Ultralife Corporation Q4 FY2026 earnings call

• In 2025, completed electric M transition and operational initiatives to reduce costs. Backlog grew to $110 million exiting 2025. • 2026 priorities: Make communication systems business profitable and growing with new products and large programs. Improve battery and energy gross margin, address yield issues, expand vertical integration, align battery and energy facilities under single leadership. Focus on company-wide branding alignment. • Development projects: Communication systems working on ruggedized server cases, DC power supply, new amplifier, wearable compute solution. Battery and energy focused on conformal wearable battery, thinal cell, remote surveillance system, medical battery pack, thin-cell technology, medical cart power options.

Consolidated revenues for Q4 2025 were $48.5 million. Battery and energy product segment revenues were $45.9 million in Q4 2025, a 15.1% increase year-over-year. Excluding third-party sales from Electrochem acquisition, organic growth was 9.5%. Medical saw 39.6% increase, industrial and other commercial 20.4%, government defense 1.2%, offset by 3.6% decrease in oil and gas. Communication systems segment revenues were $2.6 million in Q4 2025, a 35.2% decline year-over-year. Battery and energy gross profit was $11.5 million in Q4 2025, up 23.7%, gross margin 25.1%. Communication systems gross profit was $0.5 million, down from $1.3 million, gross margin 19.9%.

• Expect communication systems business to rebound in 2026 as new product sales begin and long-delayed programs sell through. • Aim for battery and energy business to improve gross margin from new product launches. • Target organic growth, with long-term goal to be greater than 10% EBITDA, and baseline revenue for communication systems business is $25 million.

• Uncertain global economic conditions. • Reductions in revenues from key customers. • Delays or reductions in US 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, or other factors not under control.

Q: Sounds like there's a lot of good growth as well as margin expansion opportunities. Would you care to help us frame that a little bit and kind of what your goals are in terms of organic growth rate or kind of where you want to get that 9% EBITDA margin?

A: Overall, started a roadmap a few years ago to get new product pipeline humming. Targeting to be two times GDP in organic growth side. Short-term, love to be greater than 10% EBITDA, long-term want it higher. As pay down debt on last acquisition, will look for next growth.

Q: On the comp systems business, when I was involved with the company years ago, you'd had a huge order in that business, and now it's extremely low levels here, I guess. But you said you wanted to get it back to a baseline revenue. I guess kind of what's your definition of baseline revenue for that business?

A: Baseline is $25 million. That's where we need to be with potential for breakaway large orders.

Q: You mentioned offhand, Mike, about listening to some old calls here about this medical order. As I remember, if it's the same one, it was kind of a topic for quite a while, and then I guess the customer kept dragging their feet. So I guess what's the ramp look like there, and is that a sizable opportunity?

A: New medical order, we don't often talk about a lot of the medical projects because history has been they drag on. On the order we have, it's an OEM we've been working with for years, already have good relationship, it's a six-figure plus opportunity per year just beginning to be a product launch, expect a good pop to the business. The thin film one we're still waiting for POs.