NEWARK — Ultralife Corp. reported operating income of $700,000 on revenue of $24.4 million for the third quarter that ended Sept. 30.
For the same period in 2019, the company reported operating income of $1.3 million on revenue of $27.5 million.
“Effective execution of both our end-market diversification strategy and operating discipline during the third quarter sustained profitability and positive cash flows, despite a reduction in total company results largely due to the continuing global economic impact of the pandemic,” Ultralife President and CEO Michael D. Popielec said in a press release. “Within battery and energy products, we posted record quarterly medical sales which increased 102% over last year, and a 23% increase in government/defense sales. These strong gains were offset by economic weakness in the oil and gas sector and lower sales for our communications systems business.
“In response, we continued our spending control, matching the overall percentage decline in our revenue with a comparable reduction in operating expenses. By preserving profitability and continuing to improve working capital management, during the quarter we also further reduced debt by $7.1 million. Supported by a solid balance sheet and resilient business model, we are committed to completing our strategic growth projects and are well positioned to withstand current economic headwinds.”
A 22.2% increase in core battery sales across diversified end-markets was offset by lower oil and gas market and communications systems sales. Total company commercial sales decreased 10.8% from the same period in 2019, while government/defense sales decreased 12.5%.
Battery and energy products revenues declined 3.4% to $21.8 million, compared to $22.6 million last year, as a 102.1% increase in medical battery sales, especially those used in ventilators, respirators and infusion pumps, and a 23.4% increase in government/defense sales, were offset by a 68.7% decline in oil and gas market sales.
Communications systems sales decreased 48.3% to $2.5 million compared to $4.9 million for the same period last year, primarily reflecting 2019 shipments of vehicle amplifier-adaptor systems to support the U.S. Army’s Network Modernization initiatives under the delivery orders announced in October 2018. These orders were completed in the second quarter of 2020.
The net adverse impact of COVID-19 on revenues for the 2020 period was approximately $2.9 million, as a substantial increase in demand for medical batteries was more than offset by weakened demand in the oil and gas and international industrial markets. Logistics disruptions also delayed certain shipments.
Gross profit was $6.5 million, or 26.7% of revenue, compared to $7.9 million, or 28.6% of revenue, for the same quarter a year ago.
Operating expenses were $5.8 million compared to $6.6 million last year, a reduction of 11.5%. Operating expenses were 23.8% of revenue equal to that of the year-earlier period.