Earnings call transcript Q1 2023

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Operator

Good day, and thank you for standing by. Welcome to the Ultralife Corporation First Quarter 2023 Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be the question-and-answer session. [Operator Instructions]. today's being that advised be conference recorded. is Please

hand over go to would Jody. now speaker, conference to like Please I your the Jody ahead, Burfening.

Jody Burfening

if anyone Financial Thank on call visit earlier CEO; and the Ultralife's for you Chief where first And President The quarter morning this copy, you, and XXXX. release morning, a in and are: the release earnings Ultralife joining the With Mike fiscal us Ultralife's for conference the Relations us Investor Fain, under www.ultralifecorp.com, to not issued was has I this call Officer. press website, Kathy, you'll thank you received find section. earnings Corporation's Investor News of good today's yet and morning Phil for everyone. invite company's Manna,

turning potential company circumstances. new date. reflect The basis reductions reflect today's update forward-looking company's from related obligation supply-chain on statements, materially those current to not reliance that a to call that statements forward-looking of of uncertainties. statements I could cautions made acceptance and to contain include and risks various statements analysis no like subsequent as differ events The results the Actual this cause expectations. of The which to the a revenue disruptions, investors materially to customers, over products results based COVID-XX some potential and impact uncertain key uncertainties to would from or forward-looking remind company global in only risks conference projected differ call as everyone during result conditions. global of on actual on the undertakes economic publicly place Before management, could undue

and these that included Form Commission, Ultralife's and on XX-K. Exchange factors results Securities including filings company's could Further is affect with latest the report factors the on annual information in the financial other

from GAAP. call, supplemental GAAP to on be should useful These to differ considered management certain considers non-GAAP management to will be financial metrics measures addition, that and measures refer today's corresponding In non-GAAP figures.

to over turn Mike? that, would With the like Mike. Good morning, to now call I

Michael Manna

on results. Good call the morning. Thanks for QX joining XXXX Ultralife's operating

margin of the Given the our the and systems time of the diligently our through then We internal facilities a as operations with QX gross quarter, at to QX over restore, teams. attack extremely work assess, I'm cyber of weeks. our validate over and efforts the results pleased improve cyber beginning business two at which resources teams managed resume attack, to and consumes many production

could restart take result, part, our large As especially a and the our not inefficiencies production adoption defense thank the markets, a experienced of surging it and from teams our full products demand was backlog medical QX position, advantage while through in of we of we in in experiencing strengthening new and reflecting, customers, experienced customer validation operational the working and for QX, the in team great I effort. customers patient and our relationships.

to will turn to I it Phil talk QX the now numbers. through over

Philip Fain

XXXX. everyone. Thank for XX, quarter released first this our we and good quarter ended results morning, you, Mike, the Earlier March morning,

investor website, few next our in which of Investor section to find Relations and days. you in presentation, our SEC the Form updated also our can We the with file XX-Q expect the

our facility. week period ship XX, over at a to January Newark attack on orders, investor which S&OP Beach call of impacted effectively during Virginia my a process ability quarter and the will Virginia March and the our locations, remainder our and facility, our starting follow-up we fourth on on our quarter Beach provide few several at disclosed Before manage I at comments occurred The attack review, during Newark the ransomware our process first products that X.

both covers of impact. cost to continuing resulting a and disclosed, cybersecurity systems have experts place claim, in augmentation we system work cyber as all and are policy which restoration, security business the we of with recovery, the to help direct interruption reporting, data previously the regulatory on engaging insurance the well As the as

you the funded, with after sharing settlement on results. of details to reached forward will to claim and the amount been once in the has our which able be look our settlement financial I report we

For To prompt as quarter, the based incident, the of to review policy no files is an which response affected the recovery amount assessment first or reiterate, been the paid. be on was operating our or will in recognized systems, of insurance has as the well deductible, amount company's only the $XXX,XXX the ransom other of reported expenses.

I'll first sectors million, $XX.X increase Consolidated impacted million the XXXX an quarter the the with for XXXX, of of XX.X%, X.X%. quarter by you first earlier Now attack. sales period, results. defense sales through X.X% first compared to $XX.X totaled for increased both Government commercial revenues decreased while to year compared take our quarter cybersecurity the

$XX.X with earlier over backlog to the for of representing the total ship XX.X% quarter million Our months high period. X remaining amount million at a increase remained over exiting year the the comparable $XXX.X XXXX, $XX.X due million, of first

X.X% market Battery this These Products year-over-year. declines $XX.X increased X.X%, higher by were and of a defense respectively, year, our $XX.X The from impacted decrease sales, partially and segment. Energy were last XX.X% & gas X.X%. government and segment our attack which medical cybersecurity offset million Revenues to for businesses, which oil million primarily compared declined

backlog continued identical battery backlog of highest our was year was commercial in XX/XX, quarter which for and The the Battery exiting the split XXXX for the The international XX/XX, & our to fourth XXXX, compared history virtually of for million $XX.X Energy our was diversification the reported XX/XX year, success million split of XXXX identical to segment. revenue for accentuating government $XX.X the for domestic and defense between of the our to the to global business that business strategy. this was sales Products

relating was a defense XXX.X% shipments received a our X.X% from of in backlog adapter with cybersecurity mid-XXXX. of XXXX. to million of impact compared vehicle the Revenues Systems $XX.X under business an primarily segment the million to Communications for million backlog the year, exiting our the contractor last of global tempered Systems amplifier That Communications million increase $X.X from were attack. The $X.X fourth order was quarter of $XX.X by down

On was to sales government XX/XX, virtually a basis, for defense to consolidated XX/XX split XXXX identical year. the reported the commercial the full

the consolidated for was up XXXX over the Our profit $X.X gross X.X% period. million first quarter, XXXX

gross As XX.X% total a last consolidated XX.X% versus was percentage revenues, quarter. first year's of for margin

the & Battery certain and The due materials improvement components, of of basis increases points year. Products matching of XX.X% margin points last cost electronic was reported decrease customer our continued price basis last quarter XX a and various was including $X.X XXX primarily to million components, sequential key inflation $X.X in closer for XX.X% the Gross boards of business sequential to profit increase the Gross and XX.X%, over a year. PC million, compared and raw Energy was fourth reported with chipsets. our

recognition expenses this million of for absorption our was compared solely tempered to earlier year, increase deductible. of cybersecurity associated compared cost the $XXX,XXX Systems the higher year, leading Gross to last insurance were gross For XX.X% attack. profit higher million to $X.X was X.X%, cybersecurity to margin $X.X the XX.X% throughput Communications the segment, to last an by $X.X year $X.X attributable compared Operating inefficiencies with period. million million reflecting factory

basis the year's last expenses improvement to XX.X% leverage. revenues, first of XX reflecting percentage for XX.X% a compared were point a operating quarter, As sales

Operating was one-time the profit deductible, an operating of last of breakeven, to loss million $X.X year. compared insurance million inclusive $X.X

computed $X.X quarter, reported on a Our million $X.X for the basis. for the XXXX versus benefit tax million fourth quarter was GAAP

currency the compares per associated help losses for of loss to of million quarter. impact as a share or EBITDA, for interest EBITDA, This foreign compensation to million the including for pound $X.X with was sales U.S. or quarter, or XXXX finance $X.XX compared Adjusted was or quarter. million the to net and stock-based dollar, $X.X the defined $X.X of strengthening the $X.XX million X.X% the Including of Excell acquisition, prior per sterling net X.X% to expense share. loss $X.X year noncash XXXX expense the

by the as million fourth with cybersecurity in the as locations. Virginia increase our XX.X% attack Turning XX.X% occurring and to Newark sheet, position actions well the increased $X.X to impacts over to our the of reflecting Beach influence proactively quarter inventory total $X.X our or balance million our backlog, service substantial or of

We ratio to Debt slightly current ended a for X.X the X.X, XXXX of and quarter million quarter. first working to end X.XX%. capital below quarter of $XX.X compared and XXXX fourth XX.X with capital the was at

our growth of ongoing part initiatives, backlog, Going improve cybersecurity to the our margins rearview actions the dedicated forward, leverage to model. most attack with realizing and remain gross mirror, the we for in with end our diversified potential business markets, our

turn now Mike. will it I to back

Michael Manna

for Phil, QX on detailed breakdown the you, results. the Thank

which margin margin impact more event in underway, teams see our call, events we Kaizen as such printed recovery explained The and on and the QX but some backlog Lean is We cyber board the of we as to circuit have delayed I have due were did the the cyber and business. efforts. the accomplish. the improving as For XXXX, encouraging, improvement with in the event, focused projects even of our focused redesigns in on are gross we gross to executing last inefficiencies improvement

Direct certain businesses labor to we issues supply through chain, still availability specialty briefly of tight our part both XXXX signs supply time thus although encouraging in our improved that supply Speaking locations impact with and chain lead parts QX. component throughout seeing with remain production. reduction are far, and have

progress price realization Our still first, being, in top are continuing initiatives activities.

margin both adjustments specifically priced businesses. increased QX We delivery. backlog of to earlier, margin. on the in We margin a improve award, to the benefit a work cases these Communication margin from move few backlog in gross some which experienced quarters, next contracts gross pricing, were for which that then stabilize in through contracts and and pressure gross performance on Systems work improve in over and will some to resulted year should us the has our earlier past continue actual

with continue we journey and planning horizon our improving our Second, customers forecasting. of of operations and end-to-end the process both suppliers, our time sales extending

are our an the a hired and and manufacturing additional fees supply chain. will reduce for supply Newark both have within internally process reduce leader. facility in and chain our We logistics operations and expedited recruiting lead This to parts currently Ultralife inefficiencies,

lean principles improve we production, And launching process to and and new manufacturing. design focus resources to our on of higher transitioning to for volume products aligning continue lastly,

will which underway. focus give Next, our organic the and on is some I development strategy, new growth product major projects updates

and the business, develop we branded & of for and Energy customers. our our the continue Battery OEM on First, to improve products important for side sales general

product growing gain medical to momentum wearables Cell spaces. continues product and line Thin the tracking Our in market rapidly

support this online in demand coming equipment start CapEx forecasted additional of purchased have by equipment QX should We to This customers. our year.

and UL project size this On the serving Carbon currently volumes in market space, XRXXXA, line IoT to version XX% the to The the cell, continue this ramp cadence QX. product blend energy safety is our in going expected XX% offers production through to Monofluoride is of of complete expect which we same early certification, this UBXXXA which shipments more year.

sales, to cell cell assemblies battery XXXA of work both multiple critical but variants, offer product For be and for custom ultimately relationships. opportunities a can piece believe on solutions this customer line we continue will value where stronger pack

evaluating years. product improved to partners for multiple targeting across extreme XX can line, power technology have this and We applications monitoring temperature Chloride telemetry Thionyl ranges items where our up

and cell several Thionyl commercial a This XXXX. the multiple in targeting cell first is XXAh half be new D sampling XXXX, we'll launching have of production the monitoring is of have utility which back now ongoing, available applications. in in We and will negotiations products

this of other development expect wearable in currently We power battery quantity, QX to used conformal an delivery with of contract the to This continues start soldier advanced we The is with make to continue resources cost the balance being known projects. and for internal first which equipment uncommitted testing revenue-generating reduction volumes, battery, article progress. to indefinite indefinite of XXXX. dismounted project

branding that system, on are the commercial sign working we orders, Secondly, we and ELXXXX the business. partners power to multiple work to nature. military amplification this a Systems initial products server we items business, with on and diversify sea the to and close continue Communications to cosmetic and our primarily of are side air, power strong case through for and ground in will communications, Meanwhile, help scale support add advanced

competitive spaces, us best advantage, on niche advantage continue that design capabilities. to will how Lastly, cell on us to growth, investments and strategies market take relationships XG applications and electrification position power we to and for and our of system expertise looking develop leveraging bring

are We on with discussions partners in collaborate in prototypes advanced several XXXX. to cell

are effort to team which a In cyber profitable key track, in closing, increasing the laser with of with back improvements. after main Execution returning driving achieve we some on initiatives, our communication great growth acquisition frustration focused businesses on the to goal to & mandate profitability. event gross is on growth, QX for Energy get both and while to debt. down Battery multiple systems priority and converting paying continues margin scale our

Back Thanks, everyone, the prepared for to questions. concludes the the operator remarks. attention. That for

Operator

we'll this Instructions]. Thank time, you. [Operator conduct session. a At question-and-answer

UnidentifiedCompany Participants

If there to no for questions, turn I'd now Mike are the to remarks. back call like closing

Michael Manna

Kathy. Okay. day. to to listening everyone, a Thank next the forward talking today's earnings everyone. Bye, thanks, We Well with Have QX for at you, you call. call. time great look

Operator

participation your the conclude you you program, in today's may Thank does now This call. for and disconnect.

Ultralife (ULBI) 27 Apr 232023 Q1 Earnings call transcript