From Insider Score: The chief executive officer of Ultralife Batteries (ULBI) stepped up earlier this week and purchased stock, becoming the first corporate insider to buy shares in 18 months, and the first executive stock buyer in more than three years.
John Kavazanjian, president and CEO of ULBI since July 1999 and a director at the company since August 1999, bought 12.5K shares at an average price of $10.96 on May 8th. The buy raised Kavazanjian's holdings in ULBI to approximately 99K shares, and the transaction was an about-face for the CEO, who sold or exercised & sold 278K shares for a net value of $4.9M from February 2004 to July 2005. Kavazanjian was formerly an executive at Xerox (XRX), and he has a deep background in the computer business.
With shares of ULBI trading down -2% today, the stock has now shed about -38% of its value since its July 2005, 52-week high of $18.37. Conversely, the stock has moved about 18% off its September 2005, two-year low of $9.59. Investment firm Grace Brothers, which is ULBI's largest shareholder with a 16.1% stake, was buying ULBI near its lows and again in November 2005, in a range of $10.85 to $12.26.
ULBI manufactures and sells lithium and rechargeable batteries. The company's customers include Energizer Holdings (ENR), Radio Shack (RSH), Lowe's (LOW), General Dynamics (GD), as well as the U.S. and U.K. militaries. Last week, the company reported first-quarter results, posting earnings of $100K, or a penny per share, on revenues of $18.3M, up from a net loss of -$1.6M, or -11 cents per share, and revenues of $15.3M a year earlier. Earnings results came in better than expected, as analysts forecasted merely a breakeven quarter. Revenue, however, was -$600K shy of the consensus, and the company guided about -10% below analyst estimates for Q2, saying it foresees $20M in revenue. For FY2006, ULBI forecast revenue of $90M, compared to a $91.25M consensus.
Some of the lumpiness in ULBI's business over the past few years has related to the timing and shipment of contracts related to the U.S. military. Perhaps hoping to smooth out the revenue stream, the company said last week that it would acquire privately held McDowell Research, a maker of military communications accessories, for about $25M.
ULBI is paying $5M in cash and issuing a $20M non-transferable convertible note to be held by the sellers of the company, which had about $1.6M in operating income on $22M in revenue in 2005. The convertible note has a five-year term and is convertible into 1.33M shares of ULBI common stock at $15.00 per share, with a forced conversion feature at $17.50 per share. ULBI said the acquisition will be accretive in 2006, but did not offer specific details.