ULBI - Earnings call transcript Q1 2024

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Operator

Good day, and thank you for standing by. Welcome to Ultralife Corporation's first quarter conference call. [Operator Instructions] Please be advised that today's conference is being recorded.I would now like to hand the conference over to your first speaker today, Jody Burfening, Managing Director of LHA Investor Relations. Please go ahead.

Jody Burfening

Thank you, Antoine, and good morning, everyone, and thank you for joining us this morning for Ultralife Corporation's earnings conference call for the first quarter of fiscal 2024. morning, call made Relations Fain, Manna, earnings I where copy, Ultralife's was earlier today's the statements CEO; President press call I on turn has issued Phil you'll under anyone this would visit website, and Chief this invite that us you are I received the to Ultralife's Mike during and the release www.ultralifecor.com, everyone Investor not News contain to With yet based if company's to a and Financial management, call section.Before release find in like remind the forward-looking Investor current on conference over some statements expectations. Officer.The those as materially results of differ Actual a projected could various from result uncertainties. risks and uncertainties materially could to reductions that results or customers, conditions, economic and include global revenues in actual differ from in key reductions delays cause potential The uncertain U.S. risks and of control.The due reliance company's foreign as and or statements, of investors delays of basis, forward-looking acceptance conflicts, company's global not or in other to today's place products not the date. materials cautions on global which a weather, factors raw analysis under new on military reflect business conditions, spending, the our company only and supply disruptions undue to components company or to to circumstances. The undertakes publicly events obligation statements reflect subsequent no update forward-looking and annual financial including useful to latest in to certain is Further refer filings information the management on today's measures differ these on with Exchange from and call, that considers could addition, affect the on company's included Commission, will Securities other financial results Form that non-GAAP GAAP. be Ultralife's management factors the XX-K.In and report corresponding like turn be over Mike. the to would that, should I figures.With measures GAAP non-GAAP considered call to supplemental to These now Good morning, Mike.

Michael Manna

$X.X the everyone. $X.XX detailed The positive fourth sales, our across accelerates incremental morning, reported business $X.XX of will improvement over invest the Jody. improvement. Welcome objective top quarter.I am EPS is margin sequential of operating and the first Earlier efforts quarter, of $XX our more further on sales team's in cash QX realized flow down and results. our XX.X% numbers. to reported in this debt.I second delivering QX following and this organic impact it acquisition year, or priority extremely gross our QX million in the to proud operating Phil growth to quarter QX to of from we income the million in which through turn to million, the consecutive to Good call $XX Ultralife's morning, Thanks, the and pay the for talk EPS initiatives

Philip A. Fain

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

XX-Q the which commercial of Relations also Government XX.X%, status includes summary increased SEC and of website, We increase increased of and $XX.X the revenues $XX.X an filed a with Form our our and million, totaled in new section defense Investor sales compared the quarter XX.X%. presentation first XXXX, X.X%. our of million sales for transformational investor our Consolidated updated to now products.

products to domestic sales business was demand for we global negatively were to government to our quarter last double core increased defense multinational year, a of modernization and allied power by and our to compared increase our domestic year, revenue million were contractor our primarily and government systems versus almost of an base. battery U.S.-based full Energy under technology was year.Our XXXX last diversification The government very driven prime. information of Revenues of program, reported strategy.Revenues heightened a mounts basis, international from XX.X% international cases XX%-XX% reported across These were by year, remains our XX% shipments offset & decline in and On our for were integrated growth compared the of first the and in represents year's was market sales. and and to between from performance $X.X the ELXXXX oil diverse replenishment rate The respectively. to gas demonstrating major which for XX%-XX% in impacted to by Communication partially million, the was full of backlog Battery success last split server segment high XX%-XX% global to million and $XX.X a attributable systems continued an split split medical defense consolidated reported million year, total amplifiers exiting for defense compared a government the segment TTM for XX%-XX% sales defense $X.X to XX%-XX% full XX.X%. of for our sales $XX.X January commercial radio backlog the vehicle the defense results remains sales. System a XXXX commercial XX%-XX% and and XX.X% first large nature increases commercial ongoing our company, the quarter government $XX million reminder, country XXXX to was and customer the XX.X% the defense a This As cyberattack. strong Product markets,

revenues. Our XXXX consolidated up gross profit the XX.X% increase was million, period, far the $XX.X in eclipsing XX.X% over

of $X.X the was increased and was year, points primarily for The increases million a basis was XX%. due sequentially an As last sequential XXX margin business XX.X% an over XXX for period. total were XXX and for quarterly resulting XX the compared price on last an points were production to compared to increase was margin out volume year-earlier favorable of last and a well across Products points quarter.Gross $X.X revenues, quarter, same profit due & basis for Operating million basis System of concerted compared $X sequential segment our percentage basis $X.X evenly margin point points. from product million, quarterly year-over-year year's improvement, first XX.X% million Communications basis. as segment, XX.X% and the factory reported XXX higher $X.X gross sequential cost million XX.X% quarter. versus last higher our realization.For to Energy primarily efficiencies as fourth On gross Gross of a to as for increase effort Gross increase was absorption sales more more and Battery year-earlier over expenses XXXX to improved basis, mix. the level XX.X%, year, year's a to quarter, improved basis our profit the the margin quarter, XX.X% consolidated first gross

improved basis were of our XX.X% of XXX leverage last years. million interruption basis a and revenues, gross to margin over improvement ratio percentage claim leverage. profit sales operating a improvement, million, to first X.X% financial last pure not The to XXXX to XXX the reduction first As combined in margin.On operating in insurance an dollar operating absolute the is point expenses in $X.X reflecting quarter, results. the highest pertaining level included our achieved compared for business quarter remains least XX.X% point basis, year's XXX XX $X The XXXX basis still to in and cyberattack resulted in operating expenses our sales QX point our at a review

to of operating income GAAP and $X.X was finance the for $X.XX million basis. to fully of year EBITDA net prior a fully the carry-forwards quarter of provision $X.X quarter for as fourth compared reported expense XXXX $X.X share TTM diluted per a $X.XX of was ended to GAAP X.X% loss and expense million provision period. first currency to to balance loss On help defined acquisition year-end. for adjusted for tax sheet, on per is current a compared loss versus million XXXX $X.X million for loss million gains net for a including quarter a XXXX the the or XXXX million basis. capital or basis, or EBITDA fully of $XX.X of quarter. ratio was stock-based we XX.X% $X.X benefit X.X the working in per sales diluted This compared by EPS million and expected interest Adjusted $X.X for on quarter.Excluding our our computed with Including X or XXXX adjusted $X.X of Excell sales.Turning or losses, $X.X the the a first net non-cash million U.S. foreign million impact was offset to non-cash be compares $XX.X the EBITDA quarter compensation share tax the a credits, taxes for of $XX.X the Our XX.X% other and share to of

actions reducing With with ongoing costly business the further accelerate basis. down will turn a the balance which backlog, $X.X in further million We to in the thereby us subsequent pace represents margins expense, the expectation well over end to initiatives, just by gross are quarter pick share our leverage strengthening interest positioned we quarters.Going of position model.I our on our improve balance almost first up markets, strengthen debt per of back diversified debt, growth and $X.XX our the our TTM Mike. it of forward, reduced the and our our to sheet, to sheet, now the to pay

Michael Manna

for detailed QX Thank you, the Phil, the of review results.

last XXXX continued priorities following success. being to in mentioned As the key we exiting call, I the refined year the our with

depletion, initiatives, savings. cost we need cost key working suppliers keep driving cost material to realized to First, produce material with

spend low-cost and across Beach, the dual vendor in experienced consolidation, region over work have rationalization locations Virginia Vancouver hired months We supply enterprise. the and part to and streamlining X sourcing, Newark, resources sourcing, logistics chain past on critical

Secondly, lines improvement. Continue automation line finally, waste sales and inefficiencies office both lean in and with the throughout systems productivity. additional including balancing production support to and all processes, of and functions, reduce funnel integration projects on our activities.And initiatives, back

drive larger have continue a sales close, a funnel which have and products healthy growth. of to new is most to to which future required of opportunities, We increasing pipeline yet with

over in labor is XX have brand process strong component mostly allowed lead lead and seen portable materials more S&OP applications, the the times has and it quarters. and kept that becomes Ultralife last products conditions way.On within revenue the over direct deliver recent to world the improve our us As side, months, us critical important we

of and demand, to to resources continue key to on the which efficient sales as the further refine and organic I'll expansion. level the to We are turn we process direct the future new business.Next, growth give underway businesses, expect precious continue projects in this grow for more allowing updates development production S&OP and market utilization our

developed server-level system our which a review allows XG to be edge truly the our bringing industrial On use. high-end AI power that system I'll communication systems, the in environments partner of applications, first computing on strategic difficult power used with in key and computational ELXXXX the is to side, point

of For power future, and the received in remote available supply this grows we in for DC later line systems the commercial the win key shipped as shipment quarter-to-date, business.Next, applications application. to ELXXXX part vehicular expect a applications.Secondly, the of $X.X to wide-range the year, in and this and initial further QX, ELXXXX an DC a comm revenue we diversification airborne power million the defense project, highest product with for become radio orders project line product in in new we

to We least program and expect continue for ramp the X this next at over years. year

product this optimistic in new of orders excited the business, calls.On products, we'll both projects international more way to Finally, the customers. funnel variety in several and under updates opportunity next-gen the we Battery and we have & are of incremental hope the amplification future I growth that see have across about are side and target existing year. detailed domestic Energy

multi-cell The several mentioned, applications in projects phase, primarily XXXA with and the in is to assemblies, cell pack illumination wearable thin which support a funnel place qualification the in line, product in in key the packs, several medical we with for funnel tracking. customers quotes seen markets, previously production have medical IoT in growth for product equipment is strong, item this provided multiple supporting opportunity in for space currently our sales underway medical line. applications.The initiative has As

application, line, field product Our telemetry several qualification cycles and chloride improved testing with lengthy. qualification and continues customers. final targeting These are extremely monitoring

wearable opportunities product For battery qualification, initial continues. been production year.Our customer have later X the instance, product on we anticipate the has development orders work X year. testing in we multiple conformal this that With for over

focused for military customers to prospective commercial funnel completing first testing, is call, article applications rest year. other this our keep and last years.In enter markets. margin validation Meanwhile, growth U.S. realize the is scheduled the government shipping to yet X I improvement all with channels have return our pipeline growth currently we last early of a and closing, expand delivering Sales growth. key we trajectory their positive over are international energized last to promising later samples started backlog X investments are benefit the fully as results, is U.S. we to and strong working expect of of healthy across margin mentioned new the opportunity gross we the on year We improvements on testing as progress. outside the to which more in from and initial sales organic team to the and opportunity objectives position, gross the as funnel to sales initiative portfolio XXXX product going, to made key start The

further As momentum and today. continues, forward growth remarks debt, everyone. accretive beginning paying concludes look our investment, organic prepared our That to search.Thanks, I next for the down M&A acquisition

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

Operator

Our Josh from Sullivan Company. The Instructions] question from first comes [Operator Benchmark

Jamie Sullivan

Congratulations a nice on quarter here.

Michael Manna

Thank you.

Philip A. Fain

Thank you.

Jamie Sullivan

versus the is the the how initiatives? much as improvement of volumes gross strategic margin initiatives, of benefit far As here the

Michael Manna

gross across the some And your margin fixed It's price additional probably point. on I we are seeing the which this sales have. helps obviously realization that mean, numbers. volume shared more we always same costs, putting at we're

sales whammy double on the margin. side the is gross a So

say I point. shared it's would So this at

Philip A. Fain

a volume higher, And was example use slightly very, to The Newark. nice just did that increase in we gross did How Mike and located, but is where I'll margin. is Because Josh, very we add that. a see the bit little I are perform? Newark right primary

portion So that of the volume goes beyond it.

there's mentioned items that here. at So really the other play Mike

Jamie Sullivan

and look or to we for needs? elsewhere, forward recent that's funding Ukraine into defense if been anything is we pulled there then that at expect And quarters? benefit Or defense recent the your work should

Michael Manna

usually does funnel is The then as to it's primes it going we an immediate they're giving and Well, through. orders that our to us. as much money primes the would that business unfortunately funding, it's saying typically, defense hope and are help

even us mention are So that it any is coming our way. for to weeks orders taking probably X to X have possibly

Jamie Sullivan

should the think And year? side, about then the we inventory cadence on the how through

Philip A. Fain

supply It know way perfect all up cash all the in day a We process, the out anything year-end just you your the of look And reasons disruptions to through collections. That our loading. the materials all COVID goes orders, specifically supply ourselves through I and do there our depends And because we're time one in us margin, the suppliers, thing because that. on the timing know to it deliveries, not level planning, the and our the level we the inventory there to of very, orders know put level to loading, in one where purchasing very why more the short. if great day production at our we basis. during POs of level way do all to Josh, that with certainly are lean The on hand, of out get over on through manufacturing, not lessons exceptions suppliers loading years world.But In we same through that cut with way the gross helped to We support the some is is absolutely inventory in is get went their chain. well. be learned know it's level trying want way loading. was position than a the going is

that is $X cost, So serve compared of the could inventory in does be quarter? And go caught absolutely that of just or because our any But million some down $X points we it will up. to down debt. up get the to this future want can Yeah, the able to cost customers. million pay all

Jamie Sullivan

keep And far then on? trials we update FDA timelines or as an eye thin the that cell any just on on certification opportunity, any can as

Michael Manna

bigger still this that And to year. They're we're the see big quantities initial But positive to still in for the we to continue not announcement customer be the being that future, small we're other their some in ship orders over told the should for the for hoping they through production do we're testing. going Well, summer sure. of it's applications. award or

Jamie Sullivan

do these how of should cadence? consistent orders flow Are more lumpy you then is or ELXXXX this And a the kind think beginning think the about of here? we

Michael Manna

different that's this and of the doing with else early cases, just we're server in integration In to couple actual Josh, the say someone there's doing the components other some we're of actually little business. which a cases. It's a placing go, cases is going integration definitively way selling and In work. to cases,

us depends and in scenario on for servers going the the integration it the the So customers' really which the unfortunately And on orders is of number side it out are X, field. number X. just available, cadence

Jamie Sullivan

the on going one decline market oil just is one and last maybe else anything gas the then dynamics on there? market. in that Is or And end

Michael Manna

customer, all. some we through up who We're it's overbuy business. we the at been We we but starting They've long-term X in markets back QX. slow to Well, orders dynamics impact see it's had think don't a don't end to now, believe, believe QX. pick

of I and on track a still a think rate strong as at business. we things we're look that to kind really yearly run in year have we think

Operator

[Operator Samuel from comes McColgan Investors. Breakout next from Instructions] Our question

Samuel McColgan

lower I quarter. just came bit One at the operating of Are through to had little just if, Well how Well progress little are? that level? where was Or Great Just Congratulations. on done. just a do I couple kind they bit kind hoping around wondered how of to of kind they are done. that lower. going and fluctuate stay year? might they a of look? you you wondering in a will think expenses questions.

Michael Manna

is little thought I on a mean, keep bit a underspent little side, a as matter it's spend operating a this QX, at bit in goal huge funnel of little we we'd just growth. that our probably we're expenses bit higher, We just of to really side, timing we possible. overall, the our want and looking think line expense to but expense But in Well, marketing that as I point. of swings low R&D that not the sales for add on on drive to some spend.

Samuel McColgan

about a you're kind the can yet, to but if kind And of turn out that. I will through quite in the don't on just to had other down. if of I was you year you don't had of Obviously the XXXX? ramp much hoping by reduce paying goal question you you wondered hoping that up how I know know know debt. I quickly debt you're mind were comment how how

Philip A. Fain

volume And those those any hand the an we we're and we're to million have previously million underwriters into is $X claim -- can into going date knows when debt my with I when earmark have, Sam. that sure And either. with going reduction. that ongoing IRS on going million, with they take business is I and that year, quarters, that sure would in in is I with insurance that, the in process the that, time. that absolutely basis things an to any the in not claim then spoken we of do on But the a $X.X to about it some I the last debt work being interruption still to operations. see is have quarter. equal, unknown and the that by announced IRS. have $X quarterly I'm through that goal couple we the going comment on But one basis, insurance target that's all expectation commented -- of What reduce solid last see have of QX We not quarter that's ERC

Samuel McColgan

through it really quarter. impressive in. if of reduction you're That's done, impressive be to funnel able all me. year, Well would that the Yeah, for an that

Operator

at turn like this back to remarks. closing no [Operator to I questions time. am showing over for Instructions] now it would Mike I further

Michael Manna

the in Thanks, look Thanks forward right. XXXX then. next you listening time talking Talk Bye everyone to today's earnings during QX now. call to everyone. July. you for to We to All call.

Philip A. Fain

you. Thank

Operator

conclude Thank you does for today's participation in the your This conference. program.

now disconnect. may You

Ultralife (ULBI) 25 Apr 242024 Q1 Earnings call transcript