Ultralife Reports Third Quarter Financial Results

November 06, 2007 by Jeff Shepard

Ultralife Batteries, Inc. reported revenue of $33.3 million for its third quarter of 2007, an increase of 40% compared with $23.7 million reported in the same three-month period in 2006. Operating income was $0.2 million compared with a $2.1 million operating loss a year ago.

Revenue in the third quarter rose $9.6 million over the same quarter last year due to growth in sales of communications accessories, higher sales of batteries to international defense organizations and increased demand from automotive telematics customers. As percentage of revenue, gross margin for the third quarter of 2007 was 21%, up from 17% a year ago. This was driven primarily by improvements in Non-Rechargeable operating efficiencies on higher production volumes. Operating expenses totaled $6.7 million, up from $6.1 million a year ago due to higher professional fees associated with acquisition-related activity and higher corporate costs associated with running a more diverse business. Net interest expense was $0.5 million in the third quarter of 2007, up modestly from $0.4 million reported in the same quarter of 2006 due to higher borrowing levels under the company’s revolving credit facility. The company has not recorded any tax provision during 2007 as a result of its decision in the fourth quarter of 2006 to fully reserve for its deferred tax asset given the uncertainty of the company’s ability to utilize its net operating loss carryforwards at that time. Net loss for the third quarter of 2007 was $0.1 million, or $0.01 per common share, compared with a net loss of $1.7 million, or $0.11 per share, for the same quarter in 2006.

For the nine-month period ended September 29, 2007, revenue was $100.8 million, an increase of 59% when compared with revenue of $63.4 million for the same period a year ago. Operating income amounted to $2.5 million for the first nine months of 2007, an improvement of $4.0 million over 2006. Net income for the first nine months of 2007 was $1.1 million, or $0.07 per share, compared to a net loss of $1.4 million, or $0.10 per share, for the same period last year.

"Our impressive, double-digit revenue growth, both in the third quarter and year-to-date, attests to the leadership position we have established in designing and producing high energy power solutions and communications accessories for a broad range of advanced applications," said John D. Kavazanjian, Ultralife’s President and CEO. "During the third quarter, we further cemented our already strong relationships with U.S. prime contractors and, through the acquisition of Innovative Solutions Consulting, we continued to expand our product portfolio and diversify our customer base. On a year-to-date basis, we reached the $100 million revenue mark, achieving a major milestone and exceeding any prior fiscal year’s revenue level.

"In the fourth quarter, we expect our entrenched customer relationships will translate into another period of strong top-line growth. On a broader level, we intend to continue taking full advantage of the growing demand for power solutions, accessories and engineered services in diverse government/defense and commercial markets through the development of new technologies, products and applications, further leveraging our expertise and technical capabilities."