Ultralife Corporation

Good day and welcome to this Ultralife Corporation's third quarter 2021 earnings release conference call. At this time, for opening remarks and introductions, I'd like to turn the call over to Ms. Jodi Berthning. Please go ahead.

Thank you, Catherine, and good morning, everyone. Thank you for joining us this morning for Ultralife Corporation's earnings conference call for the third quarter of fiscal 2021. On today's call are Mike Popolek, Ultralife's President and Chief Executive Officer, and Phil Fain, Ultralife's Chief Financial Officer. The earnings press release was issued earlier this morning. If anyone has not yet received a copy, I invite you to visit the company's website, www.ultralifecore.com, where you'll find the real investor news in the investor relations section. Before turning the call over to management, I would like to remind everyone that some statements made during this conference call contain forward-looking statements based on current expectations. Actual results could differ materially from those projected as a result of various risks and uncertainties. The potential risks and uncertainties that could cause actual results to differ materially include the impact of COVID-19, potential reductions in revenue from key customers, acceptance of new products on a global basis, and uncertain global economic conditions. The company cautions investors not to place undue reliance on forward-looking statements, which reflect the company's analysis only as of today's date. The company undertakes no obligation to publicly update forward-looking statements to reflect subsequent events or further information on these factors and other factors that affect ultrafinancial results is included in Ultralife's filings with the Securities and Exchange Commission, including the latest annual report on Form 10-K. In addition, on today's call, management will refer to certain non-GAAP financial measures that management considers to be useful metrics that differ from GAAP. These non-GAAP measures should be considered as supplemental to corresponding GAAP figures. With that, I would now like to turn the call over to Mike. Good morning, Mike.

Good morning, Jody, and thank you, everyone, for joining the call. Today I'll start by making some brief overall comments about our Q3 2021 operating performance, after which I'll turn the call over to Phil, who will take you through the detailed financial results. When Phil is finished, I'll provide an update on the progress against our 2021 revenue initiatives, then open it up for questions. For the third quarter of 2021, COVID supply chain challenges negatively impact our customers as well as our own product manufacturing schedules affecting quarterly shipments, revenue, and earnings. We estimate the COVID supply chain issues for the third quarter of 2021 to have had an adverse impact on revenue of approximately $4.1 million, on operating profit of $1.3 million, and EPS of $0.06. As such, total company revenue was down 11%, or $2.6 million year-over-year, which drove a slight operating loss and negative earnings per share. Revenues in our core end markets of government, defense, and medical were both down year-over-year. However, we did continue to see improvement in our oil and gas and China revenues of 90% and 86%, respectively, year-over-year, which drove our total company commercial revenues up 5%. Coincident with the COVID supply chain related revenue impact, customer demand remained high, and our ending Q3 total company firm order backlog increased by 22%, or $7.7 million, over the end of Q2, and not including the $4.2 million leader radio add-on contract received and announced just a few days ago. To address these supply chain challenges, we have leveraged our established relationships with our suppliers and customers, working side by side to acquire and qualify required materials, managing freight and logistical costs as best as possible, transparently adjusting delivery expectations, tightening overhead spending, and in many cases, raising prices. Though difficult, we do not view the current COVID supply chain challenges as permanent. And while closely monitoring cost and worldwide supply chain developments, given our solid liquidity position, we presently continue to aggressively pursue completion of our transformational projects and to support new contracts in order to realize the expected new revenue growth streams they will bring despite the near-term pressure on profitability and year-over-year comparisons. In a few minutes, I'll give you a further update on our revenue initiatives. But first, I'd like to ask Ultralife CFO, Phil Thain, to take you through additional details of the Q3 2021 financial performance.