ULBI - Earnings call 3 2023 | Ultralife Corporation

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Operator

Good day, and thank you for standing by. Welcome to the Ultralife Corporation Third Quarter 2023 Results Conference Call. All participants are in a listen-only mode. [Operator Instructions]. Please be advised that today's conference is being recorded.

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

Jody Burfening

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

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

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

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

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

Michael Manna

morning, everyone. with Ultralife's you. team's stabilize operating improve on Thank to pleased to QX extremely and results. progress Welcome gross call the our margin. XXXX Good QX I'm

Our have operating point in XXX million increase for year-over-year. of the increase in margin gross a with resulting basis deliver year-over-year business, started profit initiatives to an $X.X

We the that of have in pipeline should with strong new growth. continue strong a to products profitable backlog that position main our portfolio across sustained support of a continued objective QX

now which cash headroom in due going provide We us allow have to debt, event generated priority. overall near-term mostly cash strategic which to down cyber initiatives pay will business from forward. the in recovered start to this of acquisitions accretive will imbalance and supporting our invest the This utilizing year, growth reported QX examine highest is to our

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

Philip A. Fain

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

We in our also which of and our Form find presentation, XX-Q Relations you can our updated website. section the SEC the with investor Investor filed

which an increased medical and to Products respectively. $XX.X compared compared for $XX.X our defense XX.X%. in increased of $XX.X and segment strong commercial XX.X% Energy to million for XX.X%, X.X%. of an third XXXX, XX.X%, year & million increased Battery were reflecting sales increase our growth million last and from sales million of quarter defense year-over-year government increase totaled third markets, revenues XXXX the Consolidated XX.X% $XX.X Revenues the quarter Government

of compared between shipments to the sales essentially to domestic diversification the defense XX-XX sales, and customers, strategy. reported success year. the the year, was for timing experienced revenue the last to oil to And and orders. a compared primarily year-over-year commercial XX-XX XX-XX decline XXXX XX-XX to of flat The due demonstrating government global in gas to market business, certain While XX.X% was split battery due commercial of sales in international timing international we for continued were our other our China, split

Revenues $X.X program. an last of increase Allied defense contractor to a major XX.X% vehicle a Systems an defense U.S. to modernization vehicle government million adapters Army and systems global amplifier of million international our to were integrated for attributable primarily compared $X.X year, Country Communications from ongoing to radio shipments segment the amplifiers a defense contractor amounts under

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

government quarter total exiting million $XXX Our in our customer and base. backlog third diverse defense and over the across commercial is nature

backlog this customers amount the in that have of X vendors. components delays million primarily government Not fourth million approximately of $X.X last commenced. months the $XX medical the and were of the over into XXXX. expect to pushed certain is from of defense to ship deliveries quarter during shipments to in These We due included shipments

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

year's throughout XXX margin and to Products this was last gross reported margin over primarily quarter, and XX.X% points an XX.X%, XX.X% increase sequential XX.X% third Energy evenly and Gross profit reported of higher an basis for quarter. resulting the quarter, labor for consistent business was for as As last for reported absorption. more quarter. percentage with remain million a was a $X.X due cost effort utilization compared our to year. second versus year's load well year-over-year the last revenues, of & over realization XX.X% third quarter, year's efficiencies Battery consolidated price of and that second production $X.X in to basis Gross level as XXX were points The concerted improved total for increases million increase the

$X.X period. the Operating an profit compared the year XX.X% was of million primarily period. For receipt year million margin Gross Systems resulting was gross compared for over $X.X earlier segment, XX.X% year, increase million delays of were to the the our last certain in expenses Communications to components. million, experienced $X.X $X.X from earlier

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

The a in in million $X.X combined for $X.X sales point improvement an expense in profit to XXX improvement to point third basis operating basis gross loss XXXX the $X.X leverage ratio million operating quarter. our of million of resulted our margin to compared XXX operating

Our help of gains tax U.S. benefit currency million versus for $X.X the impact third $X.X on with was of the to sterling. pound dollar quarter XXXX million for provision and basis, the to computed acquisition, reported the including GAAP Excel interest strengthening a the expense foreign finance associated the quarter

quarter. $X.XX of of the loss was income or loss per Net share. million million $X.XX or compares $X.X a share a for XXXX net $X.X to This per

provision of prior stock-based the be the sales adjusted basis, On or EBITDA or that offset the as other of This to trailing expense EBITDA, the for achieved quarter we $X.XX fully of adjusted net compared EPS year. was of TTM million is highest our taxes compared XXXX including operating to a $X.X loss XX-month for to through compensation sales $X.X X.X% U.S. million XXXX per defined $XX.X level compared Adjusted loss for or year XXXX years. X.X% X.X% in carryforwards million quarter. $X.X Excluding or expected a last XX $X.XX represents by of the for for the million and X.X% have sales the to quarter XXXX was noncash share noncash EBITDA, third the tax credits, period.

ended of working We million Turning current XXXX XXXX to balance with compared and $XX.X year-end. the X.X and ratio our sheet. third capital $XX.X X.X to quarter million a for of

our on and With fourth per in represents basis. commence the share debt quarter the paydown our balance the TTM reducing are a sheet, of strengthening interest costly which $X.XX we dramatic of expense poised to the almost

our to potential gross initiatives our and optimize forward, the position leverage and diversified of Going business improve strengthen to model. well end margins balance actions our markets, us sheet, backlog, growth ongoing our

turn now will back I Mike. to it

Michael Manna

operations year, improve experienced improvement from yielded on we loading our Thank you, Material results. front, improvement the although level efficiency lean and multiple lines. source for utilization. but single production improve delays we still promising projects The price our margin continue this factories key focus have occasional flow we team's the efforts and of early which labor to on detailed results, to is QX continued including realization, throughput disrupts the the throughout components, to gross Phil, has seen production specialized review and

S&OP We our which avoiding fees. windows established customers thereby forecasts, the expedite enabling extended of provided process, through lead us have time major have framework parts within our order to

As this benefits both cost process impact in positive forward. going it will matures, supply and have labor chain efficiency

chain, The offset in throughput QX direct labor labor measured impact projects Our with costs lean hour. utilities. completed several underway manufacturing process supply the and lean imperative per journey increases in and inflationary is and to rising with in teams immediate pressure

globally We facilities. have effort expand started across to this

year this stable customer further initiatives, I X to With throughout the quarter subject focus expect into on the mix improvement last of see to a XXXX, of demand. these and

review projects. now growth organic key the business with opportunities the several a I update in on will brief

customers ThinCell Veteran in as the flexible forecasted wearable and XXXX focused and expected energy begin our installation QX, line, received on in medical line in is on demand opportunities. beyond. our products equipment tracking in we'll validation production future increase support continues applications First, sales to by and and our finish line side, QX which We product to

the cell production cadence the continue UBXXXA space, we On shipments. serving line market IoT

optics are more now factor have and form We same the to sampling XX% key in XRXXXA the markets. cells in energy new our which customers illumination

assemblies will XXXA for work value be cell line, longer-term crucial this piece sales, relationships. to customer pack but product ultimately and continue a can We Pack battery opportunities where believe multiple offer added solutions of

several extreme monitoring these up qualification temperature life chloride and can final telemetry leading years. field With improved XX-year the and recognition. with a XX across expectancy, technology testing expensive validation range a This sales Our for be items to cycle revenue in product time and power line is can applications for an lengthy products qualification to targeting and customers.

medical expected samples of expected fully now. On received with devices continues light, a system year, order completing swap available is further increases in provides million backlog sell USB QX. long-term swap with with The to this QX version this hot system, follow-on power our which certification compliance safety ship $X.X in XX well to XX power hot the and to preproduction

short-term As work government wearable conformal mentioned paused with from on the we to other battery a our the project extension projects. on contract granted last engineering internal XX-day bandwidth focus quarter,

an with design indefinite program this being near-term reduction government We to and projects continue in the This first resources will on work balance project year. that and we engineering delivery expect other article internal with with testing uncommitted the quantity, project have revenue-generating the contract to have known our volume, business. indefinite next cost and for resumed impact

the $X.X and integration vehicle Switching side kits. fleet million received We from to follow-on communications their communications international our support of customers an a amplification business. ground the to order for over for upgrades

to the awards programs We Systems in government funded coming expected which backlog. several contribute U.S. Communication of have other in will the months, support

efforts We for products see and engineering continue to in primarily multiple power support air ground nature. partners communications with advanced amplification military

the environments the pleased announce I This partner difficult business with XG earlier in for server has power I computational the to allows our am which truly on server that initial received ELXXXX to year. mentioned previously high-end systems, integrated had case AI in completed of the be applications, bringing edge strategic use. to power this the used computing developed Communications and point system certifications orders industrial

We the to gain business grow diversity to expect segment. to area this and adding continue momentum, and scale

reviewing We systems of the expand type integrated to strategic this leverage computing are advanced can portfolio. our with capability we other systems currently communication further areas, expertise

thoughtful process [indiscernible] and size part support of significantly has have planning business This areas impactful development. goal is journey focused that and strategic review for on of truly of very technologies This acquisition. going and the resources process business the projects been next both support our the future quarters a to we These segments, through growing a case we now were through our in market analysis business. growth, which development should time product or and the focus real either process, niche several precious areas on are in

complete to focused continue these forward partner on past profitable in which on showing down future laser advanced cell calls, us needs increase activities QX promising earnings we X work momentum acquisition initiatives multiple are with We We look paying while discussions us With and scale stated in advanced on on provide to with resident to initiatives the Initial that be facility. QX convert calls. the with results to systems for continue start debt. partners from achieve And to a consistent baseline as building, additional profitability, execution and development can need growth allows current our in improvements. margin our materials gross build designs Newark to better signs upon. to few driving communication to energy of our key growth multiple

Thanks, the That remarks for everyone, attention. concludes today. for prepared the

back the Now we'll to go for questions. operator

Operator

with And from the Instructions] Josh Benchmark line of Sullivan [Operator question Company. the comes first our

Joshua Sullivan

call, you through, you think you leverage off cash debt the what the As in, net what's get want started mentioned appropriate? comes to you do

Philip A. Fain

at look $X.XX the at the in seeing, EBITDA months we I us staring based on my right the Josh, with look previous past acquisition off is because paid in -- us level the the goal gap acquisitions, eye, see positive to we're extinguish the in that I face. having XX right I debt cash

built into certainly piTero enables see the that's a to years. So iterative cash next buildup that us our nice strategic really couple across of

Joshua Sullivan

then you to I up leverage? on the to back opportunities, are mean, strategic as at you And comfortable it. look Got what going

Philip A. Fain

we're opportunities point of today's time, Well, economy, just intriguing, on see. some front it one are which And of we've of that it's books at we any one a that certainly multiple opportunity not us, depends we in the which we're have of before. some in In couple seen that It's seeing. seeing. opportunities

So on see level it of business last of with where over going. would of the I really couple be opportunity. depends comfortable our the our the you And pace can is the going. quarters, is business where

of similar I out. at look for pushed been at it couple had QX were to look being not QX parts almost that I a QX, the

very from which trajectory, So vary I'm looking can and been criteria, on going has the I'm just very, dollars knowing acquisition are for see -- not any the we're multiple. you that specific very you -- I'm actual the looking can not EBITDA disciplined. focused at whatsoever to our see

[ look look just look ], at admirably. you Excell, ], Sue all you You at [ Accutronics performing at

Joshua Sullivan

you chain natural backlog, rate just to think back on a then as levels. improves XXXX release level backlog we And mentioned as million there $XX a supply should efficiencies. manufacturing of going about Is run

in it's the what Just curious know rate 'XX there? hard of run estimate, should to expect we kind as I but. on

Michael Manna

we judge to hard X/X were Josh. this I point, of It's this at level. last mean year,

the we've -- chain guess multiple loosens supply where world, it's for be now and at My else between depending row. quarters now So been and in on happens, there's on where it going $XXX is the million probably what's to somewhere in it a over was up not to trying to lucky is, everything quickly million component shipments. is settle it's And door. we $XX it can to is ultimately, availability, range cetera. hold labor, to now probably that we $XX million et execute on if term, short we're where especially going as trying and as ship We're based out ship

Philip A. Fain

more the business And from -- what Mike. I see from leverage it that, I the ability I of our quicker. model our couldn't with move out leverage agree by see to

Joshua Sullivan

it. be run profile that how Got beneficial release thoughts this get with QX. the of then the on are what into we your in margin should profile to it. backlog we point And Got But rate as year? at margin next is going think

Philip A. Fain

the last to a it's at year. see that base does this, at over XXX us EPS reason next And the next every tax. is basis us a gross year, yields following XXX so year, year, important case. year or improvement point way whether difference. basis this Josh, approximately would XXX I'm the I I XXX in and XXX looking looking to going of the same The $X.XX point we're and make XXX I'm Sure. why to improvement after see margin in improvement think that's expect XXX that's that

we're So gross focused that's why margin. so on

XXX, XXX, XXX. So I'm looking at

Joshua Sullivan

expand? next say as on order what news. do X order opportunity over And then order, you years? large that And it's the maybe system milestones able see great where Are the the you was? there then Are services ELXXXX how that to could

Michael Manna

but just of Comm business, that insignificant order, the right we're comment not Systems not now going mean that. it's to let's on say the Well, I size to

need market. it's a in strategic multibillions I So go a huge huge of mean backlog, that dollars our partner has out the servers of marketplace. to

the are vendor edge. package and this it that to to real space preferred We only the in get to equipment

but have I be. how resources think the know or to wouldn't it's going I like really be can the see So opportunity the investing to and even we time, effort, develops you. significant just quantify we'll it don't into be what energy We could

Joshua Sullivan

And mentioned or staying expect order Should fleet million similar about be pipe. communications, just upgrades, on to down we within the are good. some those you the -- size Sounds then ground programs additional $X.X those the the coming potentially opportunities? larger on

Michael Manna

the about They're similar size this point? at

Joshua Sullivan

it. or within right markets, themes Got kind any now? it. industrial, markets? broadly, obviously, And you you're looking a of Got dynamics of then on just focus obviously, just have any Just energy, industrial investors consumer comments broader at seeing, do

Michael Manna

and I I soon. everything Well, anytime be of monitor has gas of of spots. to Everybody strong. is going market continues mean, oil and industrial away. these the in monitoring that there's lot not We definitely still certain anticipate telemetry a obviously, wants went don't lot a to that markets it's activity mean days. The still strong. to

things there's then switch just water that's lot of on So a failures costs. every systems things sensors line, to AI and predictively of to every line, power other activity. and for maintain the of equipment And some there's lot all pipeline, gear, reduce and to a monitor of going into every try every

end. what what that's at kind of seeing So we're our

Joshua Sullivan

again, Well, time. taking thank on quarter, for congratulations and you the the Good.

Operator

see questions to Instructions] will this turn don't Mike I at time. over And the I now any Manna. call [Operator back

Michael Manna

All right. Thanks, everyone.

QX will next talk time XXXX now. Bye conference We call. in at the

Operator

call. conference your This concludes participation. you today's for Thank

You may disconnect. now

Ultralife (ULBI) 26 Oct 232023 Q3 Earnings call transcript