On July 25, 2024, Ultralife Corp (ULBI, Financial) released its 8-K filing reporting its second-quarter earnings for the period ending June 30, 2024. Ultralife Corp provides products and services ranging from power solutions to communications and electronics systems to customers across the globe in the government and defense, medical, safety and security, energy, and industrial sectors. The company designs, manufactures, installs, and maintains power and communications systems including rechargeable and non-rechargeable batteries, charging systems, communications and electronics systems and accessories, and custom-engineered systems. The company's segments include Battery and Energy Products, and Communications Systems. It generates maximum revenue from the Battery and Energy Products segment, and from the U.S.
Performance Overview
Ultralife Corp (ULBI, Financial) reported revenue of $43.0 million for Q2 2024, surpassing the analyst estimate of $42.00 million. This represents a slight increase from the $42.7 million reported in the same quarter last year. The Battery & Energy Products segment saw an 8.3% increase in sales to $36.7 million, driven by a 30.5% rise in government/defense sales and a 20.1% increase in medical battery sales. However, this was partially offset by a 10.9% decline in oil & gas market sales. Conversely, the Communications Systems segment experienced a 28.7% decrease in sales to $6.3 million, primarily due to the fulfillment of delayed orders from the previous year.
Financial Achievements and Challenges
Gross profit for the quarter was $11.6 million, or 26.9% of revenue, compared to $10.6 million, or 24.8% of revenue, in the same period last year. The Battery & Energy Products segment's gross margin improved by 480 basis points to 27.1%, attributed to higher cost absorption and production efficiencies. However, the Communications Systems segment saw a decline in gross margin to 25.6% from 34.5% last year, mainly due to product mix.
Operating expenses increased to $7.6 million from $6.9 million in the prior year, reflecting investments in new product development and additional sales resources. Despite this, operating income rose to $3.9 million from $3.7 million, with an operating margin of 9.1% compared to 8.6% last year.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Revenue | $43.0 million | $42.7 million |
| Gross Profit | $11.6 million | $10.6 million |
| Operating Income | $3.9 million | $3.7 million |
| Net Income | $3.0 million | $3.3 million |
| EPS (Diluted) | $0.18 | $0.21 |
Balance Sheet and Cash Flow
Ultralife Corp (ULBI, Financial) reported total assets of $169.8 million as of June 30, 2024, down from $178.3 million at the end of 2023. The company significantly reduced its long-term debt by over 50%, bringing it down to $10.0 million from $23.6 million. This debt reduction was facilitated by strong cash flow generation, which also contributed to a decrease in cash reserves to $6.7 million from $10.3 million at the end of 2023.
Commentary and Future Outlook
“Ultralife’s second quarter results testify to the continued high demand for our products particularly from our government/defense and medical battery customers, the success of our initiatives to improve Battery & Energy Products’ gross margin, and our solid cash flow generation which we used to reduce our debt by over 50%,” said Mike Manna, President and Chief Executive Officer.
Looking ahead, Ultralife Corp (ULBI, Financial) aims to drive gross margin increases through material cost deflation, lean productivity, scrap reduction, and price realization. The company is optimistic about sustaining profitable growth and generating incremental cash flow for debt reduction and strategic investments.
For more detailed information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Ultralife Corp for further details.
