Ultralife Q2 2026 Earnings Report

Ultralife EPS Results

• Actual EPS: $0.19
• Consensus EPS: $0.19
• Beat/Miss: Met Expectations
• One Year Ago EPS: N/A

Ultralife Revenue Results

• Actual Revenue: $47.94 million
• Expected Revenue: $55.00 million
• Beat/Miss: Missed by -$7.06 million
• YoY Revenue Growth: N/A

Ultralife Announcement Details

• Quarter: Q2 2026
• Date: 8/7/2026
• Time: Before Market Opens
• Conference Call Date: Friday, August 7, 2026
• Conference Call Time: 8:00AM ET

Ultralife (NASDAQ:ULBI) develops, manufactures and supplies battery and communications products for government, defense, industrial, medical and commercial customers. The company’s offerings include lithium-ion and lithium primary batteries, rechargeable battery systems, battery packs, chargers and related power accessories.

Through its communications business, Ultralife also provides equipment and components such as tactical communication systems, power supplies, amplifiers, cable assemblies and other products designed to support portable and field-based communications. Its products are used in applications that require reliable power and communications in demanding operating environments.

Founded in 1990 and headquartered in Newark, New York, Ultralife serves customers in the United States and international markets. The company’s leadership includes Michael D. Popielec, who has served as president and chief executive officer.

Ultralife Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Profitability improved: Q2 revenue was $47.9 million, while GAAP EPS rose to $0.15 from $0.05 a year ago. Gross margin expanded to 28.9% from 23.9%, although $1.1 million of tariff refunds contributed approximately 230 basis points of the improvement.
• Positive Sentiment: Backlog reached a record $117.5 million, up 39% year over year, and management said it had increased to nearly $130 million by July. More than $14 million of the quarter-end backlog came from products launched within the past year.
• Positive Sentiment: Communications Systems revenue increased 39.3% year over year, supported by new amplifiers, ruggedized computing products, and opportunities tied to next-generation military command-and-control programs.
• Positive Sentiment: Management expects Battery & Energy Products margin initiatives to generate approximately $600,000 to $800,000 in annual savings, while vertical integration from the Electrochem acquisition and underwater drone programs are expected to contribute incremental revenue beginning in Q4 and into 2027.
• Negative Sentiment: Consolidated revenue declined modestly from $48.6 million a year ago, with Battery & Energy Products revenue down 3.7% and commercial sales pressured by lower oil and gas demand and geopolitical factors.

Presentation

[Operator]

Thank you for standing by, and welcome to Ultralife Corporation's second quarter 2026 earnings conference call. Currently, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. To remove yourself from the queue, you may press star one one again. I would now like to hand the call over to Jody Burfening. Please go ahead.

[Jody Burfening, Head of Investor Relations at Ultralife Corporation]

Thank you, Lateef. Good morning, everyone. Thank you for joining us for Ultralife Corporation's earnings conference call for the second 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. If anyone has not yet received a copy, I invite you to visit the company's website, www.ultralifecorp.com, where you'll find the release under Investor News in the investor relations section.

[Jody Burfening, Head of Investor Relations at Ultralife Corporation]

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. The potential risks and uncertainties that could cause actual results to differ materially include uncertain global economic conditions.

[Jody Burfening, Head of Investor Relations at Ultralife Corporation]

Reductions in revenues from key customers, delays or reductions in U.S. and foreign military spending, acceptance of new products on a global basis, and disruptions or delays in supply of raw materials and components due to business conditions, global conflicts, weather, or other factors not under the company's 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.

[Jody Burfening, Head of Investor Relations at Ultralife Corporation]

Further information on these factors and other factors that could affect Ultralife's financial results is included in the company's filings with the Securities and Exchange Commission, including the latest quarterly report on Form 10-Q. 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 Q2 2026 earnings call. Earlier today, we announced Q2 revenue of $47.9 million with operating profit of $3.4 million, which resulted in an EPS of $0.15 per share. We made positive progress on several fronts during the second quarter. We continue to build a strong and growing backlog, supported by an expanding product portfolio as recent product developments transition from development into commercialization.

[Mike Manna, President and CEO at Ultralife Corporation]

In addition, our new plant leaders in Newark and Raynham are continuing to gain experience and drive operational improvements. Their teams are executing key gross margin initiatives, which have begun to deliver measurable benefits and are expected to contribute further improvements as these efforts gain traction. Our Communications Systems business is gaining momentum, supported by multiple new product releases, a growing opportunity funnel, and active development programs focused on expanding revenue and improving business stability.

[Mike Manna, President and CEO at Ultralife Corporation]

We remain confident in the long-term upside of this business and are continuing to invest in product development, customer engagement, and project that position us to pursue large, sustained revenue opportunities. With defense spending continue to emphasize force modernization and advanced network capabilities, our product portfolio remains closely aligned with emerging program requirements. We believe this favorable spending environment will support incremental program awards and long-term growth opportunities.

[Mike Manna, President and CEO at Ultralife Corporation]

We exited the quarter with a record backlog of $117.5 million, with over $14 million of the backlog from products released within the last year, including the conformal wearable battery and updated manpack radio battery for a NATO partner, new amplifiers, new speakers, and new battery packs for medical and safety customers. We expect our brand realignment to complete over the back half of the year, consolidating under the Ultralife master brand, which will bring clear, concise messaging to our customers.

[Mike Manna, President and CEO at Ultralife Corporation]

We design and deliver critical RF and portable power products. I will now 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 second quarter results for the quarter ended June 30th, 2026. We have also updated our investor presentation in the investor relations section of our website, and our Form 10-Q was filed with the SEC earlier this morning. Consolidated revenues totaled $47.9 million, compared to $48.6 million for the second quarter of 2025. Overall, government defense sales increased 5%, while commercial sales decreased 4.7%. Revenues from our Battery & Energy Products segment were $44.2 million, compared to $45.9 million last year, a 3.7% decrease.

[Phil Fain, CFO at Ultralife Corporation]

The year-over-year decrease reflects a 4.7% decline in commercial sales, primarily attributable to lower oil and gas sales, reflecting geopolitical factors, offsetting a 7.2% increase in medical battery sales. Government defense sales declined 1.4% due to the shipment of a very large order for an allied country last year. The sales split between commercial and government defense for our battery business was 68/32, identical to that reported for the 2025 quarter, and the domestic to international split was 59/41, compared to 73/27 for the 2025 period.

[Phil Fain, CFO at Ultralife Corporation]

Reflecting the heightened global demand for our products. Revenues from our Communications Systems segment of $3.8 million increased 39.3% from the $2.7 million we reported last year, due primarily to the timing of orders. On a consolidated basis, the commercial to government defense sales split was 62/38 compared to 65/35 for the 2025 second quarter. Our total backlog exiting the second quarter was $117.5 million, the highest level in the company's history, and representing a $33 million or 39% 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 63% of trailing 12-month sales. Our consolidated gross profit was $13.9 million, an increase of 19.5% over the 2025 period. As a percentage of total revenues, consolidated gross margin was 28.9%, a 500 basis point increase from the 23.9% reported for last year's second quarter. The increase resulted from favorable sales product mix for both business segments and the net refund of IEEPA tariffs, which had been recognized as costs in previous periods.

[Phil Fain, CFO at Ultralife Corporation]

The net tariff refund in the second quarter of 2026 was $1.1 million and accounted for 230 basis points of the year-over-year increase in gross margin. Gross profit for our Battery & Energy Products business was $12.5 million compared to $10.8 million last year, an increase of 15.4%. Gross margin was 28.3%, a 470 basis point increase over 23.6% last year due to sales mix and the tariff net refund. With this refund accounting for 250 basis points of the year-over-year increase. Accordingly, gross margin excluding the net tariff refund was 25.8%.

[Phil Fain, CFO at Ultralife Corporation]

For our Communications Systems segment, gross profit was $1.4 million compared to $0.8 million for the year-earlier period. Gross margin was 36.3% compared to 28.4% last year, primarily due to favorable sales mix. Operating expenses were $10.4 million, an increase of $1.1 million or 10.6% from the year-earlier quarter. New product development costs increased 39.1% related to the continued investment in our product offering and vertical integration opportunities within our portfolio.

[Phil Fain, CFO at Ultralife Corporation]

In addition, we incurred one-time costs of $0.9 million relating to litigation expenses for our cyber insurance claim and the completion of certain consulting fees to help expedite gross margin improvement at our two largest manufacturing facilities. As a percentage of revenues, operating expenses were 21.8% compared to 19.8% for last year's second quarter. Operating income was $3.4 million compared to $2.3 million last year, reflecting the overall increase in gross margin to 26.6% when excluding the tariff refund.

[Phil Fain, CFO at Ultralife Corporation]

Operating margin increased to 7.2% compared to 4.7% for the 2025 second quarter. Other expense reported below operating income was $0.5 million for the quarter, primarily comprised of interest expense from the financing of our Electrochem acquisition, partially offset by the second 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, established by the Inflation Reduction Act, runs through 2032.

[Phil Fain, CFO at Ultralife Corporation]

Other expense for the year-earlier period was $1.1 million, reflecting the acquisition financing. Our tax provision for the second quarter was $0.5 million compared to $0.2 million for the 2025 quarter, computed on a GAAP basis at statutory rates. Net income was $2.5 million or $0.15 per share on a GAAP fully diluted basis. This compares to net income of $0.9 million or $0.05 per share for the 2025 quarter. Adjusted EBITDA, defined as EBITDA including non-cash stock-based compensation expense and one-time costs not reflective of our ongoing operations, was $6.1 million or 12.8% of sales, compared to $4.1 million or 8.5% for the prior year quarter.

[Phil Fain, CFO at Ultralife Corporation]

Adjusted EBITDA on a TTM basis is $17.1 million, or 9.1% of sales. Turning to our balance sheet, we ended the second quarter with working capital of $69.8 million and a current ratio of 2.9, compared to $68.5 million and 2.8 for 2025 year-end. Looking beyond our second quarter results, our backlog, the sheer number of our growth initiatives, our continued focus 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 Q2 2026 results. For 2026, we have four distinct priorities well underway. Our first priority was to accelerate the revenue capture in the Communications Systems business. We have several new products now moving through commercial capture phase, including products that already received initial orders, with additional product releases planned later this year. During Q2, we showcased our new StrikeHub product line at Special Operations Week in HPE Discover.

[Mike Manna, President and CEO at Ultralife Corporation]

StrikeHub provides vehicle mounting network switching power and UPS to support edge compute solutions targeting special operations forces, U.S. Air Force Joint Fires Network, and U.S. Army Next Generation Command and Control applications. We are actively working with multiple partners on longer-term opportunities that we believe can attain profitable baseline revenue in the business over the next year. The second priority is improving gross margin within our Battery & Energy Products business, with our Raynham operation serving as the initial focus.

[Mike Manna, President and CEO at Ultralife Corporation]

As discussed on the last earnings call, we successfully addressed the significant scrap issue associated with our largest margin-impacting product line and began realizing positive P&L benefits as we ended the second quarter. We have also corrected the second-largest contributor to margin inefficiencies, and updates are currently being implemented through the supply chain, with benefits expected to begin materializing mid Q3. These two initiatives alone are expected to generate annual savings of approximately $600,000-$800,000 to the Battery & Energy Products gross margin.

[Mike Manna, President and CEO at Ultralife Corporation]

We have several lean manufacturing and automation projects underway at our Raynham facility aimed at increasing throughput, improving quality, and enhancing operational efficiency. These investments are particularly important as we anticipate more than 30% growth in customer demand and cell consumption over the next year. Third, we continue to expand the vertical integration opportunities resulting from the Electrochem acquisition, enabling us to incorporate Electrochem cells into our existing battery pack assemblies and increase the amount of content we provide to customers.

[Mike Manna, President and CEO at Ultralife Corporation]

This strategy not only enhances our competitive position, but also broadens our addressable market for battery pack solutions. In addition, through our enhanced marketing efforts, we're experiencing growing demand in support of both large and small water-based drone platforms utilizing Electrochem cells. These opportunities are progressing well, and we expect them to contribute meaningful incremental revenue beginning in the fourth quarter and continuing over the next several years.

[Mike Manna, President and CEO at Ultralife Corporation]

Lastly, on priority four, we are well underway in our company branding realignment under the Ultralife master brand, which will be completed this year, clarifying our customer messaging and market positioning as a market leader in battery and RF products. Switching to development projects, we continue to invest in products on both sides of the business to drive revenue and opportunities for organic growth. Within Communications Systems, continued focus remains on multiple new product development projects with 2026 launch dates.

[Mike Manna, President and CEO at Ultralife Corporation]

We're expanding our ruggedized computing portfolio by integrating new HPE server products and configurations tailored for tactical and mission-critical environments. We have already received several initial orders and continue to pursue additional program awards with expected 2026 deliveries. Our new 20 W amplifier is under evaluation with multiple global customers for potential adoption and key monetization programs, while we continue to receive orders from international partners with deliveries expected this year.

[Mike Manna, President and CEO at Ultralife Corporation]

We remain engaged with radio manufacturers to pair our amplifiers with OEM platforms and drive pull-through sales opportunities. We'll introduce the advanced variant of the 20 W amplifier in 2026, supporting the newest high-speed, single-channel, and frequency-hopping MANET waveforms in a compact body-worn form factor. We're also releasing new vehicle radio mounts in 2026 that integrate our entire amplifier portfolio with multiple handheld radio platforms, providing customers with a cost-effective universal mounting solution for both legacy vehicle fleets and new vehicle programs.

[Mike Manna, President and CEO at Ultralife Corporation]

Our Crescent small form factor wearable edge compute solution, which provides portable high-end compute capability in manned vehicle and drone applications, is in the final design stages. We have an established strong partner ecosystem to support hardware development, system integration, and software tool development, while incorporating voice-of-customer feedback to refine requirements, with the first prototypes available later this year.

[Mike Manna, President and CEO at Ultralife Corporation]

On the Battery & Energy Products side of the business, our primary focus remains driving new business growth through transformational programs and strategic OEM partnerships. We currently have multiple OEM development programs underway aimed at bringing new customer-specific products to market over the next several years. In addition, we are collaborating with existing customers on several initiatives to enhance the performance of current products and refresh product designs to meet evolving market requirements.

[Mike Manna, President and CEO at Ultralife Corporation]

With respect to our conformal battery, which powers dismounted soldier systems, I'm pleased to say we have shipped more than $2 million in orders during 2026. Current backlog exceeds $7 million and expected to fully ship before year-end. We have secured several cell and battery pack development programs supporting water-based defense drone applications. Design and prototype funding is in place for 2026, with production expected to begin in early 2027.

[Mike Manna, President and CEO at Ultralife Corporation]

This represents an exciting and expanding segment of our business, where we have an established leadership position as a supplier of advanced underwater battery solutions in both rechargeable and non-rechargeable configurations. We are nearing completion of product development activities with an OEM partner for a rechargeable power pack, powering a remote surveillance system. This development and product certifications are scheduled to be completed into Q4, with product deliveries beginning in early 2027.

[Mike Manna, President and CEO at Ultralife Corporation]

We've established initial production capabilities for our thin cell technology platform to support customers in the medical wearables and asset tracking markets. Our sales pipeline continues to gain momentum, with several opportunities advancing through qualification processes. These ultra-thin battery designs enable smaller, more discreet wearable sensors than those typically available today, improving user comfort while delivering longer device operating life. Continued investment in new product development remains a key component of our long-term growth strategy.

[Mike Manna, President and CEO at Ultralife Corporation]

Expanding and diversifying our product portfolio not only creates new revenue opportunities, but also reinforces our legacy of delivering mission-critical power solutions. Our strategic priorities remain unchanged, converting long-term development programs into recurring revenue, advancing vertical integration where it creates value, and maintaining a disciplined focus on operational excellence and efficiency improvements. During 2026, we've made meaningful progress on gross margin improvement initiatives within the battery business.

[Mike Manna, President and CEO at Ultralife Corporation]

Looking ahead, we have multiple new Communications Systems products scheduled for launch this year in support of Next Generation Command and Control programs. At the same time, we continue to streamline our operations and strengthen our market recognition through our consolidation of our business under the Ultralife master brand. With a healthy backlog exceeding $117 million as we exited the second quarter and a robust development pipeline across both business segments, we are well-positioned for revenue growth.

[Mike Manna, President and CEO at Ultralife Corporation]

Several custom battery programs serving medical, safety, and drone markets are expected to transition into production later this year and into 2027. In addition, new amplification and man-wearable computing products are slated for release in our Communications Systems business, further supporting our growth outlook and expanding our market opportunities. I will now pass it back to the operator for questions.

[Operator]

Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone. To remove yourself from the queue, you may press star one one again. Again, that's star one one on your touch-tone telephone to ask a question. Please stand by while we compile the Q&A roster. Our first question comes from the line of Will Lauber of Visionary Wealth Advisors. Your line is open, Will.

[Will Lauber, Analyst at Visionary Wealth Advisors]

Hey, guys. I guess my question was, I saw last month that L3Harris had won the NGC2 award for their Falcon manpacks. I'm assuming that you guys will get some or most of that business. I guess my question is, what has happened to the backlog since the end of the quarter? Or how much has been added in July?

[Mike Manna, President and CEO at Ultralife Corporation]

Well, in July, we've had a lot of order pull through to our backlog. I mean, we're almost at $130 million as we sit today.

[Will Lauber, Analyst at Visionary Wealth Advisors]

Okay. With the Falcon manpack order, would it be safe to assume that that was just one division and it would roll out to all the divisions, or do you have any insight into that?

[Mike Manna, President and CEO at Ultralife Corporation]

We do not directly have the insight as to which divisions it's going to at this point. We may in the future, but right now we don't.

[Will Lauber, Analyst at Visionary Wealth Advisors]

Okay. With the Hewlett Packard Enterprise servers for the NGC2, I had noticed that the Army had conducted some tests in some pretty extreme conditions last month. Is there any kind of report as to how the Hewlett Packard servers held up in that heat?

[Mike Manna, President and CEO at Ultralife Corporation]

Well, from what we hear, everything made it through the testing. We don't really get a lot of detail other than that at this point.

[Phil Fain, CFO at Ultralife Corporation]

Accompanying the Hewlett Packard Enterprise servers is our state-of-the-art cooling system. When you're dealing with some extreme heat, let's say in Fort Irwin in California, they're designed to withstand that heat.

[Will Lauber, Analyst at Visionary Wealth Advisors]

Okay. That's good because I saw in some of the press mentions that there was some of the equipment that didn't handle the heat as well. Okay. That's all I have for right now. Thank you.

[Phil Fain, CFO at Ultralife Corporation]

Okay. Thank you, Will.

[Operator]

To ask a question, please press star one one on your telephone. Again, that's star one one on your telephone to ask a question. I would now like to turn the conference back to Mike Manna for closing remarks. Sir?

[Mike Manna, President and CEO at Ultralife Corporation]

All right. Thanks, everyone, for listening to today's call. We look forward to talking to you next time during the Q3 2026 earnings call. Bye now.

[Operator]

This concludes today's conference call. Thank you for participating. You may now disconnect.

Participants

Executives

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

Analysts

• Will Lauber, Analyst at Visionary Wealth Advisors