Ultralife (ULBI) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue rose 21% year-over-year to $50.7 million, driven by the Electrochem acquisition and strong government/defense sales, offsetting a 36.2% decline in Communications Systems sales.

• Operating income was $3.4 million (6.7% margin), down from $4.1 million (9.7%) last year, impacted by non-recurring costs and sales mix.

• Net income attributable to Ultralife was $1.9 million ($0.11 per share GAAP, $0.13 adjusted), down from $2.9 million ($0.18 per share) last year, reflecting higher operating expenses and lower gross margin.

• Adjusted EBITDA was $5.45 million (10.7% of sales), up from $5.2 million (12.5%), and adjusted EPS was $0.13 versus $0.21 last year.

• Backlog at quarter-end was $95 million, reflecting strong replenishment and supporting future growth.

Financial highlights

• Battery & Energy Products revenue grew 32.4% to $46.3 million, with 10.6% organic growth and a 53.6% rise in government/defense sales; medical battery sales declined 12.3%.

• Communications Systems revenue fell 36.2% to $4.4 million, mainly due to lower shipments to a major defense contractor.

• Gross profit was $12.7 million (25.1% margin), up from $11.5 million (27.4%), with margin decline due to product mix and non-recurring costs.

• Operating expenses increased 26.2% to $9.35 million, mainly from Electrochem integration, higher R&D, and one-time costs.

• Cash at quarter-end was $8.72 million, up from $6.85 million at year-end 2024; operating cash flow was $3.37 million.

Outlook and guidance

• Management expects continued growth in government/defense and oil & gas markets, with medical sales anticipated to rebound in the second half of 2025.

• Free cash flow is expected to remain consistent throughout 2025, supporting accelerated debt repayment.

• Confident in scaling efficiently and capitalizing on market demand with a strong backlog and innovative product pipeline.

• Enhanced sales and marketing leadership is expected to accelerate organic growth and maximize global brand value.

• Positive operating cash flow and available borrowings under the Revolving Credit Facility are expected to meet funding needs for the foreseeable future.