Ultralife Corporation Q3 FY2025 earnings call

• Q3 sales were $43.4 million with an operating loss of $1 million, including a one-time adjustment of $1.1 million. Revenue grew year-over-year but faced gross margin challenges due to supply chain quality issues in Battery & Energy. Communications business weighed on earnings. - Decided to close Calgary location, with production relocated to Houston, anticipating annual savings of ~$0.8 million in 2026. - Progressing with company-wide rebranding initiative, first phase targeted for Q4 completion. - In Battery & Energy: Received BA-53 battery award, conformal wearable battery shipping production quantities, 123A follow-on PEO, thin cell technology for medical wearable sector, expanded X5 medical car products. - In Communications: Expanding ruggedized server case portfolio, completed initial design for communication and control solution, showcased new amplifier and Crescent server at defense show, working on next high-performance amplifier, received PO for prototype electronic warfare amplifiers.

Consolidated revenues totaled $43.4 million. The Battery & Energy Products segment had revenues of $39.9 million, accounting for 91.9% of total revenues. The Communications Systems segment had revenues of $3.4 million, making up 7.8% of total revenues. In Q3, the Battery & Energy Products business had gross profit of $8.8 million, with a gross margin of 22.1% compared to 24.7% last year. The Communications Systems segment had gross profit of $0.8 million, with a gross margin of 23.3% compared to 20% last year. Consolidated gross profit was $9.6 million, an increase of 10.8% over the prior year, but consolidated gross margin was 22.2%, a 210 basis point decline from the prior year's 24.3%.

• Anticipate annual savings of approximately $0.8 million throughout 2026 from closing Calgary location. - New products in development across both businesses, with expected production and orders in 2026 for various items like amplifiers, Crescent server, conformal wearable battery, etc.

• Uncertain global economic conditions. - Reductions in revenue from key customers. - Delays or reductions in U.S. and foreign military spending. - Acceptance of new products on a global basis. - Disruptions or delays in supply of raw materials and components due to business conditions, global conflicts, weather, etc.

Q: None A: None