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Ultralife Corporation reports on 1Q earnings

Ultralife Corporation (Nasdaq:ULBI) reported an operating profit from continuing operations of $0.4 million on revenue of $21.0 million for the quarter ended March 31, 2013. For the first quarter of 2012, the company reported an operating loss from continuing operations of $1.3 million on revenue of $27.5 million.”Through solid execution in the face of ongoing softness in our Battery & Energy Products business, we delivered our third consecutive profitable quarter, consistent with our internal expectations, and reversed last year’s operating loss,” said Michael D. Popielec, Ultralife’s president and chief executive officer. “Despite the budget pressures confronted by our U.S. government/defense customers, our plans to diversify our revenue by driving international and commercial opportunities are proceeding, and we are still planning for modest revenue gains in our Battery & Energy Products business in 2013. Revenue for our Communications Systems business grew by 7% and we expect year-over-year growth to continue throughout 2013 based on our opportunity funnel and anticipated timing of pending projects. As a result, with an efficient and profitable business model and strong cash generation, we remain well positioned to realize operating leverage gains on revenue growth during 2013.”First Quarter 2013 Financial ResultsDiscontinued operations for the first quarter of 2013 include the final settlement of our obligation to return our former UK facility back to its original condition per a previous contractual commitment. For the first quarter of 2012 discontinued operations include the operating results of RedBlack which was sold in the third quarter of 2012. All revenue, gross margin and operating expense amounts presented below represent results from continuing operations. Revenue was $21.0 million, compared to $27.5 million for the first quarter of 2012, a 24% decline, reflecting an increase of $0.5 million in Communications Systems sales offset by a $7.0 million decrease in Battery & Energy Products sales. As a result of continued new business development, the mix of sales from international customers increased to 46% from 37% for the first quarter last year. Battery & Energy Products sales were $13.1 million, compared to $20.1 million last year, a 35% decline, reflecting for the most part the continued slowdown in U.S. government and defense order rate for rechargeable and non-rechargeable batteries and charger systems. Communications Systems sales were $8.0 million, compared to $7.4 million for the same period last year, an increase of 7%, reflecting the fulfillment of large orders for amplifiers from international defense customers and continued demand for amplifiers from the U.S. government. Gross profit was $6.4 million, or 30.3% of revenue, compared to $6.6 million, or 24.0% of revenue, for the same quarter a year ago. The 630 basis point increase reflected productivity gains in both businesses and a higher mix of Communications Systems sales. Battery & Energy Products’ gross margin was 23.7%, compared to 19.6% last year, an increase of 410 basis points due to productivity improvements resulting from our lean processes and improved 9-volt margins which partially offset lower overhead absorption on volume declines. Communications Systems’ gross margin was 41.2%, an increase of 550 basis points over the 35.7% gross margin reported last year, which resulted from higher volumes and productivity improvements. Operating expenses decreased by 24% to $6.0 million, compared to $7.9 million a year ago, reflecting across-the-board actions taken to align spending with revenue. As a result, operating expenses were 28.6% of revenue, compared to 28.7% for the year earlier period. The combination of higher gross margin and essentially flat operating expenses as a percentage of revenue resulted in a $1.7 million improvement in operating income to $0.4 million, compared to an operating loss of $1.3 million last year, despite lower revenue. Operating margin for the first quarter of 2013 was 1.8%. Net income from continuing operations was $0.2 million, or $0.01 per share, compared to a net loss of $1.4 million, or $0.08 per share, for the first quarter of 2012. Net income from discontinued operations was $0.3 million, or $0.02 per share, for the first quarter of 2013 versus a net loss of $.1 million, or $0.01 per share, for the first quarter of 2012. OutlookManagement reiterated its outlook for 2013 and continues to expect low- to mid-single digit revenue growth reflecting strong growth in Communications Systems sales and modest gains in the Battery & Energy Products business, despite continued constraints on U.S. government spending. Based on this outlook for revenue growth, ongoing productivity improvements and plans to continue prudently investing in new product development, management expects to increase operating profitability for the year and to generate a mid-single digit operating margin.Management cautions that the timing of orders and shipments may cause variability in quarterly results.

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