ULBI - Earnings call transcript Q3 2024

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Operator

Good day, and thank you for standing by. Welcome to the Ultralife Corporation Third Quarter 2024 Results 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 speaker today, Jody Burfening, Managing Director, Alliance Advisors Investor Relations. Please go ahead.

Jody Burfening

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

that of Report XX-K. including Securities events to the Commission, results or in and other not on date. subsequent are Further not the Exchange reliance financial to conflicts, conditions, to Before turning risks to from and results customers, forward-looking due the materially acceptance Actual over uncertainties. latest or Form from military other and statements revenues conference made call supply to today's that materially and to reductions and expectations. filings economic The in statements, remind delays which management, cautions U.S. could differ obligation various key of factors forward-looking Ultralife's weather factors forward-looking global on contain basis, company like no analysis reflect new with the during risks on actual company's update our those in differ The factors foreign materials affect conditions, reductions potential business as to I projected company's everyone publicly cause raw under statements call and of statements a only current company circumstances. uncertain on could these would include components could global based as control. The products on undue undertakes disruptions that in a or some results our our of Annual this global spending, information result investors place delays, or the reflect uncertainties included

In measures Good from on to certain to turn Mike. now over today's Mike. non-GAAP financial should and addition, refer morning, These that, GAAP corresponding differ be would supplemental will I GAAP. measures considers to call management the useful that to like to non-GAAP call, figures. With management be considered

Michael Manna

we Thank Welcome QX Ultralife's that QX, EPS. Energy of sales reported operating business. call $XX.X you. today, $X.XX & operating diversify Systems $X.X sales X.X% to as prior in million our decreasing million Good year's sales morning. to on XX% million, Products Communication over the QX continue to results. Earlier and increased income of of resulting Battery with we $X.X

cost events initiatives top for and in including year: metal QX, cost Our deflation with in funnel the continued completed multiple material boards. circuit printed and X sales important captured and lean future lithium material businesses deflation, improvement in several both lean areas, productivity progress

in growth, We supply seeing especially it customers long-term sales closing detailed are and on opportunity Thionyl in and through the thin agreements several turn to target numbers. spaces. I cell Chloride our focused talk to Phil over will products funnel are with

Philip A. Fain

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

from of mounts XX-XX compared the for chain our in from XX-XX, Relations quarter products. Revenues Investor the our of contractor been summary in segment presentation split vehicle amplifier which delayed compared most supply our status XX.X%, XX-XX expected Leader by battery the contractor year-over-year sales The Products These declines to includes quarter defense shipments medical the section defense due for the of Order will was Energy not & orders domestic respectively. XX.X%, transformational oil for constraints. reported market from XX-XX compared earlier our acquisition, was offset the declined and in split to XX.X% of totaled XX-XX to for a and $X.X the international reported that to Communications sales sales XXXX large of third XXXX government year. amplifiers third for recap battery by almost major defense with compared defense adapter full XXXX and was consolidated our comparison systems million to in Revenues which demand the recent a to year. Systems attributable in our to X.X%. Electrochem. Consolidated demonstrating gas $XX.X of million increased our the part, were year, website, period domestic XX.X% global updated $XX.X the shipments XX-XX Form was the a filing XXXX. the Sales government received year, of commercial million new be a were, follow-on XXXX the our we Army to had industrial of increased SEC defense have U.S. for revenues of and million investor the until increases of to timing next defense for split last business to our of products to full We million most and and million basis, for periods the for commercial days was $XX.X last and the to the identical heightened government XX-Q a integrated vehicle government our few $X.X in a primarily segment $XX.X sales market and Battery between October. On Radio year, full radio reported and U.S. XXXX customers and compounded The international from

commercial nature decline and our larger periods reflects base. recent The remains post-COVID times occasional exiting order recurring Our with blips. backlog flow the in supply chain with of and across $XX the more despite long customer normalized resolution total return of backlog the from was third defense quarter disruptions customers, lead significant our and government million, diverse

was XX.X% the from down gross period. consolidated profit Our $X.X XXXX million,

Battery last the business was XX.X% point reported for an & consolidated Gross X.X%. from our As increase a receipt decline factory basis the partially compared total revenues, to resulting XX.X% Gross a quarter. Products XX The from in point million third year, primarily some last XX percentage increase XX.X%, of margin was of last now year's to offset Energy from year-over-year facility, delays in XX.X%, margin was $X.X volume of York $X key a was reported the by million year's for New rectified. a our material profit inefficiencies for increase higher gross basis Newark, due quarter. raw component,

expert lean beyond Our expanded lean has reach his operations into our as Newark. continued now our initiatives internal

stock the the year directly the primarily for factory sales volume Operating quarter. increase gross signing our product from margin year fees XX.X% we of or of earlier other opportunities. September $X.X commercial acquire related million, X% The as period. agreement as earlier product XX.X% last compared to and development earlier period. and segment, For programs year government to increase XX increase large was an major of legal Gross of to XX.X% spending due profit mix lower was both were aggressively $X.X unfavorable is year-over-year $X.X to Communications an new Electrochem million, to million Systems million $X.X million in and year, on to compared attributable $X.X the to expenses $X.X the purchase compared or defense million and pursue

future experienced sales by addition Our offset spending was drive resources expenses. the lower to on of growth G&A

in third expenses the and to for the last in an expenses increase with million of XX.X% compared margin the interest for for quarter. The X.X% for quarter the reduction million XX.X% revenues, compared expense in compared $X.X the third quarter. Other operating As for a were operating third decline XXXX reported sales the of quarter to our below XXXX year's primarily period, resulted debt. operating operating income year in $X.X percentage resulting X.X% from to income was earlier decrease

that -- provision was share versus reported $X.X a at rates. Net XXXX per was net $X.X the quarter or second $X.X share million, basis defined diluted income reflective expense to for to prior EBITDA, a Adjusted basis million, of was million quarter, million, EBITDA This the is $X.XX $XX.X we the XX.X% quarter. of computed or on EBITDA, for expense and million, or GAAP operations, third quarter year ongoing or sales $X.X statutory million, consider basis. for compares income or GAAP of Our for Adjusted $X.XX not for on a fully X.X% our on sales. compensation do the $X.X of per the TTM stock-based compared XXXX non-cash X.X% quarter. continuing tax or including income $X.X million as

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

With delays sequentially or $X.X purchase over the quarter reduced million at to the quarter, the represents orders, of further a the receipt our million, million, end inventory $X.X $XX.X This or million. increased or from During we by reduction debt quarters. second of our million X third last XX.X% $XX.X the by $X.X certain in XX.X% X.X%.

markets, growth realize leverage volume ongoing actions position well sheer forward, us to of gross to Going margins our of business diversified end our our the the our initiatives backlog, model. improve and

mention back for completion filed our to Before turning want on Mike, that October acquisition our I Electrochem X-K we just the Wednesday it Form to of on XX.

have stand-alone audited is turn equates January along calendar an for disclosures. will now XXXX. I to other days a reporting X-K, year, this with include will purposes, file Electrochem's XX we to back financial required for considered Mike. to amended SEC XX material financial Form As acquisition it which XXXX statements days XX,

Michael Manna

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

I've on we X mentioned major As previous have XXXX accomplish. priorities calls, to

the per favorably material lithium savings expect contracts in circuit dollars of metal boards in year. hundreds to continued negotiated several QX, First, In thousands of of and deflation. printed our we realize our

inventory customer work positively a QX, and Kanban turns, in to continue on and shipping cash to with and and systems remainder with smooth the next was partially and order inventory for QX in which pushouts hampered flow year. We suppliers pull large material impact build key

Second, lean productivity.

of with Newark, of Beach the we to in throughout waste all see ship facilities year. Houston produce QX, events improvements area. our X% next we to at inefficiencies we a go cost QX We as into in We to cadence, processes continue areas lean our reduce high-value and expect an target These Virginia and and expected regular in completed each at items and X% benefits business.

improvement. sales funnel Lastly,

and are currently to best deploy focus seeing completed. realignment We our we oil now and some and defense team markets in are in reviewing Chloride, with expect of sales the QX to the acquisition drive and and Electrochem of I to especially development thin how be growth, target the assets especially gas, there and Thionyl government will cells align growth. sales business funnel medical, better resources

applications, I organic product ELXXXX ship to and On growth future to businesses, development new underway our market key will customer including several to to business, smaller and XU variant give sales pipeline cases projects for continues we current are alternate on better expansion. several XU the development customers, size service a the the Next, which Systems variant. of server size updates the Communications in broader a versus have systems range

QX, over with the next power initial transitioned in to platforms low We supporting ready the the radio communications are whom products, to of system earlier power the vehicular our We to The be quantity project partner, delivered with customer. for available in supply testing sale year. use few DC and XXXX production years supply remote support rate prime the ramp expecting next anticipate to mentioned was production our this is initial that supplying radios. ELXXXX validation production MRC case and airborne to

man smallest, happy lightest, to are amplification to the This Meanwhile, our key and be next-generation agnostic, which and radio we've a are for available launched amplifier year. most will now benefits amplifier production This amplification new product product we our in to available targeted marketplace, first to used sampling XX-watt by the believe Lastly, we say radio is in variant government XXXX. end power-efficient engine the all partners customers. the defense which our all I'm be high-performance with add of is be portable orders frequency high-efficiency portfolio hopping to across to advancing of expected advanced amplifier platforms. the products, to

products existing see Energy are excited and growth side year. opportunity expect Battery of continued we the variety funnel business, of a new the across and about this and to orders incremental the On

item IoT large initial projects we in in for thin place primarily new to medical in previously strengthen XXXA continues equipment applications several pack customers. markets, have sales volume production growth has with in QX. The space, supporting and The with international the support wearable qualification in medical funnel the assemblies, tracking. line added opportunities phase, the battery mentioned, and customers both opportunity funnel funnel application domestic illumination tracking and product in to and seen thin multiple sales the As our cell now in cell medical to space several

We this and production start for customers a are packs, servicing launch. to in negotiation supply year several development to XXXX international battery medical pack expect

continues field line, testing improved targeting and Chloride customers. with qualification applications monitoring telemetry several Our Thionyl product and

successfully completed for in amp-hour our and major now production company cell, year-plus test deliveries in have a We metering are cycle for XX with and the XXXX. discussions initial flagship D

of to version continue validation and continue activities. advance commercial the Conformal Battery the We production Wearable readiness and

We quoted XXXX. opportunities production international award and have multiple decisions QX in in expect

a we low-rate and ship in be XXXX XXXX. and aperture And test. opportunity resources, with for QX continues small expect quantity to in into focus international growth continue pipeline our I an and We added expect expand businesses wins. to and and to initial evaluation Sales production for to funnel opportunity both a key will customer the

and continued enter lines. as projects material steady We initiatives CapEx continue lean our gross efforts see expect to production investments, improvement the our margin and

revenue welcome SWE Electrochem portfolio. Excell $XX the XX, manufacturer months and Electrochem, integration October overlap, niche efficiencies with will high-reliability to markets Ultralife for with integration working revenue to advance playbook. closely business, closed synergistic our a a chemistries lithium President little creating opportunities with like this our business, through products opportunities high-temp, and vertical to cells business we XX attractive Having operating growth. Carroll, to growth. We would similar Together, look scale and manufacturing and over producing and now the this thionyl to leverage to jointly highly of drive product of future approximately acquisition strategy cost we of of positioned model customer I the business and with our and non-rechargeable the sulfuryl Lastly, trailing realize Khristine implement our see high-reliability team experienced her while million for as forward

the in We first concludes today. expect half remarks That for the activities of to main XXXX. Thanks, integration everyone. the complete prepared

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

Operator

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

Joshua Sullivan

far delays, how how if were you headwinds you due segment, within order you're As supply Energy that? bucket versus as Products were about the chain talking the Battery of to the & to the would much frame

Philip A. Fain

that, don't I and almost happen. say. Josh, XX-XX, things day this And would to expect I frame age, in probably would you

stuff and after post-COVID hit going component And all the position we happen, does components that everything out. during be in set customers, their and we're think and in in things all certainly, many part look because and that when or but of say large chain, with it's supply You products chain. the supply willing in in we're bumps that something be after you just supply all interesting the their revenue, it this are our us that our other ironed there also, to ship road a chain But recognize and rectified. and and one of the an I'll go, quarter, but now with may they're ready may We're ready experiencing on customer. the to delay at

that inventory I Or can't this. our why We kind it would the broad-based? say in answer it. range. industry? But of Josh, just day, the of control. things up. And it's try gone that We one to as we try XX-XX happen end are any that has we your again, influence it's to But was was probably question, far to Got control. to related the certain there you control. significantly the delays, can't everything it as that's But at can So then control everything

Michael Manna

push mean, It pretty I had was medical some broad-based. we customers out.

the was business. that soft quarter the of battery on saw little this side You a

reason the inventory them. and material of which we handful On provide to QX have orders a quarter, actually we orders excuse a whole couldn't things have But Helene like you like had we truck FedEx come in a went didn't the mean, of of service, our obviously. then the Communication little we to I'm actually whole in throw to kind then is Helene time to I'm do, just that Systems cent but that change there service business, to in expected up. And another little were going going outlook side the thing, we had -- not ship. but frustrating, out it's on and on it it which a pull couldn't labels that it's not like you was that, your can't we those it that things it's hair a like might the added that had the and of I get to and bunch going

Philip A. Fain

lost orders. And any I to think not have say, it's we important

Michael Manna

them just, we Yes. timing? the We It's don't get door on typically. based can lose their orders and timing out our

Joshua Sullivan

do opportunity, the customers what then share funnel, as can as those And And it. added far the you approval think? far might your there? you products medical are the where timeline, customers be? as mentioned the what thin cell Or you as Got then to

Michael Manna

whole pretty probably sheer couple opportunities we've out, pretty really are come had wearable exciting. a the electronic customers us checking us our at opportunities a area and tied about and in through is Well, loop, that so that, qualified are bunch part an all the to the now work been But opportunity puzzle it's of we're one head that part just beyond that exciting cell because side, they're years labeling, complex on large at qualification couple software is -- functioning trying coming some to and thin back-end different is sure but volumes. coming such shelf them and we've trying for that opportunities and get many And potentially their talking still a actually it's the there's are make tracking. first the a volumes of and system of properly. the make But some in us years up right at RFID of shake medical AI your supporting a And there's boxes. still of sure really

Joshua Sullivan

just opportunity, ELXXXX opportunity an of then you is? on think do And it. direct the how Got that vehicle big

Michael Manna

type of $XX your you've probably at come is couple think you're to we the And of the rugged opportunity which this we've we're piece, for Well, million to us, area that which piece. space, that million commercial of if military then on $XX a -- out different just applications And there's far in it there million. ways. a just commercial in lot million out side, looking $X of as got in as $XX there definitely

million nothing type million to server we will some So, being in $XX with last our control in we're in delays, blades I marketplace. actually that $XX of available say had quarter, to time. us this available

is So, I market the think pretty there. It's strong.

I think I starting is just that validation typically. kind have the to we're tipping DC operating get really really mean, the we're starting. on where power then with and of enabler now on go. AI is it's the where that And vehicles bases power forward it supply point really right DC-only to in they

that So opens for another as that pops whole product a soon up think line. I as channel through, that

Philip A. Fain

cases. we're know only nice it's And to for the supplier authorized that the ELXXXX

Michael Manna

sizes be Yes. And expect offerings opportunity, rounded us we a -- there different to couple to into aperture help as the expand could of different of right? I portfolio the uses, it's that for case going of out have pretty to a only

Joshua Sullivan

it interest? Got it. just capabilities what and And indication early the early Electrochem be? customer Is then any on That's great. driving any might

Michael Manna

only not think battery another that had lot a a kind parent, in of supply didn't the worldwide, of the can a in of some start business, kind that synergies lithium -- we've they but looking displaced the the how excitement do sell side, been I business. of use. plays. packs have We they've and and much to with Well, because cells congratulations business. I but we and efficiency provider orphaned of to of, portfolio bit their internally has have a the going say a are acquisition then of whole living externally. really you product product And its also it. we a you we space, lot and manufacturing ancillary think, They're customer around company primary not going a our quantity chain side internally of them. of definitely bring to opportunity picture of metal our at we pretty lot in I'm devices been they're shift them integration as that and cell they've around in add really add buying really can have to been then to we pretty our for think a all our small purchases pack little And quantity some mean, much good pack And larger we a

integration we're vertical I'm synergy. things we So, I find more excited that to get there's going a lot we'll about, collaborate, a pretty hope. as good And sure

Operator

John comes question Pinnacle. next Deysher of from Our

John Deysher

Just a couple of quick questions.

an shipping order think, you of I in you was? to pushed quarter. that Could in mentioned, how was us that You large order to an fourth out ship expected quarter the that third give idea

Philip A. Fain

Yes.

total For the $X.X that under -- business, Comm Systems million. was was order just the

and look So between That's business it look bit one sometimes it you at a the longer. the we We at that of pieces sizable, XX-month moving I sometimes of of just We realizing items. and that that's there's and at all of into components Mike quarters this lose specific at the why over on over the look and are different basis shuffling always things go the we a way And happen. is was even longer a it term. you things and sometimes quarter. a many look a can product lot gain, and end one because

John Deysher

That's Okay. helpful. Great.

Electrochem other the bidders acquisition, were On there property? that for

Michael Manna

is we've we least bid been told what do the And we There know be there highest, the that it in were done. was heard. us at timeline or wanted that execute And there the not could to a were. versus more but other the was transaction with synergies lot business we've our

John Deysher

Okay.

process, saying? it auction an was So you're

Philip A. Fain

went to targeted... go It didn't auction. to It

Michael Manna

Targeted participants. Yes.

Philip A. Fain

was to it before may it have decided. participants gone Targeted auction if

John Deysher

the auction process? But you never reached

Philip A. Fain

reached the Correct. process. never It auction

John Deysher

for through coming if XXXX, January financial And think, year-to-date even Electrochem, the it's enough. XXXX. And include unaudited? the on will by Fair of I it disclosure, September statements Okay. perhaps audited XX, that of disclosure include will

Philip A. Fain

happen part. is in first you're What's -- correct absolutely the to going

part first financial audited be statements. will The

Integer materiality Now it Holdings of small very, It audited. was component very being never below Corporation, was levels. well a

certainly the out cut what know So, done looking work and get you're it's that all our interesting to regard carve-out stuff. audit I an with have proposition to and your expensive for be as will our But expected happen in $XX in future report, model indicated see, filings. their that with XX, that we -- was, question. EBITDA million, complete $X believe, we Integer's And do on of and the because let's sales October next million. will to That I not they

Integer's of So, until audit And the a on disclosure opening until and us is we've as well. work that We was diligence. this. of because balance audit we, lot is course, part, an done also the enabler key wait with sheet due the wait for a

John Deysher

Okay.

will see results stand-alone for So, for XXXX we Electrochem?

Philip A. Fain

yes. certainly some you at point, Well, will,

John Deysher

Okay.

a carve-out? As

Michael Manna

the announce report. we When

John Deysher

will to helpful as That very 'XX well Okay. be as 'XX. see.

Philip A. Fain

There Yes. forma. pro is

earlier. We results have acquired -- we would Electrochem what let's show like if our to have see, in filings looked we if future

John Deysher

I disclosure, more The the think. better, Okay.

you're sounds right on track. So like it the

Philip A. Fain

be totally We're happy, will We're disclosing of done was very into information. the Absolutely. work and acquisition. Yes. this that transparent. the going we We're proud

Operator

Stefano from comes ], Individual question next our Investor. And Bolas [

Unknown Attendee

and in progresses the acquisition. for Congratulations product the pipeline the

one quarter. reduction the first of the about The end backlog is

post-COVID is orders, reduction due timing to than normalization you this rather said? the mostly of a So, expected

Michael Manna

last bump. historically investor over the backlog. much at to presentation, $XX -- then million million going we've We year due in COVID. before mean, Yes. with if have COVID think the in back And been series couple per to of of I that look And our range backlogs our higher we back kind a of years, been it's you $XX -- even

have that filling of year they other piece year. going The deplete end the I the QX as throughout off what we will towards to in POs in the yearly QX slight from start some, volume the do say, is

do additional expect in we particular next So, year's to POs from see those customers. for volume some QX

Philip A. Fain

as that say on investor single it's our reported a this, day. Page in XX And of the just I'll information presentation, we've

to just later example, $XX it after So, week million. from $XX into went million an as a up a QX, week

at you're because what of looking it on more depends POs. it of a So flow continual

Unknown Attendee

Okay. a I one have Electrochem on second acquisition.

call, characteristics now about but have one? you you So, made given thing the this say already the the is one the that some company in is what

Michael Manna

the piece call, looking a of identified Thionyl XX the last temperature we will we've the gaps it's years, smaller key cell, Thionyl with heavily portfolio chemistry. at our pretty -- us, for in And lower in, the and we've Well, what metering of the to been target Chloride applications one past invested CCs, high-reliability And cells some development to looked we as of the like years over X and for type of cycle X- the the X a cells years DDs, really adoption and RFID XX-year for the to at temp, large products. telemetry high I the marketplace.

it, So versus became make XX-year buy. a And make a for it really be us to enterprise. it'd

XXXX, they're at the I we could in business back the that So it. dating really who it product was the mean, they're has buy to premier you look in top the world this dog. Electrochem And chemistry.

what So, that's wanted. we

Operator

no this Manna like at showing I'm time. Instructions] back to [Operator to questions for closing Mike I'd further remarks. it turn

Michael Manna

QX it. We attending to you The earlier may listening look forward you you event. for today's see XXXX everyone, those you be to We'll Thank That's then. December for in conference call. Thanks, call the that and Benchmark of for... during

Operator

you participating, and This for today's now call. conference you concludes may disconnect. Thank

Ultralife (ULBI) 8 Nov 242024 Q3 Earnings call transcript