Ultralife Q1 2026 Earnings Report

Ultralife EPS Results

• Actual EPS: -$0.03
• Consensus EPS: $0.15
• Beat/Miss: Missed by -$0.18
• One Year Ago EPS: N/A

Ultralife Revenue Results

• Actual Revenue: $47.45 million
• Expected Revenue: $52.40 million
• Beat/Miss: Missed by -$4.96 million
• YoY Revenue Growth: N/A

Ultralife Announcement Details

• Quarter: Q1 2026
• Date: 5/8/2026
• Time: Before Market Opens
• Conference Call Date: Friday, May 8, 2026
• Conference Call Time: 8:30AM ET

Ultralife (NASDAQ:ULBI) (NASDAQ: ULBI) develops, manufactures and sells a broad range of energy and communications products for defense, medical, automotive and consumer electronics markets. The company operates through two primary segments: Power Systems and Communications Systems. In its Power Systems segment, Ultralife produces lithium-ion rechargeable cells and battery packs, primary lithium batteries, alkaline and rechargeable battery packs, chargers and battery accessories designed to meet demanding performance and safety requirements. Its Communications Systems segment offers tactical communications solutions, including voice and data transmission systems, power management units and air purification systems primarily for military and public safety organizations.

Founded in the late 1980s and headquartered in Newark, New York, Ultralife has built a reputation for delivering rugged, reliable energy and communication solutions that comply with stringent defense and industrial standards. Over the years, the company has invested in research and development to expand its product portfolio, pursue higher energy density chemistries and improve battery management technologies. Ultralife’s manufacturing facilities and design centers are ISO-certified and employ automated production processes to maintain quality, traceability and consistency across all product lines.

Ultralife serves customers around the globe, with sales and support operations in North America, Europe and Asia. Its energy solutions power critical applications such as battlefield radios, unmanned vehicles, medical monitoring devices and electric vehicle charging systems, while its communications products are used in environments that demand secure, continuous voice and data connectivity. The company’s customer base includes major defense contractors, equipment manufacturers and end users in the public safety sector.

Ultralife is led by an experienced management team and board of directors with deep expertise in battery technology, electronics engineering and global supply chain management. The company continues to pursue strategic collaborations and acquisitions to enhance its technology offerings, expand its geographic footprint and capture new growth opportunities in renewable energy and next-generation communications markets.

Ultralife Q1 2026 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: Q1 revenue was $47.4 million with an operating loss of $0.2 million and a net loss of $0.5 million (‑$0.03/sh), attributed to shipment timing, Middle East delivery delays, plant reorganizations, weather-related interruptions, and pre‑revenue staffing and consulting costs.
• Negative Sentiment: Consolidated gross margin dropped to 21.3% (down 380 bps) and gross profit fell 20.7% year‑over‑year, driven largely by lost production days (Newark substation failure and a 16‑day equivalent impact at Raynham during ERP/inventory transition), higher energy costs, and unfavorable sales mix/tariffs.
• Positive Sentiment: The company exited Q1 with a record backlog of $115.1 million (up 21% YoY), representing 61% of trailing‑12‑month sales and including over $12 million of new‑product backlog, providing stronger near‑term revenue visibility.
• Positive Sentiment: Management is investing in product development and vertical integration (Electrochem), expects to more than double internal cell usage, shipped the first conformal wearable battery order with > $8 million backlog, and won a $4 million multi‑year award—actions intended to stabilize Communications Systems revenue and lift gross margins.

Presentation

[Operator]

Good day, and thank you for standing by. Welcome to the Ultralife Corporation first quarter 2026 results call. At this time, all participants are in listen-only mode. After the speaker's presentation, there'll be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear a recorded message advising you when it's raised. To withdraw your question, please press star one again. Please be advised that today's conference is being recorded. I would like to hand the conference over to your first speaker today, Jody Burfening. Please go ahead.

[Jody Burfening, Investor Relations Representative at Ultralife Corporation]

Thank you, Marvin. Good morning, everyone. Thank you for joining us this morning for Ultralife Corporation's earnings conference call for the first quarter of fiscal 2026. With us on today's call are Mike Manna, 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 has not yet received a copy, I invite you to visit the company's website, ultralifecorp.com, where you'll 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.

[Jody Burfening, Investor Relations Representative at Ultralife Corporation]

The potential risks and uncertainties that could cause actual results to differ materially include uncertain global economic conditions, reductions in revenues from key customers, delays or reductions in U.S. and foreign military spending, acceptance of our new products on a global basis, and disruptions or delays in our supply of raw materials and components due to business conditions, global conflicts, weather, or other factors not under our control. 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. Further information on these factors and other factors that could cause or affect Ultralife's financial results is included in the company's filings with the Securities and Exchange Commission, including the latest annual report on Form 10-K.

[Jody Burfening, Investor Relations Representative at Ultralife Corporation]

In addition, on today's call, management will refer to certain non-GAAP financial measures that management considers to be useful and differ from GAAP. These non-GAAP measures should be considered supplemental to corresponding GAAP figures. With that, I would now like to turn the call over to Mike. Good morning, Mike.

[Mike Manna, President and CEO at Ultralife Corporation]

Good morning. Welcome to Ultralife's Q1 2026 earnings call. Earlier today, we announced Q1 revenue of $47.4 million, with an operating profit loss of $0.2 million, which resulted in a loss of $0.03 per share. We had a challenging start to the year on both sides of the business due to several factors, including order shipment timing, shipment delays to our Middle East customers, plant shutdowns for reorganization and weather events, and consultation fees. We have a growing backlog and product portfolio due to new product releases that we need to support this year, so we have added and trained direct labor resources in our Raynham and Newark facilities to staff lines for the increased demand expected in 2026. This expense comes pre-revenue, is critical given the nature of our products to ensure product quality.

[Mike Manna, President and CEO at Ultralife Corporation]

We now have new experienced plant leadership in both of those locations to drive manufacturing efficiencies and gross margin initiatives. Our Communications Systems business, which I acknowledge had another underwhelming quarter, has multiple new products and projects underway to grow the baseline revenue and stabilize the business. We believe in the upside of this business and continue to invest in product development to capture large, sustained revenue opportunities. A large part of the communications business continues to be government-related, with long development and procurement cycles for the products we sell. We exited the quarter with a record backlog of $115.1 million, with over $12 million of backlog from products released within the last one year. Often we incur training and ramp costs prior to revenue capture.

[Mike Manna, President and CEO at Ultralife Corporation]

We continue our brand realignment under the Ultralife brand, which will bring clear, concise messaging to our customers that we design and deliver critical RF and portable power products. I will turn it over to Phil to talk through the detailed numbers.

[Phil Fain, CFO at Ultralife Corporation]

Thank you, Mike, and good morning, everyone. Earlier this morning, we released our first quarter results for the quarter ended March 31st, 2026. We have also filed our Form 10-Q with the SEC. Consolidated revenues totaled $47.4 million, compared to $50.7 million for the first quarter of 2025. Revenues from our Battery & Energy Products segment were $44.2 million, compared to $46.3 million last year, a 4.7% decrease. The year-over-year decrease reflects a 5.5% decline in commercial sales attributable to oil and gas customers and a 2.7% decline in government defense sales relative to the shipment of a very large order for an allied country last year. Medical sales increased 5.9% for the 2026 quarter.

[Phil Fain, CFO at Ultralife Corporation]

The sales split between commercial and government defense for our battery business was 69/31, compared to 64/36 reported for the 2025 quarter, and the domestic to international split was 66/34, compared to 78/22 for the 2025 period, reflecting the global demand for our products. Revenues from our Communications Systems segment of $3.3 million declined 25.7% from the $4.4 million we reported last year, resulting from the timing of expected orders. On a consolidated basis, the commercial to government defense sales split was 64/36, compared to 58/42 for the 2026 and 2025 quarters respectively. Our total backlog exiting the first quarter was $115.1 million, the highest level in the company's history and representing a $20.1 million or a 21.1% increase over the comparable 2025 period.

[Phil Fain, CFO at Ultralife Corporation]

The backlog remains diverse in nature across our commercial and government defense customer base, and the replenishment rate remains high, representing 61% of trailing 12-month sales. Our consolidated gross profit was $10.1 million, down 20.7% from the 2025 period. As a percentage of total revenues, consolidated gross margin was 21.3%, a 380 basis point decline from the 25.1% reported for last year's first quarter. Gross profit for our Battery & Energy Products segment was $9.4 million compared to $11.4 million last year, a decrease of 18.2%. Gross margin was 21.2% compared to 24.7% last year.

[Phil Fain, CFO at Ultralife Corporation]

The year-over-year reduction primarily resulted from non-recurring events, resulting in lost production days in the 2026 period, negatively impacting gross margin by approximately $0.8 million. This included 3+ days due to the failure of the substation that provides power to our Newark facility, and 16 days equivalent to over 25% of the total Q1 production days for our Raynham facility for multiple reasons, including the preparation, execution, and reconciliation of our initial wall-to-wall physical inventory with full integration into the new ERP system, the disposal of fully reserved obsolete inventory, and overall realignment to minimize our use of costly outside warehousing, all of which was further compounded by severe weather. In addition to the aforementioned, also impacting gross margin were higher energy costs experienced in our Northeast facility and our sales mix, which resulted in higher net tariff costs.

[Phil Fain, CFO at Ultralife Corporation]

For our Communications Systems segment, gross profit was $0.8 million compared to $1.3 million for the year earlier period. Gross margin was 21.2% compared to 29.5% last year, primarily due to lower factory volume and product mix. Operating expenses were $10.3 million, an increase of $1 million or 10.5% from the year earlier quarter. The majority of the year-over-year increase is comprised of one-time costs exceeding $0.8 million related to certain consulting fees to help expedite our gross margin improvement in our two largest manufacturing facilities, litigation expenses incurred for our cybersecurity claim, and the final costs for our Raynham systems transition. In addition, new product development costs increased 23.3% related to the continued investment in our product offering and vertical integration opportunities within our portfolio.

[Phil Fain, CFO at Ultralife Corporation]

As a percentage of revenues, operating expenses were 21.8% compared to 18.4% for last year's first quarter. We incurred an operating loss of $0.2 million compared to income of $3.4 million last year, primarily reflecting the lost production days and one-time costs in our Battery & Energy Products segment and the 25.7% decline in Communications Systems sales. Other expense reported below operating income was $0.4 million for the quarter, primarily comprised of interest expense from the financing of our Electrochem acquisition, partially offset by the first quarter estimated portion of a refundable tax credit for certain qualifying battery cells and packs we manufacture under the 45X Advanced Manufacturing Production Tax Credit. This tax credit was established by the Inflation Reduction Act and runs through 2032.

[Phil Fain, CFO at Ultralife Corporation]

This compares to expense of $1 million for the year earlier period, reflecting the acquisition financing. Our resulting tax benefit for the first quarter was $0.2 million compared to a provision of $0.6 million computed on a GAAP basis at statutory rates. Net loss was $0.5 million or $0.03 per share compared to income of $1.9 million or $0.11 per share on a GAAP basis. Adjusted EBITDA, defined as EBITDA, including non-cash stock-based compensation expense in one-time acquisition and other non-recurring costs, not reflective of our ongoing operations, was $3.2 million or 6.8% of sales, compared to $5.4 million or 10.7% for the prior year quarter. Adjusted EBITDA on a TTM basis is $15 million or 8% of sales.

[Phil Fain, CFO at Ultralife Corporation]

Turning to our balance sheet, we ended the first quarter with working capital of $67.1 million and a current ratio of 2.6. Compared to $68.5 million and 2.8 for 2025 year end. Looking beyond our first quarter results, our backlog, the sheer number of our growth op initiatives, including our conformal wearable battery order now in hand, upgraded leadership in our two largest manufacturing facilities focused on gross margin improvement, progress with our vertical integration opportunities, and the transition of our various sub-brands to the Ultralife master brand, keep us positioned to realize the leverage of our business model. I will now turn it back to Mike.

[Mike Manna, President and CEO at Ultralife Corporation]

Thank you, Phil, for the detailed review of the Q1 2026 results. For 2026, we have four distinct priorities underway. Our first priority is to improve the revenue capture of the Communications Systems business. We have several new products in the commercial capture phase with initial orders received and multiple new products slated for release this year. We're actively working with multiple partners on long-term programs of record and long-term projects that we believe will bring recurring baseline revenue back into the business over the next year. The second priority, which is in our Battery & Energy Products business, is improved gross margin, with the initial target being our Newark operation. We have identified a corrective action for the largest contributor of scrap, which has been implemented and will start eliminating the issue mid-year as we work through existing parts supply.

[Mike Manna, President and CEO at Ultralife Corporation]

With ongoing efforts to identify root cause and corrective actions on other major scrap contributors, we continue to work lean in process improvements at all facilities to existing lines and on new product lines as added in the facilities. We continue to add, expand vertical integration opportunities enabled by the acquisition of Electrochem, allowing us to incorporate Electrochem cells into existing pack assemblies and broaden our adjustable pack assembly market. We have combined the like entities into a single subdivision within the Battery and Energy Products business, now internally known as the Telemetry Power Systems business. We expect to more than double the use of our own cells internal packs this year as customer qualifications are completed. Lastly, we are focused on the company-wide branding alignment, which is well underway and will be completed this year, clarifying our customer messaging and market positioning.

[Mike Manna, President and CEO at Ultralife Corporation]

Switching to development projects, we continue to invest in products on both sides of the business to drive revenue and opportunities for organic growth. Our communication systems business continues to expand our global military vehicle business, highlighted by a recent $4 million multi-year award from an international partner for our Universal Vehicle Adapter, a handheld radio charger supporting legacy and current radios. We're integrating multiple HPE server products and configurations to expand opportunity in the ruggedized computing market. We received several smaller orders and are pursuing additional program awards with expected Q2 deliveries, while continuing customer engagements to capture voice-of-customer feedback and improve the performance and adaptation of these kits. We received funding from a special operations organization to develop and field initial prototypes of a vehicle-based tactical network hub, StrikeHub, integrating HPE servers, switches, and power management.

[Mike Manna, President and CEO at Ultralife Corporation]

StrikeHub is a potential solution for the emerging Next Generation Command and Control NGC2 tactical network requirements initiative. Our new 20 W amplifier has received multiple orders, with deliveries expected in Q2 and Q3 2026. We are engaging radio manufacturers to pair the amplifier with OEM radios to drive pull-through sales. Later this year, we plan to introduce an advanced variant, a 20 W amplifier that supports the newest high-speed single-channel and frequency-hopping MANET waveforms in a compact body-worn form factor. We are developing new radio mounts to integrate our amplifiers with various handheld radios, providing a cost-effective adaptable vehicle mounting solution, which is planned for availability later in 2026. Our Crescent small form factor wearable AI compute solution continues to advance. We've assembled a strong partner team supporting hardware development, integration, and software tools to capture voice-of-customer requirements and accelerate the progress toward initial prototypes expected in 2026.

[Mike Manna, President and CEO at Ultralife Corporation]

On the battery and energy side of the business, we're focused on new business growth through our transformational projects and OEM partnerships. We have multiple OEM projects ongoing to bring new customer bespoke products to market over the coming years, and with existing customers to revise existing products to increase performance and/or refresh designs. On the conformal wearable battery used to power dismounted soldier systems, I am pleased to say we shipped our first order in full and have current backlog in excess of $8 million. This backlog is expected to ship in 2026, and we have quoted multiple large volume opportunities, mainly for international customers. This is the first larger transformational project revenue stream and shows the potential that all of our development projects have.

[Mike Manna, President and CEO at Ultralife Corporation]

Our 19 amp hour thionyl cell has passed all performance validation testing requirements, and we're now waiting on our customer's device certification and initial production planning to complete. We've begun new product development activities with an OEM powering a remote surveillance system with a rechargeable power pack. This development is anticipated to complete in Q3 with anticipated production deliveries beginning late year. As mentioned in the last call, we received production orders for a battery pack to provide power backup for a new pump application for a major medical OEM. This project started with them over seven years ago, and their product is now finally launching. These orders are scheduled to start shipping in mid 2026 concurrently as our customer ramps their device manufacturing. We've established initial production capabilities for our Thin Cell technology to support customers in the medical wearable sector and various item tracking application.

[Mike Manna, President and CEO at Ultralife Corporation]

The sales pipeline continues to strengthen with several projects now in the qualification phase. These smaller, thinner designs will enable a more discreet wearable sensor than typically available in today's marketplace, allowing better patient experience and longer device life. Investing in new product development is essential to continuing to diversify and strengthen our product portfolio, driving future growth, and building on our legacy of delivering critical power products. Our priorities remain converting long-term development efforts into revenue, advancing vertical integration where possible, and maintaining a strong focus on operational efficiency initiatives. With a hefty backlog, including over $12 million of new products as we exit Q1, I believe we are well positioned for future revenue growth.

[Mike Manna, President and CEO at Ultralife Corporation]

Our focus remains on increasing product offering and sales engagement for our Communications Systems business, increased gross margin and revenue on our Battery Energy business, along with vertical integration opportunities in our Telemetry Power Systems business. I will now pass it back to the operator for questions.

[Operator]

Thank you. At this time, we'll conduct a question and answer session. As a reminder to ask the question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Again, as a reminder to ask a question, you will need to press star one one on your telephone. I'm showing no questions at this time. I'll now turn it back to Mike Manna for closing remarks.

[Mike Manna, President and CEO at Ultralife Corporation]

All right. Thanks for listening today's call, everyone. We look forward to talking to you next time during the Q2 2026 earnings call. Bye now.

[Operator]

Thank you for your participation in today's conference. This concludes the program. You may now disconnect.

Participants

Executives

• Jody Burfening, Investor Relations Representative
• Mike Manna, President and CEO
• Phil Fain, CFO