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Ultralife (NASDAQ: ULBI) reported a first-quarter loss for fiscal 2026, citing lower sales, production disruptions and higher one-time costs. Management pointed to a record backlog and new product activity as indicators of future growth.
President and CEO Mike Manna said the company posted first-quarter revenue of $47.4 million and an operating loss of $0.2 million, resulting in a loss of $0.03 per share. He described the quarter as “a challenging start to the year on both sides of the business,” pointing to order shipment timing, delays to Middle East customers, plant shutdowns tied to reorganization and weather events, and consulting fees.
Chief Financial Officer Phil Fain said consolidated revenue declined from $50.7 million in the first quarter of 2025. Net loss was $0.5 million, or $0.03 per share, compared with net income of $1.9 million, or $0.11 per share, a year earlier.
Ultralife’s Battery & Energy Products segment generated revenue of $44.2 million, down 4.7% from $46.3 million in the prior-year quarter. Fain said the decrease reflected a 5.5% decline in commercial sales tied to oil and gas customers and a 2.7% decline in government and defense sales compared with the shipment of a large order for an allied country in the 2025 quarter. Medical sales increased 5.9%.
Within the battery business, the sales split between commercial and government defense customers was 69% to 31%, compared with 64% to 36% a year earlier. The domestic-to-international split was 66% to 34%, compared with 78% to 22% in the first quarter of 2025, which Fain said reflected global demand for the company’s products.
The Communications Systems segment posted revenue of $3.3 million, down 25.7% from $4.4 million a year earlier. Fain attributed the decline to the timing of expected orders. Manna said the segment had “another underwhelming quarter,” but noted multiple new products and projects underway to grow baseline revenue and stabilize results.
Consolidated gross profit fell 20.7% to $10.1 million. Gross margin declined to 21.3% from 25.1% in the prior-year quarter.
In Battery & Energy Products, gross profit was $9.4 million, down from $11.4 million. Gross margin declined to 21.2% from 24.7%. Fain said the year-over-year reduction primarily reflected non-recurring events that caused lost production days and reduced gross margin by about $0.8 million.
Those events included more than three days lost due to the failure of the substation providing power to the company’s Newark facility, as well as the equivalent of 16 days at the Raynham facility. Fain also cited higher energy costs at Northeast facilities and sales mix, which resulted in higher net tariff costs.
Communications Systems gross profit declined to $0.8 million from $1.3 million, with gross margin falling to 21.2% from 29.5%, primarily because of lower factory volume and product mix.
Operating expenses increased $1 million, or 10.5%, to $10.3 million. Fain said most of the increase came from more than $0.8 million in one-time costs, including consulting fees intended to expedite gross margin improvement in the company’s two largest manufacturing facilities, litigation expenses related to a cybersecurity claim and final costs for the Raynham systems transition. New product development costs increased 23.3%.
Ultralife ended the first quarter with a record backlog of $115.1 million, up $20.1 million, or 21.1%, from the comparable 2025 period. Fain said the backlog was the highest in the company’s history and remained diverse across commercial and government defense customers. He said the replenishment rate represented 61% of trailing 12-month sales.
Manna said more than $12 million of the backlog came from products released within the past year. He said Ultralife added and trained direct labor resources at its Raynham and Newark facilities to support demand expected in 2026, noting that the costs are incurred before associated revenue but are necessary to ensure product quality.
Adjusted EBITDA, defined by the company as EBITDA plus non-cash stock-based compensation expense and certain one-time or non-recurring costs, was $3.2 million, or 6.8% of sales, compared with $5.4 million, or 10.7% of sales, in the prior-year quarter. Adjusted EBITDA on a trailing 12-month basis was $15 million, or 8% of sales.
The company ended the quarter with working capital of $67.1 million and a current ratio of 2.6, compared with $68.5 million and 2.8 at the end of 2025.
Manna said Ultralife is focused on four priorities for 2026: improving revenue capture in Communications Systems, improving gross margin in Battery & Energy Products, expanding vertical integration opportunities enabled by the Electrochem acquisition, and completing the company-wide alignment of sub-brands under the Ultralife master brand.
For Communications Systems, Manna said the company has new products in the commercial capture phase, initial orders received and additional product releases planned for 2026. He said Ultralife is working with multiple partners on long-term programs and projects that management believes could restore recurring baseline revenue over the next year.
In Battery & Energy Products, Manna said the initial gross margin focus is the Newark operation. He said the company has implemented a corrective action for the largest contributor of scrap, with the impact expected to begin eliminating the issue mid-year as existing parts supply is worked through.
Manna also said the company expects to more than double the use of its own cells in internal packs this year as customer qualifications are completed. Ultralife has combined certain related entities into a single subdivision within Battery & Energy Products that it now internally calls Telemetry Power Systems.
Manna highlighted development projects across Ultralife’s portfolio. In Communications Systems, he cited a recent $4 million multi-year award from an international partner for the company’s Universal Vehicle Adapter, a handheld radio charger supporting legacy and current radios. He also said Ultralife received funding from a special operations organization to develop and field initial prototypes of StrikeHub, a vehicle-based tactical network hub integrating HPE servers, switches and power management.
He said the company’s new 20-watt amplifier has received multiple orders, with deliveries expected in the second and third quarters of 2026. Ultralife plans to introduce an advanced variant later this year supporting newer high-speed single-channel and frequency-hopping MANET waveforms in a compact body-worn form factor.
On the battery side, Manna said Ultralife shipped its first order in full for its conformal wearable battery used to power dismounted soldier systems, with backlog exceeding $8 million for the product expected to ship in 2026. He also said the company has quoted multiple large-volume opportunities, mainly for international customers.
Manna said a 19 amp-hour thionyl cell has passed all performance validation requirements and is awaiting customer device certification and initial production planning. He also discussed development work with an OEM on a rechargeable power pack for remote surveillance systems, production orders for a battery pack supporting a new pump application for a major medical OEM, and initial production capabilities for Thin Cell technology aimed at medical wearables and item tracking applications.
No analysts asked questions during the call. Manna closed by saying the company’s focus remains on expanding product offerings and sales engagement in Communications Systems, increasing gross margin and revenue in Battery & Energy Products, and pursuing vertical integration opportunities in Telemetry Power Systems.
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