Ultralife (NASDAQ:ULBI) reported fourth-quarter fiscal 2025 revenue of $48.5 million, up 10.6% from the prior-year period, as strength in its battery and energy products business more than offset a decline in Communications Systems sales. Management also highlighted a year-end backlog of $110.2 million and outlined operational initiatives and product development programs expected to support growth in fiscal 2026.
Quarterly and full-year results
For the quarter ended Dec. 31, 2025, Ultralife posted an operating loss of $10.6 million and a GAAP net loss of $7.4 million, or $0.45 per share. The company said results included a one-time non-cash intangible asset impairment charge tied to its transition from multiple sub-brands to the Ultralife master brand. CFO Phil Fain said net loss included $0.57 per share related to the impairment charge net of tax benefits. In the year-ago quarter, the company reported net income of $0.2 million, or $0.01 per share, and operating income of $1.5 million.
Segment performance and margins
Ultralife’s Battery & Energy Products segment drove the quarter’s top-line growth. Segment revenue was $45.9 million, up 15.1% from $39.9 million in the prior-year quarter. Fain noted that excluding third-party sales related to Electrochem, which was acquired Oct. 31, 2024, segment sales rose 9.5% year over year.
Fain said organic growth in the battery business was driven by a 39.6% increase in medical sales and a 20.4% increase in industrial and other commercial sales, along with a 1.2% increase in government defense sales. Those gains were partially offset by a 3.6% decline in oil and gas market sales. The battery business sales mix was 73% commercial and 27% government defense, compared with 70% and 30% in the year-ago quarter. Domestic-to-international mix was 71% and 29%, compared with 62% and 38% a year earlier, which Fain said primarily reflected the Electrochem acquisition.
Communications Systems segment revenue declined 35.2% to $2.6 million from $4.0 million. Fain attributed the decline primarily to timing of expected orders that were delayed by the U.S. government shutdown.
Consolidated gross profit increased 13.7% to $12.1 million, and consolidated gross margin improved to 24.9% from 24.2% in the year-ago quarter. Battery & Energy Products gross profit rose 23.7% to $11.5 million, while segment gross margin expanded 170 basis points to 25.1%, which Fain said was primarily due to product mix and higher factory cost absorption. Communications Systems gross profit fell to $0.5 million from $1.3 million, and segment gross margin dropped to 19.9% from 31.9%, which Fain attributed to lower factory volume.
Impairment charge, adjusted EBITDA, and tax items
Fain said operating expenses were essentially flat year over year when excluding the $12.2 million non-cash intangible asset impairment and several one-time items, including costs tied to completing the transition of Electrochem to Ultralife Systems, legal fees associated with a cyber insurance claim, and consulting costs aimed at accelerating gross margin improvements and upgrading operations leadership.
Other income was $0.4 million in the quarter, compared with other expense of $1.0 million in the prior-year period. Fain said interest expense related to financing the Electrochem acquisition was more than offset by an expected $1.4 million refundable tax credit under the 45X advanced manufacturing production tax credit established by the Inflation Reduction Act of 2022, which he noted runs through 2032 and applies to certain qualifying battery cells and packs the company manufactures.
The company recorded a tax benefit of $2.8 million for the quarter, compared with a $0.3 million provision in the year-ago period. Fain said the benefit primarily reflected reversal of deferred tax liabilities associated with the impairment charge.
Adjusted EBITDA was $5.7 million, or 11.7% of sales, compared with $3.9 million, or 8.9% of sales, in the prior-year quarter. Fain said trailing-twelve-month adjusted EBITDA was $17.3 million, or 9% of sales. He described adjusted EBITDA as EBITDA including non-cash stock-based compensation expense and excluding one-time acquisition and other costs not reflective of ongoing operations.
Backlog, balance sheet, and priorities for 2026
Ultralife ended the quarter with backlog of $110.2 million, up $20.0 million, or 22.1%, from $90.3 million exiting the third quarter. Fain said the backlog is diverse across commercial and government defense customers, represents 58% of trailing-twelve-month sales, and that virtually all of it is expected to ship in 2026. Manna said more than $6 million of the backlog was driven by new products released in 2025.
On the balance sheet, Fain said the company ended the quarter with working capital of $68.5 million and a current ratio of 2.8, compared with $67.9 million and 3.3 at 2024 year-end. He added that Ultralife reduced acquisition debt principal by $4.8 million in 2025, exceeding the $2.8 million amortization required under its debt agreement.
Manna described fiscal 2025 as a year of operational progress, including completing an ERP transition, transitioning Electrochem into Ultralife systems, closing two smaller North American manufacturing facilities (reducing the count to five from seven), beginning systems consolidation at Houston facilities, bringing in external lean and operational support for the Newark facility, and launching global rebranding efforts.
Looking to 2026, Manna outlined four priorities:
- Return Communications Systems to profitable growth: He said the segment has several new products in the commercial capture phase with initial orders received, additional products slated for release in 2026, and work underway with partners on “large programs of record” and long-term projects intended to restore recurring baseline revenue. In Q&A, management defined baseline revenue for Communications Systems as $25 million.
- Improve Battery & Energy gross margin: Manna said the initial focus is the Newark operation, where the company is addressing yield issues and inefficiencies with external consultants and a new leadership team. He also cited revised pricing in some product areas and cost-down projects with multiple customers.
- Expand vertical integration and reorganize operations: Manna said the Electrochem acquisition enables the company to incorporate Electrochem cells into existing pack assemblies and broaden addressable markets such as pipeline inspection, seismic telemetry, and sonobuoys. He also said Ultralife is aligning several battery and energy facilities under single leadership and forming a Telemetry Power Systems division that will include Houston and Raynham in the U.S., Surrey in Canada, and a wholly owned facility in Shenzhen, China, with reorganization expected to be completed in the first quarter.
- Complete brand alignment: Manna said the company is reducing a “complex and confusing number of brands and trade names” to lower redundant costs and sharpen messaging that Ultralife is a global provider of critical power and RF products.
Management also detailed product development updates, including testing and initial orders for a new 20-watt A2303 amplifier with deliveries expected in the second quarter of 2026, ongoing development of a Crescent man-wearable compute solution with initial prototypes expected in 2026, and progress on several battery programs. Manna said the company has begun shipping production quantities of its Conformal Wearable Battery for dismounted soldier systems and shipped its first order in full, with additional backlog shipments expected in the first half of 2026 and quoted international opportunities for 2026 deliveries.
In medical, Manna said the company received production orders—after a development cycle of just over seven years—for a battery pack providing power backup for a new pump application for a major medical OEM, with shipments scheduled to begin in mid-2026 as the customer ramps device manufacturing. In response to an analyst question, management characterized that program as a “six-figure plus opportunity per year” as it begins its product launch.
About Ultralife (NASDAQ:ULBI)
Ultralife Corporation (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.
