Ultralife (ULBI) Q2 2024 earnings summary

Executive summary

• Q2 2024 sales reached $43 million, with record Battery & Energy Products sales up 8.3% and Communications Systems down 28.7%.

• Gross margin improved to 26.9% from 24.8% year-over-year, driven by higher factory volume and price realization.

• Net income was $3 million ($0.18 per diluted share), down from $3.3 million ($0.21) in Q2 2023, which included a $1.5M Employee Retention Credit.

• Debt was reduced by over 52% in Q2, enhancing financial flexibility and lowering interest expense.

• Company was added to the Russell 2000 Index, increasing its investment profile.

Financial highlights

• Consolidated revenues were $43 million, up from $42.7 million in Q2 2023.

• Battery & Energy Products segment revenues rose to $36.7 million (+8.3% YoY), while Communications Systems fell to $6.3 million (-28.7% YoY).

• Gross profit increased to $11.6 million (26.9% margin), up from $10.6 million (24.8%) year-over-year.

• Adjusted EPS was $0.22, down from $0.29 in Q2 2023 (which included $0.10 from the ERC); adjusted EBITDA was $5.4 million (12.6% of sales).

• Operating income increased to $3.9 million (9.1% margin) from $3.7 million (8.6%) year-over-year.

Outlook and guidance

• Backlog at quarter-end was $93 million, representing 55% of trailing twelve-month sales, with a high replenishment rate.

• Management expects continued gross margin improvement, strategic debt paydown, and investments in growth and potential acquisitions.

• No significant decreases anticipated in defense programs for 2025; oil and gas sales expected to rebound in the second half.