Financial Report Analysis for ULTRALIFE CORP (ULBI)

1. Executive Summary

• Current Financial Position: ULTRALIFE CORP demonstrates a stable financial position with positive revenue and net income.
• Key Findings:
  • Revenue growth is minimal at 3.7% YoY ($164.456M in 2024 vs $158.644M in 2023)
  • Net profit margin is 3.8% ($6.312M net income on $164.456M revenue)
  • Strong liquidity position with a current ratio of 3.32
• Overall Trend: Mixed, with stable revenue but declining net income and significant balance sheet changes

2. Profitability Analysis

• Revenue and Profit Trends:
  • Revenue increased by 3.7% to $164.456M in 2024 from $158.644M in 2023
  • Net income decreased by 12.3% to $6.312M in 2024 from $7.197M in 2023 (using comprehensive income data)
  • EBITDA remained relatively stable at $9.965M (6.1% of revenue)
• Profit Margins:
  • Gross margin is 25.7% ($42.314M gross profit on $164.456M revenue)
  • Net profit margin is 3.8%
  • EBITDA margin is 6.1%
• Operating Efficiency:
  • Operating expenses increased to $32.349M (19.7% of revenue)
  • Research and development expenses are $8.268M (5% of revenue)
  • Selling, general, and administrative expenses are $24.081M (14.6% of revenue)

3. Balance Sheet Strength

• Assets, Liabilities, and Equity:
  • Total assets increased by 23.7% to $220.451M
  • Total liabilities increased by 63.3% to $86.264M
  • Stockholders' equity increased by 6.9% to $134.187M
• Liquidity Metrics:
  • Current ratio is 3.32, indicating strong liquidity
  • Quick ratio is 1.56, showing good ability to meet short-term obligations
• Solvency:
  • Debt-to-equity ratio is 0.64, indicating moderate leverage
  • Long-term debt increased significantly to $51.502M

4. Cash Flow Assessment

• Cash Flow Components:
  • Operating cash flow is $16.636M, representing 10.1% of revenue
  • Investing cash flows used $49.954M, primarily for acquisitions
  • Financing cash flows provided $29.86M, mainly from lines of credit
• Cash Generation:
  • Free cash flow is $14.704M (8.9% of revenue)
  • Free cash flow to net income ratio is 2.33, indicating strong cash conversion
• Cash Flow Concerns:
  • Significant cash outflow for acquisitions ($48.022M)

5. Growth and Investment

• Capital Expenditures and R&D:
  • Capital expenditures are $1.932M
  • R&D expenses are $8.268M (5% of revenue)
• Growth Trajectory:
  • Revenue growth is minimal at 3.7% YoY
  • Net income growth is negative at -12.3% YoY
• Future Growth Catalysts:
  • Continued investment in R&D
  • Potential synergies from acquisitions

6. Risk Factors

• Financial Risks:
  • Increasing debt levels (long-term debt up 118% to $51.502M)
  • Significant cash outflow for acquisitions
  • Declining net income
• Red Flags:
  • Negative profit growth trend
  • Increasing financial leverage
• Financial Resilience:
  • Strong liquidity position provides some cushion

7. Valuation Context

• Valuation Metrics:
  • P/E ratio is not directly available but can be calculated using the given stock price ($4.6) and EPS ($0.38 diluted)
  • Implied P/E is approximately 12.1x
  • P/S ratio can be calculated as approximately 0.46x ($4.6 stock price * 16.757M diluted shares / $164.456M revenue)
• Historical Comparison:
  • Without historical P/E data, direct comparison is challenging
  • Revenue growth has been minimal
• Valuation Insight:
  • The stock appears to be trading at a reasonable multiple relative to earnings
  • Low revenue growth may impact future valuation

8. Key Considerations

• Strengths:
  • Strong liquidity position
  • Positive free cash flow generation
  • Continued investment in R&D
• Challenges:
  • Declining net income
  • Increasing debt levels
  • Minimal revenue growth
• Important Trends:
  • Significant increase in long-term debt
  • Cash outflow for acquisitions
  • Stable operating cash flow generation despite declining net income