ulbi20220930

ulbi20220930_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission file number: 0-20852

ULTRALIFE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation of organization)

2000 Technology Parkway Newark, New York 14513

(Address of principal executive offices) (Zip Code)

16-1387013

(I.R.S. Employer Identification No.)

(315) 332-7100

(Registrant’s telephone number, including area code:)

None

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Common Stock, $0.10 par value per share	ULBI	NASDAQ
(Title of each class)	(Trading Symbol)	(Name of each exchange on which registered)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☒
Non-accelerated filer ☐	Smaller reporting company ☒

	Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes☐ No☒

As of October 24, 2022, the registrant had 16,133,618 shares of common stock outstanding.

ULTRALIFE CORPORATION AND SUBSIDIARIES

INDEX

		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements (unaudited):

	Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021	1

	Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income for the Three and Nine-Month Periods Ended September 30, 2022 and September 30, 2021	2

	Consolidated Statements of Cash Flows for the Nine-Month Periods Ended September 30, 2022 and September 30, 2021	3

	Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine-Month Periods Ended September 30, 2022 and September 30, 2021	4

	Notes to Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 4.	Controls and Procedures	29

PART II.	OTHER INFORMATION

Item 1A.	Risk Factors	30

Item 6.	Exhibits	30

	Signatures	31

PART I. FINANCIAL INFORMATION

Item 1. CONSOLIDATED FINANCIAL STATEMENTS

ULTRALIFE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands except share amounts)

(Unaudited)

	September 30, 2022			December 31, 2021
ASSETS
Current assets:
Cash	$	5,051		$	8,413
Trade accounts receivable, net of allowance for doubtful accounts of $305 and $346, respectively		26,876			20,232
Inventories, net		40,769			33,189
Prepaid expenses and other current assets		6,241			4,690
Total current assets		78,937			66,524
Property, plant and equipment, net		21,898			23,205
Goodwill		37,066			38,068
Other intangible assets, net		16,095			17,390
Deferred income taxes, net		11,963			11,472
Other noncurrent assets		1,981			2,879
Total assets	$	167,940		$	159,538

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	15,827		$	9,823
Current portion of long-term debt		2,000			2,000
Accrued compensation and related benefits		2,000			1,842
Accrued expenses and other current liabilities		8,254			5,259
Total current liabilities		28,081			18,924
Long-term debt, net		20,874			18,857
Deferred income taxes		1,996			2,254
Other noncurrent liabilities		1,673			1,760
Total liabilities		52,624			41,795

Commitments and contingencies (Note 9)

Stockholders’ equity:
Preferred stock – par value $.10 per share; authorized 1,000,000 shares; none issued		-			-
Common stock – par value $.10 per share; authorized 40,000,000 shares; issued – 20,568,210 shares at September 30, 2022 and 20,522,427 shares at December 31, 2021; outstanding – 16,133,618 shares at September 30, 2022 and 16,089,832 shares at December 31, 2021		2,057			2,052
Capital in excess of par value		187,181			186,518
Accumulated deficit		(47,727	)		(47,832	)
Accumulated other comprehensive loss		(4,842	)		(1,653	)
Treasury stock - at cost; 4,434,592 shares at September 30, 2022 and 4,432,595 shares at December 31, 2021		(21,480	)		(21,469	)
Total Ultralife Corporation equity		115,189			117,616
Non-controlling interest		127			127
Total stockholders’ equity		115,316			117,743

Total liabilities and stockholders’ equity	$	167,940		$	159,538

The accompanying notes are an integral part of these consolidated financial statements.

ULTRALIFE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME
(In thousands except per share amounts)
(Unaudited)

	Three-month period ended						Nine-month period ended
	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021

Revenues	$	33,234		$	21,761		$	95,733		$	74,504
Cost of products sold		26,519			16,653			74,414			55,151
Gross profit		6,715			5,108			21,319			19,353

Operating expenses:
Research and development		1,896			1,723			5,425			5,223
Selling, general and administrative		5,405			4,164			15,982			12,866
Total operating expenses		7,301			5,887			21,407			18,089

Operating (loss) income		(586	)		(779	)		(88	)		1,264

Other (income) expense:
Interest and financing expense		272			53			583			164
Miscellaneous		(526	)		(54	)		(605	)		(88	)
Total other (income) expense		(254	)		(1	)		(22	)		76

(Loss) income before income taxes		(332	)		(778	)		(66	)		1,188
Income tax (benefit) provision		(90	)		(175	)		(171	)		290

Net (loss) income		(242	)		(603	)		105			898

Net (loss) income attributable to non-controlling interest		(3	)		(18	)		-			1

Net (loss) income attributable to Ultralife Corporation		(239	)		(585	)		105			897

Other comprehensive loss:
Foreign currency translation adjustments		(1,691	)		(233	)		(3,189	)		(37	)

Comprehensive (loss) income attributable to Ultralife Corporation	$	(1,930	)	$	(818	)	$	(3,084	)	$	860

Net (loss) income per share attributable to Ultralife common stockholders – basic	$	(.01	)	$	(.04	)	$	.01		$	.06

Net (loss) income per share attributable to Ultralife common stockholders – diluted	$	(.01	)	$	(.04	)	$	.01		$	.06

Weighted average shares outstanding – basic		16,133			16,065			16,122			16,020
Potential common shares		-			-			22			180
Weighted average shares outstanding - diluted		16,133			16,065			16,144			16,200

The accompanying notes are an integral part of these consolidated financial statements.

ULTRALIFE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

(Unaudited)

	Nine-month period ended
	September 30, 2022			September 30, 2021
OPERATING ACTIVITIES:
Net income	$	105		$	898
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation		2,450			2,160
Amortization of intangible assets		969			458
Amortization of financing fees		25			78
Stock-based compensation		552			512
Deferred income taxes		(683	)		127
Changes in operating assets and liabilities:
Accounts receivable		(7,433	)		4,814
Inventories		(8,714	)		17
Prepaid expenses and other assets		(1,004	)		775
Accounts payable and other liabilities		9,906			(1,377	)
Net cash (used in) provided by operating activities		(3,827	)		8,462

INVESTING ACTIVITIES:
Purchases of property, plant and equipment		(1,396	)		(2,324	)
Net cash used in investing activities		(1,396	)		(2,324	)

FINANCING ACTIVITIES:
Borrowings on revolving credit facility		3,350			-
Payments on term loan facility		(1,333	)		(1,186	)
Proceeds from exercise of stock options		116			398
Payment of debt issuance costs		(25	)		-
Tax withholdings on stock-based awards		(11	)		(148	)
Net cash provided by (used in) financing activities		2,097			(936	)

Effect of exchange rate changes on cash		(236	)		(2	)

(DECREASE) INCREASE IN CASH		(3,362	)		5,200

Cash, Beginning of period		8,413			10,653
Cash, End of period	$	5,051		$	15,853

The accompanying notes are an integral part of these consolidated financial statements.

ULTRALIFE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands except share amounts)

(Unaudited)

Capital

Accumulated

Common Stock

in Excess

Other

Non-

Number of

of Par

Comprehensive

Accumulated

Treasury

Controlling

Shares

Amount

Value

Income (Loss)

Deficit

Stock

Interest

Total

SEC Form 10-Q filed by Ultralife Corporation