Ultralife (ULB) Q2 2026 Earnings Report

The call presented several strong positives: record backlog (up 39% YoY), meaningful margin expansion, higher net income and EPS, strong adjusted EBITDA improvement, and clear product and integration progress (Electrochem, conformal battery, new Communications products). Offsetting these positives were a slight decline in consolidated revenue, a 3.7% drop in Battery & Energy revenue driven by commercial weakness, increased operating expenses including one-time litigation/consulting costs, and reliance on a $1.1 million tariff refund that materially aided gross margin. Balancing the sizable backlog, profitability gains, and product momentum against the modest revenue weakness, expense increases, and one-off benefits leads to an overall positive outlook from the call.

Management guided that the company is positioned for revenue growth backed by a record backlog of $117.5 million at quarter end (up $33.0 million or 39% YoY and replenishment at 63% of trailing 12‑month sales, with backlog approaching ~$130 million in July), and highlighted Q2 results of $47.9 million revenue, $3.4 million operating income, $2.5 million net income ($0.15 EPS), adjusted EBITDA of $6.1 million (12.8% of sales; TTM $17.1M or 9.1%), consolidated gross profit $13.9M and gross margin 28.9% (500 bps improvement YoY, with a $1.1M tariff refund accounting for ~230 bps; gross margin excl. refund ~26.6%), Battery & Energy revenue $44.2M (down 3.7% YoY) with 28.3% gross margin (25.8% excl. refund), Communications Systems revenue $3.8M (up 39.3% YoY) with 36.3% gross margin, operating expenses of $10.4M (21.8% of sales, +10.6% YoY) including $0.9M one‑time costs and a 39.1% increase in R&D spend, working capital $69.8M and current ratio 2.9; near‑term operational actions are expected to deliver mid‑Q3 gross‑margin benefits (annual savings of roughly $600k–$800k from Newark improvements), management expects >30% growth in customer demand/cell consumption over the next year, Electrochem‑driven incremental revenue beginning in Q4 and into 2027, conformal battery shipments >$2M YTD with >$7M backlog to ship by year‑end, and the Ultralife Master brand realignment and multiple Communications Systems product launches planned through the back half of 2026 into 2027.