ULTRALIFE CORP Annual Report - How They Did This Year

Hey there! Thinking about investing in ULTRALIFE CORP? Let's break down their past year. We'll use plain English to help you decide if they fit your portfolio. This report covers their fiscal year, which ended on December 31, 2025.

What ULTRALIFE CORP Does (Their Business)

ULTRALIFE CORP focuses on strong engineering. They design and make specialized power and communications systems. They operate in two main areas:

• Battery & Energy Products: They make advanced batteries and power solutions for specialized uses.

  • Non-Rechargeable Batteries: They focus on Lithium batteries. These include Lithium Manganese Dioxide and Lithium Thionyl Chloride. These batteries offer big advantages over older types like Alkaline. They are lighter and last longer. They also have a longer shelf life, often over 10 years. They work in a wider temperature range and provide more stable power. Lithium batteries might cost more upfront. However, they often save money over their lifespan. They last much longer and need fewer replacements.
    • 9-Volt Lithium Battery: This is a key product. It offers high energy and stable voltage. People use it in smoke alarms, wireless security systems, and medical devices. It also powers bone growth stimulators and parking meters. They sell these to other manufacturers (OEMs) and distributors. You can also buy them directly in stores and online.
    • Cylindrical Batteries: These come in sizes like D, C, and AA. They sell them under the Ultralife HiRate and Electrochem brands. They are used in tough places. Examples include oil and gas drilling, pipeline inspection, and medical devices. They are also popular for asset tracking and military gear. For instance, their BA-5390 military battery offers 50% to 100% more energy. This is compared to a common alternative like the BA-5590. It powers about 60 different military applications.
    • Thin Cell Batteries: These are flat, light Lithium Manganese Dioxide batteries. They are perfect for displays, wearable medical devices, toll passes, and tracking devices.
  • Rechargeable Batteries: You can recharge and reuse these many times. They focus on Lithium-ion and Nickel Metal Hydride (NiMH) batteries. Lithium-ion batteries are very good. They pack a lot of energy into a small space. You can recharge them hundreds or thousands of times. This makes them ideal for military radios, medical devices, and other portable electronics.
  • Charging Systems & Accessories: They also sell rugged military and commercial battery chargers. These offer complete power solutions.
  • Multi-Kilowatt Module: This is a larger Lithium-ion battery system. It stores energy, provides backup power, and offers remote power. It can handle over 3,000 cycles.
  • Technology Contracts: They also develop new battery technologies. They do this through contracts with government agencies and private companies. These contracts bring in money. They also help Ultralife improve its own research and development. This can lead to future commercial products.

• Communications Systems: They design and make communication equipment. This gear is mainly for military use.

  • RF Amplifiers: These boost signals. They extend the range of military radios. This ensures reliable communication over longer distances. Soldiers carry them, or they are mounted in vehicles.
  • Integrated Systems: They build full communication setups. These are for vehicles, satellite communications (SATCOM), and rugged systems. These deployable systems integrate IT equipment. They help with command and control in tough field conditions.
  • Power Systems: They provide power supplies and chargers. These are specifically for tactical military radios. They keep these critical devices working.
  • Commercial Products: They also integrate IT equipment into tough cases. These are for industries like automotive and cellular. This allows high computing power in challenging non-military environments.
  • Communications and Electronics Services: They offer design, integration, and deployment services. These are for portable, mobile, and fixed-site communication systems. They provide complete solutions for their clients.

They sell these products worldwide. Their customers include original equipment manufacturers (OEMs) and distributors. They also sell directly to government defense departments. Their global reach includes North America, Europe, and Asia. They always look for ways to grow. This includes new products, expanding sales, or making smart acquisitions. They have used acquisitions often to build their business.

Big News This Year: A New Acquisition!

ULTRALIFE CORP acquired Electrochem Solutions Inc. on October 31, 2024. This impacts their 2025 operations. This is a big deal. ULTRALIFE now owns Electrochem's patents, technology, and customer relationships. Electrochem specializes in designing and making primary Lithium metal and ultracapacitor cells and battery packs. These are for critical uses in energy, military, industrial, and utility markets. Acquisitions like this usually mean a company wants to grow. They expand product offerings and gain new customers and expertise. For Ultralife, this acquisition should make them more vertically integrated. This means they might control more of their supply chain. They could bring cell manufacturing in-house. This could also improve their profit margins. They would rely less on outside suppliers. It also creates chances to cross-sell products to new and existing customers. The Electrochem brand will continue for some specific primary battery cells.

Another Big Change: Rebranding!

ULTRALIFE made a big strategic move in October 2025. They brought all their product brands under one "Ultralife" master brand. This included brands like Accutronics, Southwest Electronic Energy, and Excell Battery. The goal is to make their brand clearer, more consistent, and stronger. They want customers to recognize "Ultralife" for any product.

This rebranding was more than just marketing. It had a financial impact. In the last three months of 2025, they recorded a non-cash charge. This was about $12.2 million. They used it to reduce the value of their tradename and trademark assets. This is an impairment charge. It means they lowered the accounting value of those old brand names. They did this because they will no longer actively use or promote them. This charge reduces reported earnings. However, it does not involve spending cash. Many old brand names will be less emphasized. But the "Electrochem" brand will still be used for specific primary battery cells.

How They Get Their Products to Customers (Sales & Marketing)

ULTRALIFE sells its products in a few ways:

• Direct Sales: Their sales and marketing teams work in North America, Europe, and Asia. They sell directly to commercial customers and government agencies.
• Sales Agents: They also work with sales agents. These agents market products in specific regions for a commission.
• Distributors and Retailers: Some products sell through domestic and international distributors. They also sell directly to consumers. This happens through retail chains and online stores. This is especially true for their 9-volt Lithium batteries.

For their Battery & Energy Products, they are actively expanding marketing. This is part of a strategic plan. It includes improving their ability to design and assemble products. They are also building their international distributor network. They respond to requests from other manufacturers (OEMs). They hope their solutions will be built into new products. This leads to more sales over time.

They sell their Communications Systems directly. They also use authorized distributors. Customers include military OEMs and U.S. and allied foreign militaries. They also sell directly to defense contractors. For commercial products, they sell directly to U.S. businesses.

A big part of their business comes from government sales. These often involve competitive bidding. They must meet specific technical needs and pass tests. They have long-term government contracts. But these don't guarantee specific purchase amounts or timing. This creates some uncertainty.

How Their Business Segments Performed This Year

ULTRALIFE CORP reports results in two main business segments. They also report overall corporate costs. Here's how each performed:

• Battery & Energy Products: This segment had a great year!

  • Sales (Revenue): Sales jumped significantly. They went from $144.1 million in 2024 to $178 million in 2025. That's a strong 23.6% increase!
  • Contribution to Profit: This segment's contribution to overall company profit also rose. This is their 'segment contribution' or operating profit. It went from $19 million in 2024 to $20.2 million in 2025. This is a 6.3% increase. Sales grew a lot, but profit grew slower. This suggests some margin pressure or higher costs in this segment.
  • Future Orders (Backlog): This segment also has many future orders. As of December 31, 2025, they had about $102 million in backlog orders. This was up from $95 million at the end of 2024. This 7.4% increase shows continued high demand. This is especially true for medical, government, defense, and oil and gas batteries. Most of these orders should ship in 2026. This is good news for next year's sales.

• Communications Systems: This segment faced some challenges.

  • Sales (Revenue): Sales dropped quite a bit. They fell from $20.4 million in 2024 to $13.1 million in 2025. That's a 35.6% decrease.
  • Contribution to Profit: This sales drop hurt their profitability. This segment went from a small profit of $1.2 million in 2024. It then lost $1.3 million in 2025. This means running this part of the business cost more than it brought in. This points to operational issues or lower efficiency due to less volume.
  • Future Orders (Backlog): Despite lower sales, future orders slightly increased. Their backlog was about $8.2 million at the end of 2025. This was up from $7.6 million in 2024. This 7.9% increase is a positive sign. These orders should also ship in 2026.

• Corporate Costs: The company also has 'Corporate' costs. These include executive salaries, accounting, and legal. They are not tied to a specific product line.

  • These corporate costs rose significantly this year. They went from $10.2 million in 2024 to $24.8 million in 2025. About $12.2 million of this increase was for the rebranding charge. This is where they adjusted the value of old brand names. Without this non-cash charge, corporate costs still rose. They went from $10.2 million to $12.6 million. This is a 23.5% rise. It reflects general overhead increases.

Behind the Scenes: Manufacturing & Innovation

ULTRALIFE manufactures globally. They have facilities in New York, China, Canada, Texas, the UK, Virginia, and Massachusetts. Many facilities have important quality certifications. These include ISO 9001 (general quality) and ISO 13485 (medical devices). This is key for medical device parts.

They generally have enough production capacity. They have also invested in new machinery. This fixes any production bottlenecks they found. For their Battery & Energy Products, inventory increased by 1.6%. It went to $45.3 million in 2025 from $44.6 million in 2024. This increase is mainly to fill large backlog orders. This is especially for government, defense, and medical devices. They are buying materials that take a long time to get. Similarly, for Communications Systems, inventory grew by 29.8%. It went to $8.7 million in 2025 from $6.7 million in 2024. This also prepares for future orders needing long lead-time materials. This suggests they are building stock to meet expected demand.

The company also invests heavily in Research and Development (R&D). They constantly improve their product technology. They see new product development as a key growth driver. R&D funding decisions depend on customer demand. For their Battery & Energy Products, they always work on new non-rechargeable cells and batteries. They also improve their rechargeable products. This includes batteries, management systems, and chargers. They do this to meet growing customer needs and new technologies. They even join U.S. government R&D programs for battery improvement. For Communications Systems, they constantly develop new accessories and systems. These are for global defense and commercial markets. This keeps up with changing demands.

Navigating the Rules: Safety, Environment, and Trade

ULTRALIFE must follow many rules. This is because they deal with advanced batteries and military tech. They ensure their products are safe and handled correctly. They also follow environmental and trade regulations.

• Battery Safety & Transport: Some battery materials can be tricky if not handled right. They design products to be as safe as possible. Shipping batteries, especially Lithium ones, is highly regulated. This applies in the U.S. (Department of Transportation) and internationally (ICAO, IATA). These rules cover testing, packaging, labeling, and shipping. ULTRALIFE says they follow all current rules. They have their own testing facilities to ensure this. They don't expect big costs from these rules. But new, stricter rules or non-compliance could affect their business.
• Hazardous Substances (EU RoHS, China RoHS 2): Rules also cover what goes into their products. For example, the EU's RoHS Directive limits certain hazardous substances in electronics. This doesn't currently apply to their batteries or defense products. However, their commercial chargers meet these rules. China also has its 'China RoHS 2' rules for products sold there. ULTRALIFE believes their systems meet these needs. Current costs are not significant. But they watch for changes.
• Battery Recycling & Disposal (EU Battery Directive): The EU also has a 'Battery Directive'. It aims to reduce harmful metals and promote battery recycling. This means they must pay for collecting and recycling certain products. Their batteries also need specific markings. ULTRALIFE says they follow these rules. Their current costs are not significant. But these could change as more countries adopt the directive.
• General Environmental Controls: They also follow national, state, and local environmental laws. These cover manufacturing, storing, and disposing of materials. They believe they are currently compliant. But new laws could always bring new costs.
• Manufacturing Environment: Lithium batteries react badly with water. So, they have special 'dry rooms' and equipment. These are in factories like New York and China. They control humidity during manufacturing. This is crucial for product quality and safety.
• International Trade & Export (ITAR, EAR): They sell military-grade equipment. So, they follow strict U.S. and international export controls. These include ITAR (International Traffic in Arms Regulations) and EAR (Export Administration Regulations). These rules control what defense items can be exported and to whom. This protects U.S. national security. They also follow similar rules in countries where they operate. ULTRALIFE believes they comply. But failing to do so could mean big fines. They could lose export privileges or even customers.

Something to Keep an Eye On: Customer Concentration

ULTRALIFE CORP gets a lot of its sales from just one large defense contractor, L3Harris Technologies. This is called "customer concentration risk." This single customer made up 27% of ULTRALIFE's total revenues in 2025. This was up from 23% in 2024. If something happened with L3Harris, it could hurt ULTRALIFE. For example, if they ordered less or switched suppliers. Or if L3Harris faced budget cuts. This could significantly impact ULTRALIFE's sales and business. This isn't necessarily bad. This customer could be very stable. But investors should know about it. It creates reliance on one revenue source. This makes the company more vulnerable to changes in that customer's business.

What Else Could Affect Them? (Risks to Consider)

Investing always has risks. ULTRALIFE is no different. Here are some things they highlighted that could impact their business:

• Economic Headwinds: Inflation, tariffs, and supply chain issues could make materials harder to get. Or they could increase costs. This could hurt profits. A global economic slowdown could also reduce demand for their products.
• Reliance on Key Customers: As mentioned, if L3Harris Technologies or other key customers reduce orders, it could significantly hurt sales and profitability. This is due to many sales coming from a few large clients.
• Government Spending: Much of their business comes from defense. If U.S. or foreign military budgets are cut or delayed, orders could suffer. Government buying is also complex. It involves competitive bidding and strict rules. If they don't meet specifications, or if a losing bidder protests, a contract could be delayed or canceled. This would hurt their business.
• Developing New Products: They must keep innovating to stay competitive. If they struggle to develop new products, or launch them successfully, growth could slow. They could also lose market share to competitors.
• Supply Chain Issues: Getting raw materials and parts can be difficult. Many materials for rechargeable batteries are widely available. But some materials for other products come from only one or a few suppliers. They faced interruptions in 2024 and, to a lesser extent, in 2025. If these single-source supplies are disrupted, production and delivery could be delayed. This could be due to global events, disasters, or supplier financial issues. This would affect their financial performance and customer relationships.
• Intellectual Property: ULTRALIFE holds many global patents. But they don't believe their business depends on them. Instead, they rely more on their employees' knowledge, expertise, and trade secrets. This means others could develop similar technologies independently. Or key employees could leave and take valuable knowledge. ULTRALIFE could also face claims of infringing on others' patents. This could lead to costly lawsuits or licensing fees. They also have employees sign confidentiality and non-compete agreements. But enforcing these can be tricky depending on local laws.
• Cybersecurity: Like any modern company, they face risks from cyberattacks. These could disrupt operations or expose sensitive data. This includes customer or proprietary information. It could also damage their reputation.
• Lithium Battery Concerns: There's always a risk of bad publicity or safety issues. These include fire or explosion related to Lithium-ion batteries. This could affect demand for their products. It could also lead to costly recalls or more regulatory scrutiny.
• Interest Rates: If interest rates keep rising, borrowing could become more expensive. This would affect their financial health. It could also limit their ability to fund future growth or acquisitions.
• Global Operations: They operate in places like China. This brings unique business and political risks. These include trade tensions, regulatory changes, and potential global instability. These could disrupt manufacturing or supply chains.
• Regulatory Compliance & Changes: They operate in a heavily regulated industry. This is especially true for battery safety, transport, and environmental impact. It also applies to international trade for military products. They believe they follow current rules. But changes to these rules, or their inability to comply, could increase costs. It could also cause production delays, fines, or loss of export privileges. This could damage their reputation and sales.