaid Expenses and Other Current Assets 4,271 4,596Total Current Assets 64,538 64,496 Property, Plant and Equipment, Net 23,035 22,850Goodwill 26,998 27,018Other Intangible Assets, Net 8,725 9,209Deferred Income Taxes, Net 11,700 11,836Other Non-Current Assets 1,816 2,292 Total Assets $136,812 $137,701

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities: Accounts Payable $9,206 $10,839Current Portion of Long-Term Debt, Net 253 1,361Accrued Compensation and Related Benefits 1,153 1,748Accrued Expenses and Other Current Liabilities 6,076 4,758Total Current Liabilities 16,688 18,706Deferred Income Taxes 475 515Other Non-Current Liabilities 1,103 1,557Total Liabilities 18,266 20,778 Shareholders' Equity: Common Stock 2,051 2,037Capital in Excess of Par Value 186,360 185,464Accumulated Deficit (46,701) (47,598)Accumulated Other Comprehensive Loss (1,819) (1,782)Treasury Stock (21,469) (21,321)Total Ultralife Equity 118,422 116,800Non-Controlling Interest 124 123Total Shareholders? Equity 118,546 116,923 Total Liabilities and Shareholders' Equity $136,812 $137,701

ULTRALIFE CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF (LOSS) INCOME(In Thousands Except Per Share Amounts)(Unaudited)

Three-Month Period Ended Nine-Month Period Ended September30, September September September 30, 30, 30, 2021 2020 2021 2020Revenues: Battery & Energy Products $20,008 $21,819 $64,994 $66,616Communications Systems 1,753 2,543 9,510 12,120Total Revenues 21,761 24,362 74,504 78,736 Cost of Products Sold: Battery & Energy Products 15,216 16,142 48,750 49,597Communications Systems 1,437 1,709 6,401 7,331Total Cost of Products Sold 16,653 17,851 55,151 56,928 Gross Profit 5,108 6,511 19,353 21,808 Operating Expenses: Research and Development 1,723 1,606 5,223 4,429Selling, General and 4,164 4,198 12,866 12,893AdministrativeTotal Operating Expenses 5,887 5,804 18,089 17,322 Operating (Loss) Income (779) 707 1,264 4,486 Other (Income) Expense (1) 53 76 262(Loss) Income Before Income (778) 654 1,188 4,224Tax (Benefit) Provision Income Tax (Benefit) (175) 192 290 1,010Provision Net (Loss) Income (603) 462 898 3,214 Net (Loss) IncomeAttributable to (18) 55 1 90Non-Controlling Interest Net (Loss) IncomeAttributable to Ultralife ($585) $407 $897 $3,124Corporation Net (Loss) Income Per ShareAttributable to Ultralife ($.04) $.03 $.06 $.20Common Shareholders ? Basic Net (Loss) Income Per ShareAttributable to Ultralife ($.04) $.03 $.06 $.19Common Shareholders ? Diluted Weighted Average Shares 16,065 15,908 16,020 15,889Outstanding ? Basic Weighted Average Shares 16,065 16,089 16,200 16,103Outstanding ? Diluted

Non-GAAP Financial Measures:

Adjusted Earnings Per Share

In evaluating our business, we consider and use Adjusted EPS, a non-GAAP financial measure, as a supplemental measure of our business performance in addition to GAAP financial measures. We define Adjusted EPS as net (loss) income attributable to Ultralife Corporation excluding the provision (benefit) for deferred taxes divided by our weighted average shares outstanding on both a basic and diluted basis. We believe that this information is useful in providing period-to-period comparisons of our results by reflecting the portion of our tax provision (benefit) that we expect will be offset by our U.S. net operating loss carryforwards and other tax credits for the foreseeable future. We reconcile Adjusted EPS to EPS, the most comparable financial measure under GAAP. Neither current nor potential investors in our securities should rely on Adjusted EPS as a substitute for any GAAP measures and we encourage investors to review the following reconciliation of Adjusted EPS to EPS and net income (loss) attributable to Ultralife Corporation.

ULTRALIFE CORPORATION AND SUBSIDIARIESCALCULATION OF ADJUSTED EPS(In Thousands Except Per Share Amounts)(Unaudited)

Three-Month Period Ended September 30, 2021 September 30, 2020 Per Per Per Per Amount Basic Diluted Amount Basic Diluted Share Share Share ShareNet (Loss) IncomeAttributable to ($585) ($.04) ($.04) $407 $.03 $.03UltralifeCorporationDeferred Income Tax (218) (.01) (.01) 188 .01 .01(Benefit) ProvisionAdjusted Net (Loss)Income Attributable ($803) ($.05) ($.05) $595 $.04 $.04to UltralifeCorporation Weighted Average 16,065 16,065 15,908 16,089Shares Outstanding

Nine-Month Period Ended September 30, 2021 September 30, 2020 Per Per Per Per Amount Basic Diluted Amount Basic Diluted Share Share Share ShareNet IncomeAttributable to $897 $.06 $.06 $3,124 $.20 $.19UltralifeCorporationDeferred Income Tax 127 - - 821 .05 .05ProvisionAdjusted Net IncomeAttributable to $1,024 $.06 $.06 $3,945 $.25 $.24UltralifeCorporation Weighted Average 16,020 16,200 15,889 16,103Shares Outstanding

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 attributable to Ultralife Corporation.

ULTRALIFE CORPORATION AND SUBSIDIARIESCALCULATION OF ADJUSTED EBITDA(Dollars in Thousands)(Unaudited)

Three-Month Period Nine-Month Period Ended Ended September September September September 30, 2021 30, 2020 30, 2021 30, 2020 Net (Loss) IncomeAttributable to Ultralife ($585) $407 $897 $3,124CorporationAdjustments: Interest and Financing 53 92 164 372Expense, NetIncome Tax (Benefit) (175) 192 290 1,010ProvisionDepreciation Expense 700 582 2,160 1,743Amortization Expense 148 161 458 480Stock-Based Compensation 142 222 512 756ExpenseAdjusted EBITDA $283 $1,656 $4,481 $7,485

Company Contact: Investor Relations Contact:Ultralife Corporation LHAPhilip A. Fain Jody Burfening(315) 210-6110 (212) 838-3777pfain@ulbi.com jburfening@lhai.com