Release Date: April 01, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ultralife Corp (ULBI, Financial) reported Q4 sales of $43.9 million, with an operating income of $1.5 million, despite incurring one-time costs related to the Electrochem acquisition.
- The acquisition of Electrochem Solutions is expected to provide vertical integration capabilities, expand market opportunities, and create cost synergies.
- The company has successfully negotiated long-term supply agreements, enhancing supply chain efficiency and cost leverage.
- Ultralife Corp (ULBI) has a strong backlog of $102.2 million, representing 62% of trailing twelve-month sales, indicating a healthy demand pipeline.
- The company is advancing new product developments, including a next-generation high-performance amplifier and a conformal wearable battery, which are expected to drive future growth.
Negative Points
- Revenues from the Communications Systems segment declined by 55.1% year-over-year, primarily due to delayed shipments and timing of orders.
- The company reported a decrease in consolidated gross margin to 24.2%, down from 25.6% in the previous year, due to lower medical battery sales and factory cost absorption.
- Operating expenses increased by 17.7% year-over-year, partly due to one-time acquisition costs and the inclusion of Electrochem.
- Ultralife Corp (ULBI) identified a material weakness in its internal control process, necessitating the hiring of additional qualified accounting personnel.
- The company is facing delays in fully integrating the Electrochem acquisition, impacting control over business operations and financial reporting.
Q & A Highlights
Q: Where is Ultralife ahead of schedule with the Electrochem acquisition, and what are the major hurdles?
A: Michael Manna, President and CEO, stated that Ultralife is ahead in utilizing Electrochem's cells in their oil and gas business, which will positively impact the bottom line. The major hurdle is gaining full control over the business from its previous parent, which has caused delays, including the timing of this earnings call.
Q: Regarding industrial sales timing, what part is a push-out versus macroeconomic factors?
A: Philip Fain, CFO, clarified that the delay is entirely a push-out, with no macroeconomic trends affecting their markets. Michael Manna added that some customers overbought earlier in the year and are managing year-end inventories, pushing orders into 2025.
Q: What is the outlook for the thin cell medical opportunity in terms of production and ramp-up?
A: Michael Manna explained that they expect about $1 million in sales from this customer in 2025, with a significant growth trajectory in following years. The ramp-up depends on hospital adoption and capital expenditure trends.
Q: How is the integration of Electrochem progressing, and what are the expected timelines?
A: Michael Manna noted that the integration is ongoing, with the main focus on transitioning Electrochem's ERP system, expected to complete by the end of Q2 2025. This will allow for better control and efficiency.
Q: Are there any economic trends affecting Ultralife's markets?
A: Philip Fain stated that they do not see any negative economic trends impacting their markets, indicating confidence in their market positioning.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
