10-K: Ultralife Reports 2025 Net Loss Amid Rebranding, Strong Backlog

Ultralife Corporation reported a net loss of $5.9 million for 2025, driven by a significant non-cash intangible asset impairment from a global rebranding initiative, despite robust revenue growth and record backlog in its Battery & Energy Products segment.

Summary

• Consolidated revenues increased 16.2% to $191.159 million in 2025 from $164.456 million in 2024.
• Net loss attributable to Ultralife Corporation was $5.898 million ($0.35 per share) in 2025, compared to net income of $6.312 million ($0.38 per share) in 2024.
• Operating expenses surged 60.5% to $51.923 million, primarily due to a $12.181 million non-cash intangible asset impairment charge from a global rebranding initiative.
• Gross margin decreased to 24.1% in 2025 from 25.7% in 2024, impacted by product mix, scrap, quality issues, and lower factory throughput.
• Battery & Energy Products segment revenue grew 23.6% to $178.042 million, with Electrochem contributing $26.537 million and core organic growth of 5.4%.
• Communications Systems segment revenue decreased 35.6% to $13.117 million, mainly due to delays in purchase orders and the U.S. Government shutdown.
• Year-end backlog reached a record $110.223 million, up 7.9% from 2024, with Battery & Energy Products backlog at $101.984 million.
• Adjusted EBITDA increased to $17.284 million in 2025 from $16.480 million in 2024.
• The company identified material weaknesses in internal control over financial reporting related to accounting personnel and IT general controls.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a mixed report with significant concerns. While revenue growth and backlog are positive, the net loss, declining gross margin, and identified material weaknesses in internal controls indicate underlying operational and financial challenges that outweigh the strategic rebranding and acquisition benefits in the short term.

Positives

• Consolidated revenues increased by 16.2% year-over-year to $191.159 million.
• Battery & Energy Products segment revenue grew significantly by 23.6% to $178.042 million, including 5.4% organic growth excluding Electrochem.
• Overall commercial sales increased by $23.213 million or 22.7%.
• Overall government and defense sales increased by $3.490 million or 5.6%, with Battery & Energy Products government/defense sales up 25.6%.
• Record year-end backlog of $110.223 million, representing 57.7% of 2025 revenues and a 7.9% increase over 2024.
• Battery & Energy Products backlog reached its highest level in company history at $101.984 million.
• Adjusted EBITDA increased to $17.284 million from $16.480 million.
• Strong liquidity with cash on hand of $9.345 million, working capital of $68.468 million, and a current ratio of 2.8.
• Expected $1.410 million tax refund resulting from the 45X Advanced Manufacturing Production Tax Credit.
• Successful acquisition and integration of Electrochem Solutions, Inc., contributing to revenue and expected gross margin expansion through vertical integration and supply chain synergies.
• Significant strengthening of the finance and accounting team and ongoing remediation efforts for internal control weaknesses.

Negatives

• Net loss attributable to Ultralife Corporation of $5.898 million in 2025, a significant decline from net income of $6.312 million in 2024.
• Operating loss of $5.902 million in 2025, compared to operating income of $9.965 million in 2024.
• Gross margin decreased by 160 basis points to 24.1% in 2025 from 25.7% in 2024, attributed to product mix, scrap, quality issues, and lower factory throughput.
• Operating expenses increased substantially by 60.5% to $51.923 million, primarily due to a $12.181 million non-cash intangible asset impairment charge from rebranding.
• Communications Systems segment revenue decreased by 35.6% to $13.117 million, with a segment contribution loss of $(1.290) million.
• Decline in commercial sales for oil & gas (-12.5%) and medical sales (-8.6%) excluding Electrochem.
• Interest and financing expense increased by 103.8% to $3.953 million due to financing the Electrochem acquisition.
• Identified material weaknesses in internal control over financial reporting related to insufficient accounting and reporting expertise and ineffective IT general controls.
• Ongoing litigation with a cyber insurance underwriter regarding a 2023 ransomware attack, with a counter-claim motion filed by the underwriter.
• Precluded from paying dividends due to the current credit facility.

Risks

• Changes in economic conditions, including inflation, government trade policies, tariffs, interest rates, and supply-chain disruptions, could adversely affect business, revenues, and earnings.
• Reliance on certain key customers (L3Harris Technologies comprised 27% of total revenues in 2025) could significantly reduce revenues if orders are reduced, delayed, or cancelled.
• Reductions or delays in U.S. and foreign military spending could have a material adverse effect on the business.
• Efforts to develop new products or commercial applications may be prolonged, unprofitable, not accepted by customers, or fail to achieve market share.
• Supply of raw materials and components could be disrupted or delayed, or costs could materially increase, especially with requirements for U.S.-sourced components.
• Growth and expansion strategy could strain or overwhelm resources, including manufacturing capacity and labor.
• Inability to recruit and retain experienced, competent management and key personnel could significantly harm the business.
• Breaches in security (cyber or physical) and related disruptions could diminish revenue, compromise assets, and negatively impact the business.
• Fluctuations in the demand, supply, and price of oil and gas and resulting volatility in downhole drilling could have a material adverse effect on the business.
• Operations in China are subject to unique risks and uncertainties, including political changes, tariffs, trade restrictions, and regulatory uncertainties.
• A decline in demand for products using batteries or communications systems, or product obsolescence, could reduce demand for products and/or profitability.
• Subject to certain safety risks, including the risk of fire or explosion, inherent in the manufacture, use, and transportation of Lithium batteries, creating potential for claims.
• Quarterly and annual results and the price of common stock have and could in the future continue to fluctuate significantly.
• Customers' purchases may not meet the volume expectations in supply agreements, potentially reducing revenues or margins.
• Rising interest rates will increase the cost of borrowing and will affect earnings adversely.
• Any inability to comply with changes to the regulations for the shipment of products could limit transport and reduce operating income and margins.
• Entrance into new markets could lead to additional exposure to financial risk or increased liability.
• Litigation or claims, currently known or unknown, could result in negative market perception, demand on management time, and increased costs.
• The potential of future pandemics could create significant economic and social disruption, impacting employees, customers, and suppliers, causing delays.
• Significant costs or liabilities may be incurred to satisfy obligations under product warranties.
• Negative publicity concerning Lithium-ion batteries may adversely impact the industries or markets in which the company operates.
• Subject to the contract rules and procedures of the U.S. and foreign governments, which create significant risks and uncertainties.
• Exposure to foreign currency fluctuations could adversely affect sales levels and reduce profitability.
• Ability to use net operating loss and tax credit carryforwards in the future may be limited, which could increase tax liabilities.
• A finding that proprietary and intellectual property rights are not enforceable or invalid could allow competitors to produce competing products.
• Compliance with government regulations regarding the use of "conflict minerals" may result in increased costs and risks.
• Any impairment of goodwill and/or other indefinite-lived intangible assets could adversely impact results of operations (e.g., $12.181 million impairment in 2025).
• Significant costs may be incurred because of known and unknown environmental factors and compliance with environmental laws.
• The U.S. and foreign governments can audit contracts and adjust economic terms, delivery schedules, or other terms.
• Business and results of operations could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, or other anti-corruption laws.

Future Outlook

The company expects research and development expenditures in 2026 to increase by 10% or more over 2025 levels, driven by new battery and power solutions and Communications Systems initiatives. New product development is anticipated to be a key factor for future growth. Management projects positive operating cash flow and available credit facilities to be sufficient to meet financing and investing obligations, including debt service and capital expenditures, over the next 24 months. The company aims to reduce debt, support strategic capital expenditures, continue investment in new product development, and maximize the value of its global brand in 2026, expecting to deliver sustainable profitable growth and incremental cash flow.

Management Comments

• "We continually evaluate ways to grow, including the design, development and sale of new products, expansion of our sales force to penetrate new markets and territories, as well as seeking opportunities to expand through acquisitions."
• "Our rebranding initiative will eliminate or de-emphasize our reference to the sub-brands going forward. This move reflects our commitment to clarity, consistency and amplified brand equity across all markets."
• "This transformation positions Ultralife for ongoing growth and stronger market impact as we continue to lead in mission critical battery and RF power solutions."
• "We continue to be awarded development contracts with public and private customers resulting in intellectual property that we believe will enhance our efforts to commercialize new products that we develop."
• "Demand for our products remains strong with our 2025 year-end backlog of $110,223 representing 57.7% of 2025 revenues, a 22.1% increase over the backlog exiting the third quarter of 2025 of $90,273 and a 7.9% increase over the backlog exiting 2024 of $102,156."
• "During the fourth quarter of 2025, we took a number of decisive actions to remove structural and manufacturing inefficiencies from our global operations as we advance several new products into qualification and production and capitalize on an expanding pipeline of opportunities consisting primarily of large, multi-year programs."
• "As a result, we have greater confidence in our ability to deliver sustainable profitable growth and incremental cash flow in 2026 enabling us to reduce debt, support strategic capital expenditures, continue our investment in new product development and maximize the value of our global brand."
• "Management has concluded that our disclosure control and procedures were not effective as of December 31, 2025, as a result of a material weakness in our internal control over financial reporting."
• "Management has developed and is actively implementing corrective actions to remediate the identified ITGC deficiencies."

Industry Context

StockSavvy.ai notes that Ultralife's strategic focus on mission-critical battery and RF power solutions aligns with increasing global demand for robust power and communication technologies, particularly in defense and specialized industrial sectors. The significant growth in the Battery & Energy Products segment, partly driven by the Electrochem acquisition, reflects a broader industry trend towards advanced battery solutions. However, the decline in the Communications Systems segment, attributed to government order delays, highlights the inherent volatility and dependency on government spending cycles common in the defense industry. The rebranding initiative aims to consolidate market presence, a common strategy for companies with diverse acquired brands seeking to enhance market recognition and operational efficiency in competitive markets.

Comparison to Industry Standards

• The filing does not provide specific comparable companies, projects, or results for direct industry standard comparison.
• It notes competition from "development-stage companies to major domestic and international companies, many of which have financial, technical, marketing, sales, manufacturing, distribution and other resources significantly greater than ours."
• The company also highlights an increase in foreign competition, especially in Asia, which tends to compete on price in the battery industry, though poor quality and tariffs could mitigate their progress.

Management Changes

Corporate Governance

Legal Proceedings

• Subject to legal proceedings and claims that arise from time to time in the normal course of business, with the belief that final disposition will not have a material adverse effect.
• Filed a complaint in the Supreme Court of the State of New York, County of Wayne, on February 4, 2025, for an outstanding cyber insurance claim related to a January 25, 2023, ransomware attack.
• The cyber insurance underwriter filed a motion for permission to file a counter-claim on March 2, 2026, which the company believes is without merit and will oppose vigorously.
• Expectation of a jury trial in the latter half of 2026 for the cyber insurance claim.

Stakeholder Impact

• Shareholders: Experienced a net loss and declining gross margin, which could negatively impact shareholder value. Identified material weaknesses in internal controls raise governance concerns. However, strong backlog and strategic growth initiatives offer future potential.
• Employees: Strengthening of the finance and accounting team and ongoing R&D investments suggest continued employment and growth opportunities in those areas. Plant closures in Canada indicate some workforce adjustments.
• Customers: Delays in Communications Systems orders and supply chain interruptions could impact customer satisfaction. The rebranding initiative aims to strengthen customer recognition and alignment. Strong backlog indicates continued demand for products.
• Suppliers: Supply chain disruptions and increased lead times could strain supplier relationships. Emphasis on U.S.-sourced components may shift supplier reliance.
• Creditors: Increased interest expense due to acquisition financing. The company reports full compliance with its debt covenants, but rising interest rates pose a risk to debt servicing costs.

Next Steps

• Complete the development and testing of new battery and power solutions in facilities in Newark, New York; Missouri City, Texas; Raynham, Massachusetts; Surrey, Canada; Newcastle-under-Lyme, UK; and Shenzhen, China.
• Advance new product initiatives for the Communications Systems business.
• Continue to make funding decisions for research and development efforts based upon demand for customer applications.
• Reduce debt, support strategic capital expenditures, and continue investment in new product development in 2026.
• Maximize the value of the global Ultralife brand.
• Actively implement corrective actions to remediate identified ITGC deficiencies, including a comprehensive evaluation of all access rights and formalizing user access review policies.
• Continue to diligently monitor information systems with outside expertise for any attempted intrusions or other irregularities.
• Proceed with a jury trial in the latter half of 2026 for the cyber insurance claim, and vigorously oppose any counter-claim filed by the underwriter.

Key Dates

Recommendation

The company exhibits strong revenue growth in its core Battery & Energy Products segment and a record backlog, indicating robust demand for its products. Strategic acquisitions like Electrochem are expected to drive future growth and margin expansion. However, the significant net loss for 2025, primarily due to a non-cash impairment charge from rebranding, and the identified material weaknesses in internal controls, introduce considerable uncertainty and operational risk. The decline in the Communications Systems segment and ongoing litigation also weigh on performance. A "Hold" recommendation is appropriate as investors should monitor the successful remediation of internal control issues, the resolution of the cyber insurance claim, and the company's ability to translate its strong backlog into profitable growth and improved margins in 2026 before considering further investment.

Keywords

Batteries, Lithium-ion, Communications Systems, Defense, Government Contracts, Energy Products, SEC Filing, 10-K, Ultralife, ULBI, Financial Results, Rebranding, Internal Controls, Supply Chain, Cybersecurity, Acquisitions, Electrochem, Backlog, Manufacturing