Ultralife Corporation (ULBI) Q2 2010 Earnings Call July 29, 2010 10:00 am ET Executives Jody Burfening - Lippert/Heilshorn & Associates John Kavazanjian - President & CEO Philip Fain - CFO & Treasurer Analysts Walter Nasdeo - Ardour Capital James Mcllree - Merriman Sam Bergman - Bayberry Asset Management Presentation Operator
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» Ultralife Corporation Q1 2010 Earnings Call Transcript
» Ultralife Corporation Q2 2009 Earnings Call Transcript
» Ultralife Corporation Q1 2009 Earnings Call Transcript
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 John. John Kavazanjian Thank you and welcome everybody to the Ultralife Corporation conference call for the second quarter of 2010. Joining me today is Philip Fain, our Chief Financial Officer. Today, we reported revenue of $37 million for the second quarter of 2010, with an operating profit of $400,000 and an adjusted EBITDA of $1.8 million. Despite the lower revenue, we showed an operating profit due to the continuation of strong gross margin performance and disciplined financial and expense control. Revenue was flat due to government contracting delays along with continued weakness in the energy services market. We expect a sequential growth in revenue for the third quarter and have shipped over $20 million worth of products in July already. We also expect energy services revenue to start to grow in the third quarter, as capital equipment expenditures start to recover. In Battery and Energy products, we've continued to see delays in contracting and order activity for standard battery products with the Defense Logistics Agency. Despite order history and contract estimates that are significant, we've seen no orders on standard battery products since the fall of 2009 as contracting efforts continue. International defense business and commercial business continued strong in ever and operational improvements continued to effect margins positively. Communication Systems sales were on target at $11.2 million with a gross margin performance at 35%. We commenced shipments on our SATCOM on the move order in the first week of July and expect to complete this order in the fourth quarter of this year, which will contribute to further revenue growth this year in communication systems.
While, energy services revenue continue to be weak, bookings have seen a significant pick up, which will result in a return to revenue growth in the third quarter. Activity is strong for the second half of the year and we see signs that could indicate permanent recovery in this sector, as deferred capital projects have been reactivated. With our continuing work on operational improvement and overhead costs firmly entrenched, we are also focusing on new product development.In energy products, much of our work is on international variance of our Land Warrior product line, initially developed for the US military. We are now in discussions with a number of international military organizations interested in adapting this product line for their use. With the US now deploying this system and others looking to adopt our power system, we see this area as a major growth sector of our defense business. On the commercial side, we have several new medical applications either in starting production or in final development qualification testing. Utilization of our SmartCircuit technology is capturing interest and design programs in the medical space, as designers of advanced medical equipment start to utilized smart battery technology. As we’ve finalized the contracts process with the state of New York, we haven't got the go ahead to start some work on our large scale energy storage batteries. Interest in this work is high, as both the wind and solar industries start to understand that energy storage is intracle to the long-term success of both of these alternative energy technologies. While, we do not expect to have finished megawatt size product until next year, we expect to apply to intermediate-sized products that we will develop on the way, that have applications in many of our existing markets. Read the rest of this transcript for free on seekingalpha.com