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Ultralife releases 2Q results

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 ResultsDiscontinued 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. OutlookDespite 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.

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