Ultralife (ULBI) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue was $35.7M, down 9.6% year-over-year, with Battery & Energy Products up 1.9% and Communications Systems down 58.2%.

• Net income was $0.3M ($0.02/share), down from $1.3M ($0.08/share) in Q3 2023; nine-month net income rose to $6.1M from $4.3M year-over-year.

• Gross margin for Q3 2024 was 24.3%, down 50 bps from Q3 2023, mainly due to lower factory volume and less favorable product mix in Communications Systems.

• Adjusted EBITDA for Q3 2024 was $1.9M (5.4% of sales), down from $3.5M (8.8%).

• Completed the $50M acquisition of Electrochem Solutions on October 31, 2024, funded by a new $55M term loan.

Financial highlights

• Q3 2024 revenue: $35.7M (down from $39.5M in Q3 2023); nine-month revenue: $120.6M (up 5.7%).

• Q3 2024 net income: $0.3M ($0.02/share); nine-month net income: $6.1M.

• Q3 2024 gross profit: $8.7M (24.3% margin); nine-month gross profit: $31.7M (26.3% margin).

• Q3 2024 operating income: $0.5M (1.4% margin), down from $2.1M; nine-month operating income: $8.5M.

• Debt reduced by $4.1M (33.4%) in Q3 to $8.0M, and by $17.2M (68.2%) over the last two quarters.

Outlook and guidance

• Backlog at quarter-end was $78M, increasing to $83M a week into Q4, reflecting normalization post-COVID.

• Management focuses on gross margin improvement, lean initiatives, and material cost savings for future quarters.

• Integration of Electrochem expected to complete in H1 2025, with anticipated synergies and growth opportunities.

• Order timing and supply chain delays are expected to push some revenue into Q4 2024 and H1 2025.