Ultralife (ULBI) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue increased 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% margin) last year, impacted by non-recurring costs and higher operating expenses.

• 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 GAAP, $0.21 adjusted) last year.

• Adjusted EBITDA was $5.45 million (10.7% of sales), up from $5.24 million (12.5% of sales) year-over-year.

• Backlog at quarter-end was $95 million, supporting strong demand visibility and 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 shipment timing and lower orders from a major defense contractor.

• Gross profit increased to $12.7 million (25.1% margin), but gross margin declined from 27.4% last year due to unfavorable sales mix and non-recurring costs.

• Operating expenses rose to $9.35 million, reflecting the inclusion of Electrochem, 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 profitable growth, incremental cash flow for debt reduction, and ongoing investment in strategic product development.

• Medical sales are anticipated to rebound in the second half of 2025, with government/defense and oil and gas markets remaining strong.

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

• Integration of Electrochem and related ERP transition expected to complete by end of Q2 2025.

• Tariff mitigation plans, including surcharges and supply chain adjustments, are being implemented.