ulbi20220630

ulbi20220630_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 June 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 July 25, 2022, the registrant had 16,132,868 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 June 30, 2022 and December 31, 2021	1

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

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

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

	Notes to Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 4.	Controls and Procedures	28

PART II.	OTHER INFORMATION

Item 6.	Exhibits	29

	Signatures	30

PART I. FINANCIAL INFORMATION

Item 1. CONSOLIDATED FINANCIAL STATEMENTS

ULTRALIFE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands except share amounts)

(Unaudited)

	June 30, 2022			December 31, 2021
ASSETS
Current assets:
Cash	$	5,114		$	8,413
Trade accounts receivable, net of allowance for doubtful accounts of $316 and $346, respectively		22,349			20,232
Inventories, net		39,201			33,189
Prepaid expenses and other current assets		5,161			4,690
Total current assets		71,825			66,524
Property, plant and equipment, net		22,338			23,205
Goodwill		37,502			38,068
Other intangible assets, net		16,566			17,390
Deferred income taxes, net		11,731			11,472
Other noncurrent assets		2,261			2,879
Total assets	$	162,223		$	159,538

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	13,441		$	9,823
Current portion of long-term debt		2,000			2,000
Accrued compensation and related benefits		1,924			1,842
Accrued expenses and other current liabilities		4,811			5,259
Total current liabilities		22,176			18,924
Long-term debt		19,566			18,857
Deferred income taxes		2,086			2,254
Other noncurrent liabilities		1,328			1,760
Total liabilities		45,156			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 – 20,567,460 shares at June 30, 2022 and 20,522,427 shares at December 31, 2021; outstanding – 16,132,868 shares at June 30, 2022 and 16,089,832 shares at December 31, 2021		2,057			2,052
Capital in excess of par value		186,999			186,518
Accumulated deficit		(47,488	)		(47,832	)
Accumulated other comprehensive loss		(3,151	)		(1,653	)
Treasury stock - at cost; 4,434,592 shares at June 30, 2022 and 4,432,595 shares at December 31, 2021		(21,480	)		(21,469	)
Total Ultralife Corporation equity		116,937			117,616
Non-controlling interest		130			127
Total stockholders’ equity		117,067			117,743

Total liabilities and stockholders’ equity	$	162,223		$	159,538

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

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

	Three-month period ended						Six-month period ended
	June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021

Revenues	$	32,126		$	26,770		$	62,499		$	52,743
Cost of products sold		24,480			19,503			47,895			38,498
Gross profit		7,646			7,267			14,604			14,245

Operating expenses:
Research and development		1,672			1,853			3,529			3,500
Selling, general and administrative		5,181			4,323			10,577			8,702
Total operating expenses		6,853			6,176			14,106			12,202

Operating income		793			1,091			498			2,043

Other expense (income):
Interest and financing expense		177			55			311			111
Miscellaneous		(62	)		(34	)		(79	)		(34	)
Total other expense		115			21			232			77

Income before income tax provision		678			1,070			266			1,966
Income tax provision (benefit)		170			248			(81	)		465

Net income		508			822			347			1,501

Net (loss) income attributable to non-controlling interest		(4	)		11			3			19

Net income attributable to Ultralife Corporation		512			811			344			1,482

Other comprehensive (loss) income:
Foreign currency translation adjustments		(1,262	)		93			(1,498	)		196

Comprehensive (loss) income attributable to Ultralife Corporation	$	(750	)	$	904		$	(1,154	)	$	1,678

Net income per share attributable to Ultralife common stockholders – basic	$	.03		$	.05		$	. 02		$	.09

Net income per share attributable to Ultralife common stockholders – diluted	$	.03		$	.05		$	. 02		$	.09

Weighted average shares outstanding – basic		16,129			16,019			16,116			15,997
Potential common shares		20			241			25			197
Weighted average shares outstanding - diluted		16,149			16,260			16,141			16,194

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)

	Six-month period ended
	June 30, 2022			June 30, 2021
OPERATING ACTIVITIES:
Net income	$	347		$	1,501
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation		1,635			1,460
Amortization of intangible assets		651			310
Amortization of financing fees		17			52
Stock-based compensation		373			370
Deferred income taxes		(375	)		345
Changes in operating assets and liabilities:
Accounts receivable		(2,385	)		2,390
Inventories		(6,606	)		864
Prepaid expenses and other assets		104			2,536
Accounts payable and other liabilities		2,839			(2,873	)
Net cash (used in) provided by operating activities		(3,400	)		6,955

INVESTING ACTIVITIES:
Purchases of property, plant and equipment		(585	)		(1,225	)
Net cash used in investing activities		(585	)		(1,225	)

FINANCING ACTIVITIES:
Borrowings on revolving credit facility		1,550			-
Payments on term loan facility		(833	)		(789	)
Proceeds from exercise of stock options		113			314
Payment of debt issuance costs		(25	)		-
Tax withholdings on stock-based awards		(11	)		(67	)
Net cash provided by (used in) financing activities		794			(542	)

Effect of exchange rate changes on cash		(108	)		(13	)

(DECREASE) INCREASE IN CASH		(3,299	)		5,175

Cash, Beginning of period		8,413			10,653
Cash, End of period	$	5,114		$	15,828

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

Balance – December 31, 2020		20,373,519	$	2,037	$	185,464		$	(1,782	)	$	(47,598	)	$	(21,321	)	$	123	$	116,923
Net income												1,482						19		1,501
Stock option exercises		88,656		9		305									(52	)				262
Stock-based compensation – stock options						337														337
Stock-based compensation – restricted stock						33														33
Vesting of restricted stock		12,501		1		(1	)								(15	)				(15	)
Foreign currency translation adjustments									196											196
Balance – June 30, 2021		20,474,676	$	2,047	$	186,138		$	(1,586	)	$	(46,116	)	$	(21,388	)	$	142	$	119,237

Balance – December 31, 2021		20,522,427	$	2,052	$	186,518		$	(1,653	)	$	(47,832	)	$	(21,469	)	$	127	$	117,743
Net income												344						3		347
Stock option exercises		38,369		4		109									(7	)				106
Stock-based compensation – stock options						362														362
Stock-based compensation – restricted stock						11														11
Vesting of restricted stock		6,664		1		(1	)								(4	)				(4	)
Foreign currency translation adjustments