Q2 2025 Performance Highlights This section summarizes Ultralife's Q2 2025 performance, highlighting CEO commentary and key financial metrics CEO's Commentary The CEO noted Q2 2025 as challenging, with Electrochem acquisition-driven revenue growth offset by flat organic sales and declining Communications Systems sales due to delayed orders - Q2 was challenging due to flat organic sales in Battery & Energy Products and a decline in Communications Systems sales from delayed orders2 - Gross profit was negatively affected by tariffs, unfavorable product mix shifts, and order timing2 - The company prepaid $2.7 million of its acquisition debt, which is $2.0 million more than the required quarterly amortization2 - Management expects improved results in the second half of 2025 and into 2026, driven by a rebound in Communications Systems, new product programs, and recovering commercial demand3 - Strategic priorities include converting new product development into revenue, advancing vertical integration in the oil & gas segment, and focusing on operational efficiency3 Key Financial Metrics Summary Total sales increased 13.0% to $48.6 million in Q2 2025 due to the Electrochem acquisition, while gross profit remained flat and key profitability metrics declined year-over-year Q2 2025 Key Financial Metrics vs. Q2 2024 | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Sales ($M) | $48.6 | $43.0 | +13.0% | | Gross Profit ($M) | $11.6 | $11.6 | 0.0% | | Gross Margin | 23.9% | 26.9% | -3.0 p.p. | | Operating Income ($M) | $2.3 | $3.9 | -41.0% | | GAAP EPS | $0.05 | $0.18 | -72.2% | | Adjusted EBITDA ($M) | $4.1 | $5.4 | -24.1% | | Backlog ($M) | $89 | N/A | (vs $95M in Q1 2025) | Q2 2025 Financial Results Analysis This section provides a detailed analysis of Ultralife's Q2 2025 financial performance, covering revenue, profitability, and operating expenses Revenue Analysis Total revenue for Q2 2025 increased by 13.0% to $48.6 million, driven by the Battery & Energy Products segment's acquisition-related growth, while Communications Systems sales significantly declined - Battery & Energy Products sales increased 25.0% to $45.9 million, reflecting the inclusion of Electrochem, with organic sales flat due to a 61.1% increase in government/defense sales offset by a 20.4% decrease in commercial sales5 - Communications Systems sales decreased by 57.2% to $2.7 million, primarily due to large prior-year shipments to an international defense contractor and current period purchase order delays5 Profitability Analysis Gross profit remained flat at $11.6 million, but gross margin compressed to 23.9%, while operating income and net income saw significant year-over-year declines due to various factors - Gross margin for Battery & Energy Products decreased from 27.1% to 23.6% due to product mix, higher tariff/freight costs, and lower factory throughput6 - Communications Systems gross margin improved to 28.4% from 25.6% due to product mix, though muted by lower sales volume6 - Operating income fell to $2.3 million from $3.9 million, with operating margin declining to 4.6% from 9.1% year-over-year8 - Net income attributable to Ultralife Corporation was $0.9 million ($0.05 per diluted share), compared to $3.0 million ($0.18 per diluted share) in Q2 202410 Operating and Other Expenses Operating expenses increased to $9.3 million, primarily due to the Electrochem acquisition and higher R&D costs, while other expenses rose significantly due to interest from acquisition financing - Operating expenses rose to $9.3 million (19.2% of revenue) from $7.6 million (17.8% of revenue) in the prior year7 - The increase in operating expenses was driven by the inclusion of Electrochem, a 25.3% rise in R&D costs, and one-time non-recurring expenses7 - Other expense increased to $1.1 million, primarily comprising interest expense from the Electrochem acquisition financing and foreign currency losses9 Financial Statements This section presents Ultralife's consolidated balance sheets and statements of income for the reported periods Consolidated Balance Sheets As of June 30, 2025, total assets slightly increased to $221.0 million, while total liabilities decreased to $82.3 million, leading to an increase in total shareholders' equity Consolidated Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $99,003 | $97,160 | | Cash | $10,941 | $6,854 | | Inventories, Net | $50,575 | $51,363 | | Total Assets | $220,961 | $220,451 | | Total Current Liabilities | $29,898 | $29,291 | | Long-Term Debt, Net | $47,510 | $51,502 | | Total Liabilities | $82,316 | $86,264 | | Total Shareholders' Equity | $138,645 | $134,187 | Consolidated Statements of Income For Q2 2025, total revenues increased to $48.6 million, but operating income and net income attributable to Ultralife significantly declined compared to the prior year Consolidated Income Statement Summary (Three Months Ended June 30, in thousands) | Account | 2025 | 2024 | | :--- | :--- | :--- | | Total Revenues | $48,561 | $42,983 | | Gross Profit | $11,601 | $11,563 | | Operating Income | $2,256 | $3,917 | | Income Before Income Taxes | $1,113 | $3,846 | | Net Income Attributable to Ultralife | $879 | $2,969 | | Diluted EPS | $0.05 | $0.18 | Consolidated Income Statement Summary (Six Months Ended June 30, in thousands) | Account | 2025 | 2024 | | :--- | :--- | :--- | | Total Revenues | $99,307 | $84,910 | | Gross Profit | $24,346 | $23,033 | | Operating Income | $5,655 | $7,980 | | Income Before Income Taxes | $3,559 | $7,453 | | Net Income Attributable to Ultralife | $2,744 | $5,860 | | Diluted EPS | $0.17 | $0.35 | Non-GAAP Financial Measures This section provides reconciliations for non-GAAP financial measures, including Adjusted EBITDA and Adjusted EPS, used to supplement the analysis of operating performance Adjusted EBITDA Reconciliation Adjusted EBITDA for Q2 2025 was $4.1 million, a decrease from $5.4 million in Q2 2024, calculated by adjusting net income for non-cash and non-recurring items Adjusted EBITDA Reconciliation (Three Months Ended June 30, in thousands) | Line Item | 2025 | 2024 | | :--- | :--- | :--- | | Net Income Attributable to Ultralife | $879 | $2,969 | | Interest Expense, Net | $992 | $418 | | Income Tax Provision | $243 | $853 | | Depreciation Expense | $1,008 | $789 | | Amortization Expense | $410 | $227 | | Stock-Based Compensation Expense | $235 | $159 | | Acquisition and Other Non-Recurring Costs | $326 | $ - | | Non-Cash Purchase Accounting Adjustment | $20 | $ - | | Adjusted EBITDA | $4,113 | $5,415 | Adjusted EPS Reconciliation Adjusted Diluted EPS for Q2 2025 was $0.07, down from $0.22 in Q2 2024, reflecting net income excluding the deferred income tax provision Adjusted EPS Reconciliation (Three Months Ended June 30) | Line Item | 2025 | 2024 | | :--- | :--- | :--- | | Net Income Attributable to Ultralife ($M) | $879 | $2,969 | | Diluted EPS (GAAP) | $0.05 | $0.18 | | Add: Deferred Tax Provision ($M) | $265 | $744 | | Adjusted Net Income ($M) | $1,144 | $3,713 | | Adjusted Diluted EPS | $0.07 | $0.22 | Company Information and Forward-Looking Statements This section provides an overview of Ultralife Corporation and includes important disclaimers regarding forward-looking statements About Ultralife Corporation Ultralife Corporation, based in Newark, New York, delivers power solutions and communications systems globally to government/defense and commercial clients through two distinct business segments - Ultralife serves government/defense and commercial markets with products ranging from power solutions to communications and electronics systems12 - The company's business is divided into two segments: Battery & Energy Products and Communications Systems13 Forward-Looking Statements This press release contains forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially from expectations - The company warns that forward-looking statements involve risks and uncertainties16 - Key potential risks include global economic conditions, impact of tariffs, changes in military spending, new product acceptance, and supply chain disruptions16
Ultralife(ULBI) - 2025 Q2 - Quarterly Results