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Ultralife Corp. (ULBI)
Q2 2009 Earnings Call
July 30, 2009 11:00 am ET
John Kavazanjian - President & Chief Executives Officer
John Casper - Chief Financial Officer
Jody Burfening - Lippert/Heilshorn & Associates
Trey Grooms - Stephens Inc
Walter Nasdeo - Ardour Capital
James McIlree - Collins Stewart
Ted Kundtz - Needham
Jamie Sullivan - RBC Capital Markets
Previous Statements by ULBI
» Ultralife Corporation Q1 2009 Earnings Call Transcript
» Ultralife Q4 2008 Earnings Call Transcript
» Ultralife Corporation Q3 2008 Earnings Call Transcript
Thank you, operator. Good morning, everyone. This is Jody Burfening of Lippert/Heilshorn & Associates. Thank you for joining us this morning for the Ultralife Corporation’s earnings conference call for the second quarter of fiscal 2009.
With us on today’s call are John Kavazanjian, Ultralife’s President and Chief Executive Officer, and John Casper Ultralife’s Chief Financial Officer. The earnings press release was issued earlier this morning and if anyone has not yet received a copy, I invite you to visit the Ultralife website at www.ultralifecorp.com, where you will find the release under Investor News in the Investor Relations section.
Before turning the call over to management, I’d like to remind everyone that some statements made during this conference call contain forward-looking statements based on current expectations. Actual results could differ materially from those projected as a result of various risks and uncertainties. These include worsening global economic conditions, increased competitive environment, and pricing pressures, disruptions related to restructuring actions and delays.
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. A more detailed description of such uncertainties is contained in the company’s filings with the Securities and Exchange Commission, such as the company’s Annual Report on Form 10-K for the period ended December 31, 2008.
In addition on today’s call, management may 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. Good morning, John.
Thank you, Jody. Good morning and welcome to the Ultralife Corporation conference call for the second quarter of 2009. Joining me today is John Casper who I’d like to welcome as our new Chief Financial Officer, and also with us today are Julius Cirin, our Corporate Communications Officer, and Bill Schmitz, Chief Operating Officer.
Today, we reported revenue of $39.6 million for the second quarter of 2009 and an operating loss of $6.3 million. Revenue declined compared to last year when we were fulfilling more than a $100 million in advanced communications systems orders.
Quarter-over-quarter, revenue was consistent with the first quarter due to continued delays in contracting associated with funded government programs. Revenue was virtually zero in automotive telematics due to further inventory corrections in the automotive business and declined in standby power due to deferral of capital spending and the data processing in telecom industries.
Revenue was slightly up in all other sectors of the business. In the second quarter, we booked several non-recurring charges due to legal action, various operational changes resulting in termination costs and an increase in inventory provisions.
John Casper will take you through these charges in his commentary. Much of this expense was related to our initiatives to get more efficient and drive our operating costs down to a lower level. While the legal action resulted in the judgment in our favor, defending our position in court cost us higher than normal legal fees. Our operational changes included the closing of our Seattle amplifier operation and the consolidation of it into our newly acquired AMTI unit and certain severance costs.
Inventory reserves were a result of an examination of our inventory in the light of a slower economy. Slowdown in economic activity has caused us to revaluate the parts deemed to be slow moving and a relationship of their cost to their market value. We still await the award of the SATCOM-On-The-Move systems for the M-ATV and other programs, while we are still specified as the GFE or government’s first equipment in the programs. The government has yet to come to terms on a contract vehicle with a prime contractor to supply these parts.
We stand poised with over $8 million in inventory, ready to execute on this known demand and still believe that it is not a matter of if, but a matter of when. [D cells] and batteries remained strong, a notable weakness only in the automotive sector and in standby power. They are still being designed as a new and existing application with particular strength in military markets.
Standby power, we’ve seen the weakness in the capital markets manifest itself for continued deferrals of project. This has pushed out several significant programs with major customers. It is also exerting pricing pressure on lead acid battery sales and suppliers are fighting to liquidate inventories and generate cash in a tighter market.
We have reduced expenses in this business segment, consistent with further consolidation of operations and are remaining poised to execute as we believe that the mission critical applications that this area addresses can only defer replacements, upgrades and investments and back-up power for so long. In the Communications Systems business apart from being ready for the SATCOM-On-The-Move orders, we have now consolidated our amplifier manufacturing under the AMTI business that we purchased last quarter from SAIC.