Ultralife Corporation (NASDAQ: ULBI) reported operating income of $1.0 million on revenue of $26.0 million for the first quarter ended March 31, 2021 compared to operating income of $1.5 million on revenue of $25.8 million for the first quarter of 2020.
“Ultralife increased year-over-year revenue for the first quarter on the strength of Battery & Energy Products as medical sales were up 32% and government/defense sales were up 30%. Similar to the trends experienced since the onset of the pandemic, these gains were for the most part offset by continued sluggishness in the oil & gas market, as well as lower Communications Systems sales. Profitability for the quarter reflected our continuing start-up costs to transition several new products to high volume manufacturing and investments in engineering and sales resources for new product development and market launches to support organic growth initiatives. As we continue to work on completing new products and identify new targets in emerging markets, we are steadily expanding our long-term opportunities to scale the business and realize the operating leverage inherent in our profitable business model,” said Michael D. Popielec, President and Chief Executive Officer.
First Quarter 2021 Financial Results
Revenue was $26.0 million, an increase of $0.2 million, or 0.6%, compared to $25.8 million for the first quarter of 2020, as a 19.4% increase in core battery sales across diversified end markets was partially offset by lower oil & gas market and Communications Systems sales. Battery & Energy Products revenues increased 6.5% to $22.1 million, compared to $20.8 million last year, as a 32.2% increase in medical device battery sales and a 30.3% increase in government/defense sales, were partially offset by a 30.0% decline in oil & gas market sales. Communications Systems sales decreased 23.6% to $3.9 million compared to $5.1 million for the same period last year, primarily reflecting 2020 shipments of vehicle amplifier-adaptor systems to support the U.S. Army’s Network Modernization initiatives under the delivery orders announced in October 2018. These orders were completed in the second quarter of 2020. The net adverse impact of COVID-19 on revenues for the 2021 first quarter was approximately $2.0 million as an increase in demand for medical batteries was more than offset primarily by weakened demand in the oil & gas and international industrial markets and some delays with government/defense orders.
Gross profit was $7.0 million, or 26.9% of revenue, compared to $7.3 million, or 28.4% of revenue, for the same quarter a year ago. Battery & Energy Products’ gross margin was 24.6%, compared to 25.6% last year, primarily reflecting incremental costs in 2021 associated with the transition of a multitude of new products to higher volume production as well as higher freight costs on incoming materials. Communications Systems gross margin was 39.9%, the same as last year.
Operating expenses were $6.0 million compared to $5.8 million last year, an increase of 3.0%, primarily relating to our continued investment in engineering and sales resources for new product development and market launches. Operating expenses were 23.2% of revenue compared to 22.7% of revenue for the year-earlier period.
Operating income was $1.0 million compared to $1.5 million last year, and operating margin was 3.7% compared to 5.7% last year. The net adverse impact of COVID-19 on operating income for the 2021 first quarter was approximately $0.9 million.
Net income was $0.7 million or $0.04 per diluted share using the U.S. statutory tax rate, compared to net income of $1.1 million, or $0.07 per diluted share for the first quarter of 2020. Adjusted EPS was $0.05 on a diluted basis for the first quarter of 2021, compared to $0.08 for the 2020 period. Adjusted EPS excludes the provision for deferred income taxes of $0.2 million which primarily represents non-cash charges for U.S. taxes which we expect will be fully offset by net operating loss carryforwards and other tax credits for the foreseeable future. The net adverse impact of COVID-19 on Adjusted EPS for the 2021 first quarter was approximately $0.06.
Adjusted EBITDA, defined as EBITDA including non-cash, stock-based compensation expense, for the first quarter of 2021 was $2.0 million or 7.8% of sales, compared to $2.5 million or 9.8% for the year earlier period. For the trailing twelve-month period, Adjusted EBITDA was $9.2 million or 8.5% of revenues.
During the first quarter of 2021, our cash-on-hand increased by 28% to $13.7 million and our debt was reduced by 27% to $1.1 million (gross of unamortized debt issuance costs).
See the “Non-GAAP Financial Measures” section of this release for a reconciliation of Adjusted EPS to EPS and Adjusted EBITDA to Net Income Attributable to Ultralife Corporation.
About Ultralife Corporation
Ultralife Corporation serves its markets with products and services ranging from power solutions to communications and electronics systems. Through its engineering and collaborative approach to problem solving, Ultralife serves government, defense and commercial customers across the globe.
Headquartered in Newark, New York, the Company’s business segments include Battery & Energy Products and Communications Systems. Ultralife has operations in North America, Europe and Asia. For more information, visit www.ultralifecorporation.com.
Conference Call Information
Ultralife will hold its first quarter earnings conference call today at 8:30 AM ET. To participate in the live call, please dial (800) 915-4836 at least ten minutes before the scheduled start time, identify yourself and ask for the Ultralife call. A live webcast of the conference call will be available to investors in the Events & Presentations section of the Company’s website at http://investor.ultralifecorporation.com. For those who cannot listen to the live broadcast, a replay of the webcast will be available shortly after the call at the same location.
This press release may contain forward-looking statements based on current expectations that involve a number of risks and uncertainties. The potential risks and uncertainties that could cause actual results to differ materially include the impact of COVID-19, potential reductions in revenues from key customers, acceptance of our new products on a global basis and uncertain global economic conditions. The Company cautions investors not to place undue reliance on forward-looking statements, which reflect the Company’s analysis only as of today’s date. The Company undertakes no obligation to publicly update forward-looking statements to reflect subsequent events or circumstances. Further information on these factors and other factors that could affect Ultralife’s financial results is included in Ultralife’s Securities and Exchange Commission (SEC) filings, including the latest Annual Report on Form 10-K.
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