UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ Commission file number: 0-20852 ULTRALIFE CORPORATION (Exact name of registrant as specified in its charter) Delaware (State or ot ...

Exhibit 99.1 Ultralife Corporation Reports Second Quarter Results NEWARK, N.Y. – August 7, 2025 -- Ultralife Corporation (NASDAQ: ULBI) reported operating results for the second quarter ended June 30, 2025 with the following results: "The second quarter was a challenging period for Ultralife. While the addition of Electrochem lifted revenue, Battery & Energy Products organic sales were essentially flat and Communications Systems sales declined due to delayed purchase orders. We also faced headwinds from tar ...

Financial Data and Key Metrics Changes - The company reported Q2 sales of $48.6 million, an increase from $43 million in the same quarter of 2024, with an operating income of $2.3 million, down from $3.9 million last year [7][10][14] - Net profit for Q2 was $900,000, resulting in $0.05 EPS on a GAAP basis and $0.07 on an adjusted basis, compared to $2.7 million or $0.18 per share for the same quarter in 2024 [16][17] - Consolidated gross margin decreased to 23.9%, down 300 basis points from 26.9% in the previous year, primarily due to product mix and tariffs [12][13] Business Line Data and Key Metrics Changes - Revenues from the Battery and Energy Products segment were $45.9 million, up from $36.7 million last year, while government defense sales increased by 61.1% [10][11] - The Communications Systems segment saw revenues decline by 57.2% to $2.7 million, attributed to large shipments in the prior year and delays in purchase orders [12][14] - The sales split between commercial and government defense for the battery business was 68% to 32%, compared to 75% to 25% in 2024 [11] Market Data and Key Metrics Changes - The domestic to international sales split was 73% to 27%, reflecting increased domestic shipments of government defense products [11] - Total backlog with high confidence orders exiting the second quarter was $89 million, indicating a diverse customer base [12] Company Strategy and Development Direction - The company aims to diversify through M&A and new product development, focusing on vertical integration opportunities from the Electrochem acquisition [8][20] - Continued investment in new product development is essential for future growth, with several initiatives underway across both business segments [29] - The company is also focused on improving gross margins through pricing strategies and lean productivity projects [21][22] Management's Comments on Operating Environment and Future Outlook - Management acknowledged headwinds from tariffs, unfavorable product mix, and softness in the oil and gas sector, but remains optimistic about growth in the second half of the year [7][29] - The company is seeing early purchase orders and qualification activities, indicating potential revenue increases in the near future [66][68] - Management expressed confidence in the potential for multiple large opportunities to materialize over the next 12 to 18 months [66][68] Other Important Information - The company successfully transitioned the Electrochem ERP and office systems, with further manufacturing support systems to be finalized in Q3 [8][20] - The company received $1.8 million from the employee retention credit, which was used to reduce acquisition debt [18] Q&A Session Summary Question: What was the impact of tariffs this past quarter? - The tariffs cost the company approximately $400,000 after accounting for customer reimbursements [33] Question: How do you see tariffs impacting the third quarter? - The company does not expect as significant an impact from tariffs in Q3 as experienced in Q2, given the current tariff rates [35] Question: Is there more employee retention credit expected to flow through this year? - The company has captured all available employee retention credit [38] Question: How much has been received from the insurance reimbursement for the cyber attack? - The company has received $235,000 and is pursuing a lawsuit for additional compensation in the millions [40][41] Question: Any updates on orders returning in the oil and gas and medical sectors? - Oil and gas orders are influenced by WTI prices, while medical sales are expected to stabilize as order timing improves [50][53] Question: Can you quantify the potential opportunities for later this year and next year? - The company is optimistic about multiple opportunities that could significantly increase revenue, although specific figures are not available yet [66][68]

Company Overview - Ultralife Corporation, founded in 1990, is headquartered in Newark, NY, and specializes in power solutions, including rechargeable and non-rechargeable batteries, charging systems, communications and electronics systems, and accessories [1]. Market Position - The company serves a global customer base, including industrial sectors, indicating a diverse market presence [1].

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section provides the unaudited consolidated financial statements and management's discussion and analysis for Ultralife Corporation's first quarter of 2025 [Item 1. Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This section presents Ultralife Corporation's unaudited consolidated financial statements for Q1 2025, including balance sheets, income, cash flows, and detailed notes [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) This section provides a summary of the company's financial position, detailing assets, liabilities, and equity as of March 31, 2025, and December 31, 2024 Consolidated Balance Sheet Summary (in Thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $101,469 | $97,160 | | **Total Assets** | **$223,753** | **$220,451** | | **Total Current Liabilities** | $31,496 | $29,291 | | **Total Liabilities** | $87,149 | $86,264 | | **Total Stockholders' Equity** | $136,604 | $134,187 | | **Total Liabilities and Stockholders' Equity** | **$223,753** | **$220,451** | [Consolidated Statements of Income and Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) This section presents the company's financial performance, including revenues, gross profit, operating income, and net income for the first quarter of 2025 and 2024 Consolidated Statement of Income (in Thousands, except per share amounts) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenues | $50,746 | $41,927 | | Gross Profit | $12,745 | $11,470 | | Operating Income | $3,399 | $4,063 | | Net Income Attributable to Ultralife | $1,865 | $2,891 | | Diluted EPS | $0.11 | $0.18 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section details the cash inflows and outflows from operating, investing, and financing activities for the first quarter of 2025 and 2024 Consolidated Statement of Cash Flows Summary (in Thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $3,368 | $(81) | | Net cash used in investing activities | $(895) | $(372) | | Net cash (used in) provided by financing activities | $(687) | $185 | | **Increase (Decrease) in Cash** | **$1,865** | **$(179)** | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed information on accounting policies, the Electrochem acquisition, debt agreements, and segment data, supplementing the financial statements - On October 31, 2024, the Company acquired Electrochem Solutions, Inc. for **$48,022 in cash**, including working capital adjustments. The acquisition is expected to enhance scale, manufacturing efficiencies, and provide cross-selling opportunities[23](index=23&type=chunk)[24](index=24&type=chunk) - For Q1 2025, the Electrochem acquisition contributed **$7,622 in revenue** and **$743 in net income**[32](index=32&type=chunk) - The company entered into a new Credit and Security Agreement with KeyBank, including a **5-year, $55 million senior secured term loan** to fund the acquisition and repay previous debt[34](index=34&type=chunk)[35](index=35&type=chunk) Segment Contribution (in Thousands) | Segment | Q1 2025 Contribution | Q1 2024 Contribution | | :--- | :--- | :--- | | Battery & Energy Products | $5,984 | $5,078 | | Communications Systems | $126 | $1,335 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 financial results, including revenue growth, segment performance, gross margin, operating expenses, liquidity, and non-GAAP reconciliations [Overview](index=22&type=section&id=Overview) This section provides a high-level summary of the company's financial performance for Q1 2025, highlighting key changes in revenues, gross margin, operating income, and net income - Consolidated revenues for Q1 2025 increased **21.0% YoY to $50.7 million**, primarily due to the inclusion of the recently acquired Electrochem and an **18.6% increase in government/defense sales**[95](index=95&type=chunk) - Gross margin decreased by **230 basis points to 25.1%** in Q1 2025 from 27.4% in Q1 2024, mainly due to an unfavorable sales product mix[96](index=96&type=chunk) - Operating income fell to **$3.4 million (6.7% of revenues)** in Q1 2025 from $4.1 million (9.7% of revenues) in Q1 2024, impacted by lower gross margin and higher operating expenses, including one-time acquisition-related costs[98](index=98&type=chunk) - Net income attributable to Ultralife was **$1.9 million ($0.11 per share)** for Q1 2025, a decrease from $2.9 million ($0.18 per share) in Q1 2024[99](index=99&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) This section details the financial performance by segment, analyzing revenue changes and the factors influencing operating expenses for Q1 2025 Segment Revenue Performance (in Thousands) | Segment | Q1 2025 Revenue | Q1 2024 Revenue | % Change | | :--- | :--- | :--- | :--- | | Battery & Energy Products | $46,321 | $34,989 | +32.4% | | Communications Systems | $4,425 | $6,938 | -36.2% | | **Total** | **$50,746** | **$41,927** | **+21.0%** | - The Battery & Energy Products segment revenue growth was driven by the Electrochem acquisition and a **53.6% increase in government/defense sales**, partially offset by a **12.3% decrease in medical battery sales**[103](index=103&type=chunk) - The Communications Systems sales decrease was primarily due to large shipments of integrated systems in the prior year to a major international defense contractor[104](index=104&type=chunk) - Operating expenses increased **26.2% YoY to $9.3 million**, mainly due to the inclusion of Electrochem (**$1.1 million**), a **24.0% increase in new product development costs**, and strengthening the sales and marketing team[108](index=108&type=chunk) [Adjusted EBITDA and Adjusted EPS (Non-GAAP)](index=25&type=section&id=Adjusted%20EBITDA%20and%20Adjusted%20EPS%20(Non-GAAP)) This section provides reconciliations of non-GAAP financial measures, specifically Adjusted EBITDA and Adjusted EPS, to their most directly comparable GAAP measures Adjusted EBITDA Reconciliation (in Thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income attributable to Ultralife | $1,865 | $2,891 | | Adjustments (Interest, Taxes, D&A, etc.) | $3,583 | $2,352 | | **Adjusted EBITDA** | **$5,448** | **$5,243** | Adjusted EPS Reconciliation | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Diluted EPS (GAAP) | $0.11 | $0.18 | | Deferred tax provision per share | $0.02 | $0.04 | | **Adjusted Diluted EPS** | **$0.13** | **$0.22** | [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, cash flow generation, debt obligations, and capital market access for future financial flexibility - Cash increased by **$1.9 million** during Q1 2025, ending the period at **$8.7 million**[123](index=123&type=chunk) - Cash generated from operations was **$3.4 million** in Q1 2025, a significant improvement from **$81 thousand used in operations** in Q1 2024[124](index=124&type=chunk) - As of March 31, 2025, the company had **$54.3 million outstanding on its Term Loan** and no amount outstanding on its Revolving Credit Facility, and was in full compliance with debt covenants[128](index=128&type=chunk) - The company filed a new shelf registration statement on Form S-3 for up to **$100 million**, providing flexibility to access capital markets for general corporate purposes, including potential acquisitions[127](index=127&type=chunk) [Item 4. Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective due to a material weakness in internal control over financial reporting, with remediation efforts underway - Management concluded that disclosure controls and procedures were **not effective** as of March 31, 2025, due to an existing material weakness in internal control over financial reporting[132](index=132&type=chunk) - The material weakness is attributed to the need for additional accounting personnel with expertise commensurate with the company's growth, both organic and through acquisitions[134](index=134&type=chunk) - Remediation efforts include hiring a **VP of Financial Growth, Transition & Efficiency** in Q4 2024 and a **Controller for Electrochem** in Q1 2025, with plans to hire additional personnel[136](index=136&type=chunk) [PART II. OTHER INFORMATION](index=30&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section includes additional information such as exhibits filed with the report and formal signatures [Item 6. Exhibits](index=30&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and iXBRL financial data - The exhibits filed with this report include CEO and CFO certifications under Rule 13a-14(a) / 15d-14(a), Section 1350 certifications, and various Inline XBRL documents for financial reporting[139](index=139&type=chunk) [Signatures](index=31&type=section&id=Signatures) The report is formally signed and authorized by the company's principal executive and financial officers - The Form 10-Q was signed on **May 12, 2025**, by Michael E. Manna, President and Chief Executive Officer, and Philip A. Fain, Chief Financial Officer and Treasurer[144](index=144&type=chunk)

Financial Data and Key Metrics Changes - The company reported Q1 sales of $50.7 million, an increase from $41.9 million in the same quarter last year, representing a year-over-year growth of 21% [10] - Operating income for Q1 was $3.4 million, down from $4.1 million in the previous year, leading to a decrease in operating margin to 6.7% from 9.7% [15] - Net income was $1.9 million or $0.11 per share on a GAAP basis, compared to $2.9 million or $0.18 per share for the same quarter last year [15][16] - Adjusted EBITDA was $5.4 million, or 10.7% of sales, compared to $5.2 million or 12.5% for the prior year quarter [16] Business Line Data and Key Metrics Changes - Revenues from the Battery and Energy Products segment were $46.3 million, up from $35 million last year, with a 10.6% organic growth excluding Electrochem sales [10][11] - Government defense sales in the Battery segment increased by 53.6%, while medical battery sales decreased by 12.3% [11] - The Communications Systems segment saw revenues decline by 36.2% to $4.4 million, primarily due to large shipments in the prior year [12] Market Data and Key Metrics Changes - The sales split between commercial and government defense for the battery business was 64% to 36%, with a domestic to international sales split of 78% to 22% [11] - The total backlog exiting Q1 was $95 million, representing 55% of trailing twelve-month sales, indicating a healthy demand outlook [12] Company Strategy and Development Direction - The company is focused on completing the integration of the Electrochem acquisition, including ERP system setup, by the end of Q2 [18][26] - There is a commitment to improve sales pipelines and stabilize gross margins through pricing adjustments and lean productivity projects [19][20] - The company aims to leverage vertical integration opportunities from the Electrochem acquisition to enhance product offerings and market reach [18][37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in profitable growth despite macroeconomic uncertainties, citing a strong backlog and expected recovery in medical sales in the latter half of the year [40][52] - The government defense sector is expected to remain robust, with potential increases in spending due to global conflicts and NATO commitments [52] - The company anticipates consistent free cash flow throughout 2025, with plans to pay down acquisition debt ahead of schedule [53][54] Other Important Information - The company is actively managing tariff impacts by passing along known costs as surcharges and exploring alternative supply sources [8][34] - The integration of Electrochem is expected to yield favorable contribution margins and enhance overall profitability [38] Q&A Session Summary Question: How have conversations with customers on tariff pass-throughs evolved? - Management noted that customers are concerned about cash flow impacts due to tariffs, which could affect their ability to invest in product development [32][33] Question: What are the major milestones left for the Electrochem integration? - The integration is on track, with most systems set up and the focus now on finalizing the ERP system [35][36] Question: What markets are targeted for the IVAS battery? - The primary focus is on foreign military markets, with some commercial engagements anticipated [39] Question: Can you discuss trends across key end markets? - The medical market is steady with known replacement cycles, while government defense remains strong with no expected downturn [50][52] Question: How do you expect free cash flow to trend over 2025? - Free cash flow is expected to be consistent, with a focus on maintaining a positive cash gap and paying down debt [53][54]

Financial Data and Key Metrics Changes - The company reported Q1 sales of $50.7 million, an increase from $41.9 million in the same quarter last year, representing a year-over-year growth of 21% [10] - Operating income for Q1 was $3.4 million, down from $4.1 million in the previous year, leading to a decrease in operating margin to 6.7% from 9.7% [15] - Net income was $1.9 million or $0.11 per share on a GAAP basis, compared to $2.9 million or $0.18 per share for the same quarter last year [15][16] - Adjusted EBITDA was $5.4 million, or 10.7% of sales, compared to $5.2 million or 12.5% for the prior year quarter [16] Business Line Data and Key Metrics Changes - Revenues from the Battery and Energy Products segment were $46.3 million, up from $35 million last year, with a 10.6% organic growth excluding Electrochem sales [10][11] - Government defense sales in the Battery segment increased by 53.6%, while medical battery sales decreased by 12.3% [11] - The Communications Systems segment saw revenues decline by 36.2% to $4.4 million, primarily due to large shipments in the prior year [12] Market Data and Key Metrics Changes - The sales split between commercial and government defense for the battery business was 64% to 36%, with a domestic to international split of 78% to 22% [11] - The total backlog exiting Q1 was $95 million, representing 55% of trailing twelve-month sales, indicating a healthy demand outlook [12] Company Strategy and Development Direction - The company is focused on completing the integration of the Electrochem acquisition, which is expected to enhance vertical integration opportunities and expand the addressable market [19][27] - There is a commitment to improve sales opportunity pipelines and stabilize gross margins through pricing adjustments and lean productivity projects [20][21] - The company is investing in new product development and marketing efforts to support targeted growth goals [9][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in profitable growth despite macroeconomic uncertainties, citing a strong backlog and expected recovery in medical sales in the latter half of the year [42][55] - The government defense business is expected to remain strong due to ongoing global conflicts and increased NATO spending [55] - The company anticipates continued cash flow consistency and plans to pay down acquisition debt ahead of schedule [56] Other Important Information - The company ended Q1 with working capital of $70 million and a current ratio of 3.2, indicating solid liquidity [17] - The company received $1.5 million from the employee retention credit, which was used to reduce acquisition debt [17] Q&A Session Summary Question: How have conversations with customers on tariff pass-throughs evolved? - Management noted that customers are concerned about cash flow impacts due to tariffs, which could affect their ability to invest in product development [33][34] Question: What are the major milestones left for the Electrochem integration? - The integration is on track, with most systems set up, and the focus is on completing the ERP system setup [36][37] Question: What markets are targeted for the IVAS battery? - The focus is primarily on foreign military markets, with some commercial engagements expected [41] Question: Can you discuss trends across key end markets? - The medical market is steady with known replacement cycles, while the government defense market remains strong with no expected fall-off in 2025 [53][55] Question: How do you expect free cash flow to trend over 2025? - Free cash flow is expected to be consistent, with plans to maintain a positive cash gap and continue paying down debt [56]

Financial Data and Key Metrics Changes - The company reported Q1 sales of $50.7 million, an increase from $41.9 million in the same quarter last year, representing a year-over-year growth of 21% [10][12] - Operating income for Q1 was $3.4 million, down from $4.1 million in the previous year, leading to a decrease in operating margin to 6.7% from 9.7% [15] - Net income was $1.9 million or $0.11 per share on a GAAP basis, compared to $2.9 million or $0.18 per share for the same quarter last year [15][16] - Adjusted EBITDA was $5.4 million, or 10.7% of sales, compared to $5.2 million or 12.5% for the prior year quarter [16] Business Line Data and Key Metrics Changes - Revenues from the Battery and Energy Products segment were $46.3 million, up from $35 million last year, with a 10.6% organic growth excluding Electrochem sales [10][11] - Government defense sales in the Battery segment increased by 53.6%, while medical battery sales decreased by 12.3% [11] - The Communications Systems segment saw revenues decline by 36.2% to $4.4 million, primarily due to large shipments in the prior year [12][14] Market Data and Key Metrics Changes - The sales split between commercial and government defense for the battery business was 64% to 36%, with a domestic to international split of 78% to 22% [11] - The total backlog exiting Q1 was $95 million, representing 55% of trailing twelve-month sales, indicating a healthy demand outlook [12] Company Strategy and Development Direction - The company aims to complete the integration of the Electrochem acquisition by the end of Q2, focusing on ERP system setup and leveraging vertical integration opportunities [19][27] - There is a commitment to improve sales pipelines and stabilize gross margins through pricing adjustments and lean productivity projects [20][21] - The company is expanding its product offerings in both the Communications Systems and Battery segments, targeting military and medical markets [22][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in profitable growth despite macroeconomic uncertainties, noting that Q1 performance exceeded expectations [42][43] - The government defense sector is expected to remain strong, with potential increases in NATO spending anticipated over the next 18 to 24 months [54] - The medical battery segment is expected to stabilize as replacement cycles for COVID-related devices approach [52] Other Important Information - The company ended Q1 with working capital of $70 million and a current ratio of 3.2, indicating solid liquidity [17] - The company received $1.5 million from the employee retention credit, which was used to reduce acquisition debt [17] Q&A Session Summary Question: How have conversations with customers on tariff pass-throughs evolved? - Management noted that customers are concerned about cash flow impacts due to tariffs, which could affect their ability to invest in product development [32][34] Question: What are the major milestones left for the Electrochem integration? - The integration is on track for completion by Q2, with most systems set up and data transitioned [36][37] Question: What markets are targeted for the IVAS battery? - The focus is primarily on foreign military markets, with some commercial engagements anticipated [41] Question: Can you discuss trends across key end markets? - The medical market is steady with known replacement cycles, while government defense remains strong with a good backlog [52][54] Question: How is free cash flow expected to trend over 2025? - Free cash flow is expected to be consistent, with plans to continue paying down debt ahead of schedule [55][56]

[Performance Highlights & Management Commentary](index=1&type=section&id=Performance%20Highlights%20%26%20Management%20Commentary) Ultralife's Q1 2025 revenue grew 21% to $50.7 million, driven by Battery & Energy Products and Electrochem, with management focused on integration, tariff mitigation, and debt reduction Q1 2025 Key Performance Indicators vs. Q1 2024 | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Sales | $50.7 million | $41.9 million | | Gross Profit | $12.7 million (25.1%) | $11.5 million (27.4%) | | Operating Income | $3.4 million | $4.1 million | | GAAP EPS | $0.11 | $0.18 | | Adjusted EBITDA | $5.4 million | $5.2 million | | Backlog (High Confidence) | $95.0 million | N/A (vs $102.2M Q4'24) | - Management's strategic focus includes: - Integrating the Electrochem acquisition to capture manufacturing cost efficiencies and savings through U.S.-based vertical integration - Actively implementing a tariff mitigation plan, which includes surcharges, adjusting inventory movements, and reviewing sourcing/manufacturing locations - Generating incremental cash flow to reduce acquisition-related debt while continuing to invest in strategic product development - Accelerating organic growth through enhanced sales and marketing leadership[2](index=2&type=chunk) [First Quarter 2025 Financial Results](index=2&type=section&id=First%20Quarter%202025%20Financial%20Results) Q1 2025 revenue increased 21% to $50.7 million, driven by Battery & Energy Products growth, while gross margin and operating income declined due to product mix and lower Communications Systems sales Revenue by Segment (Q1 2025 vs. Q1 2024) | Segment | Q1 2025 Revenue | Q1 2024 Revenue | % Change | | :--- | :--- | :--- | :--- | | Battery & Energy Products | $46.3 million | $35.0 million | +32.4% | | Communications Systems | $4.4 million | $6.9 million | -36.2% | | **Total Revenue** | **$50.7 million** | **$41.9 million** | **+21.0%** | - The organic growth in Battery & Energy Products was primarily driven by a **53.6% increase** in government/defense sales, which was partially offset by a **12.3% decrease** in medical battery sales[4](index=4&type=chunk) Gross Margin by Segment (Q1 2025 vs. Q1 2024) | Segment | Q1 2025 Gross Margin | Q1 2024 Gross Margin | | :--- | :--- | :--- | | Battery & Energy Products | 24.7% | 25.7% | | Communications Systems | 29.5% | 35.8% | | **Total Gross Margin** | **25.1%** | **27.4%** | - Operating expenses increased to **$9.3 million** from **$7.4 million** in Q1 2024, reflecting the inclusion of Electrochem, a **24.0% increase** in new product development costs, and one-time, non-recurring expenses[6](index=6&type=chunk) - The company's backlog of high-confidence orders was **$95.0 million** at the end of Q1 2025, down from **$102.2 million** at the end of Q4 2024, but indicative of a strong replenishment rate during the quarter[4](index=4&type=chunk) [Financial Statements](index=4&type=section&id=Financial%20Statements) Ultralife's consolidated financial statements for Q1 2025 show total assets of $223.8 million, total equity of $136.6 million, and a net income of $1.9 million [Consolidated Balance Sheets](index=4&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) Key Balance Sheet Items (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash | $8,719 | $6,854 | | Inventories, Net | $47,853 | $51,363 | | Total Current Assets | $101,469 | $97,160 | | Total Assets | $223,753 | $220,451 | | Total Current Liabilities | $31,496 | $29,291 | | Long-Term Debt, Net | $50,510 | $51,502 | | Total Liabilities | $87,149 | $86,264 | | Total Shareholders' Equity | $136,604 | $134,187 | [Consolidated Statements of Income](index=5&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20INCOME) Consolidated Statements of Income (in thousands, except per share amounts) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenues | $50,746 | $41,927 | | Gross Profit | $12,745 | $11,470 | | Operating Income | $3,399 | $4,063 | | Income Before Income Tax | $2,446 | $3,607 | | Net Income Attributable to Ultralife | $1,865 | $2,891 | | Diluted EPS | $0.11 | $0.18 | [Non-GAAP Financial Measures](index=6&type=section&id=Non-GAAP%20Financial%20Measures) Ultralife presents Adjusted EBITDA of $5.4 million and Adjusted Diluted EPS of $0.13 for Q1 2025 as non-GAAP measures, excluding specific items to reflect ongoing operational performance [Adjusted EBITDA Reconciliation](index=6&type=section&id=Adjusted%20EBITDA) - Adjusted EBITDA is defined as net income before interest, taxes, depreciation, amortization, stock-based compensation, and other expenses not considered reflective of ongoing operations; for Q1 2025, these other expenses included severance costs, acquisition costs, and a non-cash purchase accounting adjustment[19](index=19&type=chunk)[21](index=21&type=chunk) Adjusted EBITDA Reconciliation (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income Attributable to Ultralife | $1,865 | $2,891 | | Interest Expense, Net | $1,032 | $520 | | Income Tax Provision | $567 | $703 | | Depreciation & Amortization | $1,355 | $968 | | Stock-Based Compensation | $227 | $161 | | Severance/Acquisition/Other Costs | $402 | $0 | | **Adjusted EBITDA** | **$5,448** | **$5,243** | [Adjusted EPS Reconciliation](index=7&type=section&id=Adjusted%20Earnings%20Per%20Share) - Adjusted EPS is defined as net income excluding the provision for deferred taxes; the company believes this is useful for comparison as it expects U.S. taxes to be fully offset by net operating loss carryforwards and other tax credits[22](index=22&type=chunk) Adjusted EPS Reconciliation | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Diluted GAAP EPS | $0.11 | $0.18 | | Deferred Tax Provision per Share | $0.02 | $0.03 | | **Adjusted Diluted EPS** | **$0.13** | **$0.21** | [About Ultralife Corporation & Investor Information](index=3&type=section&id=About%20Ultralife%20Corporation%20%26%20Investor%20Information) Ultralife Corporation, a global provider of power and communication solutions, will host an earnings call and cautions investors about potential risks including economic conditions, tariffs, and supply chain disruptions - Ultralife serves its markets with products ranging from power solutions to communications and electronics systems, with operations in North America, Europe, and Asia[10](index=10&type=chunk)[11](index=11&type=chunk) - The company will hold its Q1 earnings conference call at **10:00 AM ET**, with registration required for dial-in participation and a live webcast available on its investor relations website[12](index=12&type=chunk)[13](index=13&type=chunk) - Potential risks that could cause actual results to differ materially include uncertain global economic conditions, tariffs, inflation, military spending reductions, and supply chain disruptions[14](index=14&type=chunk)

Core Insights - Ultralife Corporation reported a strong first quarter for 2025, with a 21% year-over-year revenue increase driven by robust growth in Battery & Energy Products, particularly in government/defense sales, and the contribution from the Electrochem acquisition [1][2] - The company is focused on improving gross margins and has successfully reduced inventory by 7%, which has freed up cash for strategic investments [1] - Ultralife is actively implementing a tariff mitigation plan to manage operational impacts from tariffs across its supply chains [1] Financial Performance - Revenue for the first quarter of 2025 was $50.7 million, an increase of $8.8 million or 21% compared to $41.9 million in the same quarter of 2024 [2][6] - Battery & Energy Products sales increased by 32.4% to $46.3 million, while Communications Systems sales decreased by 36.2% to $4.4 million [2][6] - Gross profit was $12.7 million, representing 25.1% of revenue, compared to $11.5 million or 27.4% of revenue in the prior year [3][6] Operating Metrics - Operating expenses rose to $9.3 million from $7.4 million in the previous year, reflecting the inclusion of Electrochem and increased costs for new product development [4][6] - Operating income decreased to $3.4 million, with an operating margin of 6.7%, down from 9.7% in the prior year [5][6] - Net income attributable to Ultralife Corporation was $1.9 million or $0.11 per diluted share, compared to $2.9 million or $0.18 per diluted share in the first quarter of 2024 [7][6] Backlog and Future Outlook - The total backlog and high-confidence orders at the end of the first quarter stood at $95.0 million, down from $102.2 million at the end of the fourth quarter of 2024, indicating a strong replenishment rate [2][6] - The company is confident in its ability to sustain profitable growth and generate incremental cash flow to reduce acquisition-related debt while continuing to invest in strategic product development [1]