News Column

Ultralife Corporation Reports Second Quarter Results

July 31, 2014

NEWARK, N.Y., July 31, 2014 (GLOBE NEWSWIRE) -- Ultralife Corporation (Nasdaq:ULBI) reported an operating loss from continuing operations of $1.3 million on revenue of $15.2 million for the quarter ended June 29, 2014. For the second quarter of 2013, the company reported an operating loss from continuing operations of $1.9 million on revenue of $17.3 million.

"The ongoing retrenchment of government and defense spending worldwide weighed on the second quarter performance of both Battery & Energy Products and Communications Systems. Nevertheless, we are encouraged by the progress we are making in diversifying our revenue sources and by the returns we are beginning to realize on our investments in new product development," said Michael D. Popielec, Ultralife's president and chief executive officer. "On the strength of a 19% increase in commercial sales for Battery & Energy Products, the mix of total company commercial revenue grew to 57% from 42% last year. New products introduced in the past two years accounted for nearly all of this increase in commercial sales. In addition, we recently received a $1 million order for our large format battery MKM system from a US public sector customer. Overall our diversification strategy, grounded in new product development, continues to gain traction."

Second Quarter 2014 Financial Results

Discontinued operations for the second quarter of 2013 included the final adjustments relating to the sale of RedBlack. All revenue, gross margin and operating expense amounts presented below represent results from continuing operations.

Revenue was $15.2 million, compared to $17.3 million for the second quarter of 2013, a 12% decline, reflecting a decrease of $2.5 million in Battery & Energy Products sales partially offset by a $0.4 million increase in Communications Systems sales. Battery & Energy Products sales were $12.2 million, compared to $14.7 million last year, a 17% decrease, reflecting a 19% increase in commercial sales more than offset by a 53% decline in Government/Defense sales. Communications Systems sales were $3.0 million, compared to $2.6 million for the same period last year, an increase of 16%, driven by the fulfillment of a $1.9 million order for the recently introduced Universal Vehicle Adaptors.  

Gross profit was $4.2 million, or 27.7% of revenue, compared to $4.5 million, or 26.2% of revenue, for the same quarter a year ago. The 150 basis point improvement reflects a higher mix of higher margin Communications Systems sales. Communications Systems' gross margin was 44.0%, compared to 39.3%, an increase of 470 basis points reflecting higher volumes and favorable product mix. Battery & Energy Products' gross margin was 23.6%, compared to 23.8% last year, essentially flat.     

Operating expenses decreased by 13% to $5.5 million, compared to $6.4 million a year ago, primarily reflecting reductions in general and administrative expenses. Operating expenses were 36.4% of revenue, compared to 37.0% for the year earlier period.  

With the reduction in operating expenses and the improvement in gross margin offsetting the decline in volume, the operating loss was narrowed to $1.3 million for the quarter from $1.9 million last year.  

As a result, the company reported a net loss from continuing operations of $1.4 million, or $0.8 per share, compared to a net loss of $2.0 million, or $0.11 per share, for the second quarter of 2013. Net income from discontinued operations was $0.0 million, or $0.00 per share, compared to a net loss of $0.1 million, or $0.01 per share, for the second quarter of 2013.  

Outlook

Despite the company's commercial sales momentum, management now expects revenue for the year to be approximately 10% below last year given the reductions in global government and defense spending to date that are likely to persist. As a result of the revised outlook for revenue, management now expects a slight operating loss for the year in the range of 2 – 3% of sales.

Management cautions that the timing of orders and shipments may cause variability in quarterly results. 

About Ultralife Corporation

Ultralife Corporation serves its markets with products and services ranging from portable power solutions to communications and electronics systems. Through its engineering and collaborative approach to problem solving, Ultralife serves government, defense and commercial customers across the globe.

Headquartered in Newark, New York, the company's business segments include: Battery & Energy Products and Communications Systems. Ultralife has operations in North America, Europe and Asia. For more information, visit www.ultralifecorp.com.

Conference Call Information

Ultralife will hold its second quarter earnings conference call today at 10:00 AM ET. To participate, please call (800) 915-4836, identify yourself and ask for the Ultralife call. The conference call will also be broadcast live over the Internet at http://www.ultralifecorporation.com. To listen to the call, please go to the web site at least fifteen minutes early to download and install any necessary audio software. For those who cannot listen to the live webcast, a replay of the webcast will be available shortly after the call at the same location.

This press release may contain forward-looking statements based on current expectations that involve a number of risks and uncertainties. The potential risks and uncertainties that could cause actual results to differ materially include: potential reductions in U.S. military spending, uncertain global economic conditions and acceptance of our new products on a global basis. 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 circumstances. Further information on these factors and other factors that could affect Ultralife's financial results is included in Ultralife'sSecurities and Exchange Commission (SEC) filings, including the latest Annual Report on Form 10-K. 

ULTRALIFE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(unaudited)
     
ASSETS    
 June 29,December 31,
 20142013
Current assets:   
Cash and cash equivalents$17,160$16,489
Trade accounts receivable, net 10,095 14,238
Inventories, net 27,079 26,053
Prepaid expenses and other current assets 1,556 1,878
Total current assets 55,890 58,658
Property, equipment and improvements, net 9,916 10,202
Goodwill, intangibles and other assets 21,125 21,334
Total assets$86,931$90,194
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
Current liabilities:    
Accounts payable$7,115$7,053
Accrued compensation and related benefits 1,838 1,908
Accrued expenses and other current liabilities 1,909 3,214
Total current liabilities 10,862 12,175
Deferred income taxes and other non-current liabilities 4,450 4,374
Total liabilities 15,312 16,549
     
Commitments and contingencies (Note 10)    
     
Shareholders' equity:    
Common stock 1,892 1,888
Capital in excess of par value 175,462 174,932
Accumulated deficit (97,450) (94,804)
Accumulated other comprehensive loss (479) (614)
Treasury stock (7,697) (7,658)
Total Ultralife equity 71,728 73,744
Noncontrolling interest (109) (99)
Total shareholders' equity 71,619 73,645
     
Total liabilities and shareholders' equity$86,931$90,194
 
ULTRALIFE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands except per share amounts)
(unaudited)
         
 Three month periods endedSix month periods ended
 June 29,June 30,June 29,June 30,
 2014201320142013
         
Revenues:        
Battery & energy products$12,165$14,656$26,087$27,709
Communication systems 3,034 2,623 4,397 10,589
Total revenues 15,199 17,279$30,484 38,298
         
Cost of products sold:        
Battery & energy products 9,289 11,166 19,410 21,119
Communication systems 1,698 1,591 2,527 6,278
Total cost of products sold 10,987 12,757 21,937 27,397
         
Gross profit 4,212 4,522 8,547 10,901
         
Operating expenses:        
Research and development 1,560 1,669 2,996 3,038
Selling, general and administrative 3,976 4,727 7,971 9,362
Total operating expenses 5,536 6,396 10,967 12,400
         
Operating loss (1,324) (1,874) (2,420) (1,499)
         
Other (expense) income:        
Interest income -- 12 9 14
Interest and financing expense (41) (43) (97) (133)
Miscellaneous 46 2 30 (23)
Loss income from continuing operations before income taxes (1,319) (1,903) (2,478) (1,641)
Income tax provision 57 53 117 151
         
Net loss from continuing operations (1,376) (1,956) (2,595) (1,792)
Income (loss) from discontinued operations, net of tax -- (120) (61) 144
         
Net loss (1,376) (2,076) (2,656) (1,648)
         
Net loss attributable to noncontrolling interest 16 3 10 9
         
Net loss attributable to Ultralife (1,360) (2,073) (2,646) (1,639)
         
Other comprehensive income:        
Foreign currency translation adjustments 73 148 139 21
         
Comprehensive loss attributable to Ultralife$(1,287)$(1,925)$(2,507)$(1,618)
         
Net loss per share attributable to Ultralife common shareholders – basic:        
Continuing operations$(.08)$(.11)$(.15)$(.10)
Discontinued operations -- (.01) (.00) .01
Total$(.08)$(.12)$(.15)$(.09)
         
Weighted average shares outstanding – basic 17,533 17,459 17,523 17,458

CONTACT: Company Contact: Ultralife CorporationPhilip A. Fain (315) 210-6110 pfain@ulbi.com Investor Relations Contact: LHA Jody Burfening (212) 838-3777 jburfening@lhai.com



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Source: Ultralife Corporation


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