Good day, everyone and welcome to today’s Ultralife Corporation First Quarter 2015 Earnings Release Conference Call. At this time, I would like to introduce your moderator for today’s conference, Jody Burfening. Please go ahead, ma’am.

Thank you, April. Good morning, everyone. This is Jody Burfening of LHA. Thank you for joining us for Ultralife Corporation’s earnings conference call for the first quarter of fiscal 2015. With us on today’s call are Mike Popielec, Ultralife’s President and CEO and Phil Fain, Ultralife’s Chief Financial Officer. The earnings press release was issued earlier this morning. And if anyone who has not yet received a copy, I invite you to visit the company’s website, www.ultracorp.com, where you will find the release under Investor News in the Investor Relations section. Before turning the call over to management, I would 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 potential reductions in U.S. military spending, uncertain global economic conditions and acceptance of the company’s new products on a global basis. The company cautions investors not to place undue reliance on forward-looking statements, which reflects 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. Further information on these factors and other factors that could affect Ultralife’s financial results is included in the – in Ultralife’s filings with the Securities and Exchange Commission, including the latest Annual Report on Form 10-K. 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 Mike. Good morning, Mike.

Good morning, Jody and thank you everyone for joining the call this morning. Today, I will start by making some overall comments about our first quarter 2015 operating performance, then I will turn the call over to Phil, who will take you through a detailed financial results. After Phil is finished, I will provide an update on the progress against our revenue initiatives for 2015 before opening it up for questions. For the first quarter of 2015, we were pleased to deliver a second consecutive quarter of total company profitability, generating an operating profit of $0.8 million on revenues of $19.2 million for an operating margin of 4.3%. This represents a year-over-year improvement in operating profit of $1.9 million on an increase in revenue of $3.9 million and demonstrates the operating leverage obtainable from increased revenue and execution of our business model. Commercial revenues for our battery and energy products business continued to make up approximately 50% of total B&E revenues, with a strong contribution from our 9-volt product line and were within 2% of the prior year first quarter commercial revenues. However, in our government/defense revenues for battery & energy products, we saw an increase of 45% year-over-year driven by sales to OEMs and the DLA, which led to an overall battery & energy products sales increase of 17%. In our communications systems business, sales of a broad range of new products through our OEM channels as well as an increase in the day-to-day flow business, grew first quarter 2015 year-over-year revenues by 113%. On the strength of both businesses achieving year-over-year revenue increases, total company revenue increased by approximately 25% from the prior year. Looking at gross margins driven by favorable mix as well as volume leverage, both business units showed improvements in Q1 2015, which increased total…

Thank you, Mike and good morning everyone. Earlier this morning, we released our first quarter results for the period ended March 29, 2015. Consolidated revenues for the first quarter totaled $19.2 million, representing a $3.9 million or 25.5% increase from the $15.3 million for the first quarter of 2014. Revenues from our battery and energy products segment were $16.3 million, an increase of $2.4 million or 17% from last year. The year-over-year growth was fully attributable to a 45% increase in U.S. government and defense sales, driven by higher sales of chargers and batteries to a large international prime defense supplier and shipments of primary batteries to the U.S. government’s Defense Logistics Agency for the second consecutive quarter. Commercial sales for the first quarter of 2015 were essentially flat with the year earlier period. Shipments of 9-volt batteries increased by over 40%, driven by demand from large global smoke detector OEMs in response to legislation and trends in certain European Union countries for products lasting 10 years. This increase was offset by launch quantities for certain commercial products in medical channels in 2014, as well as the timing of primary battery pack and charger orders. As a result, battery and energy product sales were split 50-50 between commercial and government and defense compared to 60-40 for the 2014 period. Communications system sales of $2.9 million, increased by $1.5 million or 113% from the prior year. This increase was primarily driven by higher sales of new products, including our universal vehicle adapters, to a large global defense prime as well as increases in our order flow, reflecting increased demand from system integrators in support of U.S. Department of Defense programs in international projects. Our consolidated gross profit was $6.0 million compared to $4.3 million for the 2014 period, an increase of…

Thanks, Phil. With respect to our revenue growth initiative, in 2015 we remain focused on three core elements. Expanding our market sales reach, new product development and pursuing acquisitions. In our battery and energy products business, the momentum of our commercial diversification strategy continues. Our particular note is an increase in the demand for our 9-volt lithium battery from blue chip smoke alarm manufacturers in Europe and Asia. In Q1, we had record unit shipments from our facility in China and 9-volt revenue was up over 40% year-over-year. Our next generation 9-volt battery utilizes Ultralife’s Thin Cell technology to produce the highest capacity battery on the market today, with the design life that meets the regulatory criteria for a newly developing 10-year life smoke detector market. In the medical space, in addition to continued traction in our products supporting respiratory devices, infusion pumps, medical carts and various other diagnostic devices, we also recently received a provisional PO pending FDA approval from a leading manufacturer for our battery pack to be used in an – excuse me, in an automated external defibrillator or AED equipment. Upon final FDA approval, this supply agreement could be worth several million dollars over the next few years. The accumulation of these multiple new emerging revenue streams is creating better visibility for the commercial revenue base of our battery and energy products business and has helped us to fully offset the recent government defense revenue decline to obtain year-over-year B&E revenue growth the last several quarters. That said, in Q1 of 2015, we also experienced a slight pop in government defense revenues both internationally from U.S. based prime defense contractors and domestically through the DoD Defense Logistics Agency. As approximately 50% of our present B&E revenue now comes from commercial customers and for which several new…

Thank you. [Operator Instructions] And we will first hear from Gary Siperstein of Eliot Rose Asset Management.

Hey guys, good morning.

Good morning Gary.

Good morning Gary.

Congratulations on another solid quarter and what has historically been the very tough quarter seasonally for you guys. Mike, can you – I missed a couple of things on your comments on the commercial side opportunities. So besides the 9-volt and besides medical, I think you said asset tracking, is that one of them?

That’s correct.

And what does that mean, asset tracking, give me an example?

Well, there is different type of things we are talking about here are for instance, in transportation vehicles, whether they would be toll pass type applications. We are looking at some interesting applications of RFID capability for product pricing and retail stores. Sometimes and maybe this is a loose definition of assets, for emergency locator devices, that people may use it and they are doing in their various recreational activities. We are working on a number of different activities in that area.

Okay. And that’s all with batteries or is there something else involved?

It’s all with the batteries and energy products business.

Okay. And after medical and asset tracking you mentioned two more sectors what were those again?

I believe we mentioned energy storage. And I think we are continuing to make progress, obviously in our commercial devices, in all various different devices not just smoke alarms, but other devices using our legacy 9-volt product. You mentioned medical in that asset tracking. We started to see some initial traction on our energy storage large format MKM product at the end of last year. And we are working on some new applications of that. And I think that’s an area that we can continue to do a lot more than we are currently doing.

Okay. And the – I think I missed it when Phil called it out. The commercial piece of B&E being flat year-over-year was that due to an initial ramp in the early part of the year on medical carts that didn’t repeat this time, which helped to offset the increase in the 9-volts for the smoke detectors?

You are pretty close Gary, its medical carts and certain medical devices.

Okay. So the fact that it was spread is not of concern for you because that was basically the start of that program or big shipment in the period last year and we should still see growth coming year-over-year on the commercial side?

Yes, that’s correct, Gary.

Okay. And Mike just backing up a step, you mentioned may begin some traction on the energy storage, what is the – what kind of volumes would that be if that turned into a production order?

It’s really impossible to predict that. I know last year we had an award that was just under $1 million. And so we are continuing to pursue several different opportunities in that order of magnitude.

Okay. And the – on the smoke detector side with the 9-volts, how many different customers does that represent and what’s the size and possibly the length of the opportunity there with the new 10-year mandate?

Now, there is a handful of different customers. I mean we see it on a global supply chain basis. So there are a number of different channels to which these products go into the market. So I would say there is a handful of some of the things that you would recognized both in the U.S. and on a global scale. Relative to the size of the market, we know that there is tens of millions of smoke detectors out there. We know that there is various pieces of legislation in different countries about what their mandate is for requiring some piece, just smoke detectors to begin with, sometimes with a particular life or style of smoke detector. And at the same time, we know that 9-volt technology as a legacy technology has been around for a while. So I would say that we are cautiously optimistic that as this legislation continues to drive demand, that we would see additional potential volumes of our 9-volt business. We also know that as a result of the evolution of technology, that there is opportunities for 3-volt product. We have developed a 3-volt product as well. And we know that overall, there is a pretty large 9-volt business, of which still a very small sub-segment of that is lithium. So without giving you a specific number, we think we have several different irons in the fire to continue to grow our 9-volt business and we are very pleased that the performance level of 9-volt that we introduced a couple of years ago is being validated by the strong demand we are seeing today.

Okay. And on the government side for B&E, the increase in business, so was there any catalyst for that increase, I mean any discussion with the contracting officers, I mean why all of a sudden and was it just the time past they depleted inventories and do you have any sense?

They keep it pretty close to chest in terms of what the real demand is from. I mean we have mentioned over the last couple of quarters that demand for our 5390 battery. We don’t re-enter this anymore than just restocking and sort of expiration shelf life of some existing capacity. But we put our business model together such that we are not dependent upon that to still make money. So we are delighted when we get any additional volume request from DLA. And as other customers in our space continue to do well on a global scale, that’s opening opportunities for us to continue to sell our government defense-related products there as well. So nothing that I can stick a finger on specifically in terms of a market dynamic, but to the extent we have got our cost position do not expect that it’s had a nice impact on our overall P&L.

Okay. And just stepping back again to medical, you mentioned this new opportunity with the defibrillator, what – again is that a new company or is that a company we have already dealt with through medical carts, A. And B, what essentially is the timing, is it something where – I mean, it’s not a new drug or anything, so the FDA on equipment is generally on the fast side and certainly for defibrillators that have been out there for a long time, so is that something maybe by June 30, the FDA should approve and we should start shipments in the back half of the year or is it sooner or later than that?

I think to try to predict what our – any government agency would do in terms of timing I think would be very difficult to do. This is a customer that we have been dealing with for several years in various capacities. It’s not someone that we have talked about a lot nor will we disclose today. And we would expect that we would see an FDA approval within the year. But these things have a way of sort of extending to things that have nothing to do with us or even sometimes our OEM partner. But we haven’t – if there is something imminent that happens of any magnitude, we will be for sure, to disclose that in a press release or during the future earnings call.

Okay. And then moving on to the comm side, you talked about funding, we have been doing R&D and funding ahead of revenues on that, you mentioned a handful of larger opportunities, it seems like we have been going after these elephants for a long, long time, is there any additional color on that, I think last call or a couple of calls ago, it seemed like there was a little bit of movement and they had maybe gone into the field for testing or trials or things of that nature, can you give us any color on that?

Yes. I know it’s been an area that we have talked about a lot. And it’s rippled through our P&L as discussed in our prepared remarks. I would say some of the indicators that we are seeing as positive are on a macro level, those associated with the U.S. budgeting. We are starting to see more movement at least in concept by the various components of the next U.S. Department of Defense budget, where you are seeing some increase in funding. We are doing our best to understand ourselves and through our key business partners if they are seeing allocations in tactical communications, that’s something we always look at very closely to see if there is a specific an amount of funding there. And then as you start to read in the press various announcements of radio decisions, whether they would be IDIQs or other types of radio contracts, that’s also a sort of a good leading indicator because our products are associated with radios. And if they are running a new radio contracts, they are running news in any of that, that’s still a new demand for our product. So I would say the top level because of the budget movement, because of some recent publicized churn in the tech communications radio market, I would think that those were all real positive indicators about some of the things we have been working on for a long time. And obviously, it can’t happen soon enough, but I think we have tuned our business model to be able to fund our continued participation in the new product development associated with some of those programs. We would try to be bluntly transparent about how it’s impacting our P&L and why we are doing it and we will continue to keep you updated the second if any of those large problems – excuse me, large programs should start to come to fruition, we will let you guys know about it.

Okay. And then I think in the 10-K at year end, you indicated a B&E backlog, can you tell me where the backlog is for – at the end of the first quarter for B&E?

Yes, it’s approximately at a comfortable level to what we disclosed in the 10-K, Gary.

Super, okay. And guys, with – Mike, with two quarters under your belt now, I know it’s only two quarters and it’s just the start, but we have been very much under the radar from an IR point of view for a number of years until the model was set and until we have seen a little turn in the defense business and obviously the improvement in commercial sales with the medical carts and batteries for smoke detectors, etcetera. So that being said, any plans to start going out for the investment community and making them aware of the company, again trading under book, under one-time sales, building cash, GAAP profitable, cash flow profitable, it seems like we are still extremely cheap, assuming you continue to make money, so are we at a point where you can start maybe advertising that a little bit where the company is?

Yes. I mean we continue to take calls from various interested investors. We are trying to return some of our success in the form of share repurchases to our existing holders. I think the best investor relations activity that I can do is to continue to improve our top and bottom line. As we get more traction on this and it’s proven to be sustainable, obviously assuming quarter – last quarter is not a trend, now we have two consecutive quarters we are very delighted about, we would like to see a number of consecutive quarters come together the way the last two have. But certainly, we would be open to going out and talking to whoever may be interested in purchasing our stock, as we think we have a very solid story. And it’s a pleasure now to actually see it evolving the way it is.

Okay, yes, agreed. And there is a lot of conferences out there, for micro caps, B. Riley is having a conference, there is Sidoti, there is ROTH, there is a plenty of small broker-dealers that – on the sell-side that have conferences for companies. So in addition to dealing with incoming calls, a little bit on the outgoing side can’t hurt, especially with the results coming together so beautifully. So thank you very much and congratulations again on the improvement in two quarters in a row. I am looking forward to the next quarter.

Thank you, Gary.

Thanks.

[Operator Instructions] And it appears there are no further questions at this time.

Okay. Well, thank you once again everyone for joining us on our first quarter 2015 earnings call. We look forward to sharing with you our quarterly progress on each quarter’s conference call in the future. Thank you very much and have a great day.

And that does conclude today’s conference. Thank you all for your participation.