Q2 2026 Ultralife Corp Earnings Call Transcript
Key Points
- Record backlog of $117.5 million, up 39% year-over-year, with further growth to nearly $130 million in July.
- Gross margin improved significantly to 28.9%, a 500 basis point increase year-over-year, driven by favorable product mix and a net tariff refund.
- Communication Systems segment revenue surged 39.3% year-over-year, supported by new product launches and a growing opportunity funnel.
- Operational improvements at Newark and Raynam facilities are yielding measurable benefits, with initiatives expected to generate $600,000 to $800,000 in annual gross margin savings.
- Strong growth in defense-related demand, including conformal wearable battery orders exceeding $2 million in 2026 and a backlog of over $7 million, plus expanding opportunities in underwater drone applications.
- Consolidated revenue declined 1.4% year-over-year to $47.9 million, impacted by lower commercial sales, particularly in oil and gas due to geopolitical factors.
- Battery and Energy Products segment revenue decreased 3.7% year-over-year, with a 4.7% drop in commercial sales and a 1.4% decline in government defense sales due to a large prior-year order.
- Operating expenses increased 10.6% year-over-year, driven by higher new product development costs and one-time expenses for litigation and consulting fees.
- Gross margin improvement was partly due to a one-time net tariff refund of $1.1 million, which accounted for 230 basis points of the increase, indicating underlying margin expansion is less robust.
- The company faces ongoing challenges in the Communication Systems business, which remains volatile with revenue dependent on order timing, and new product launches are still in early commercialization stages.
Thank you for standing by and welcome to Ultralife Corporation's Second Quarter 2026 Earnings Conference Call.
Currently, all participants are in a listen-only mode.
After the speaker's presentation, there will be a question-and-answer session.
(Operator Instructions)
I would now like to hand the call over to Jody Burfening. Please go ahead.
Thank you, Latif, and good morning, everyone.
Thank you for joining us for Ultralife Corporation's earnings conference call for the second quarter of fiscal 2026.
With us on today's call are Mike Manna, Ultralife's President and CEO and Phil Fain, Ultralife's Chief Financial Officer.
The earnings press release was issued earlier this morning, and if anyone has not yet received a copy, I invite you to visit the company's website, www.ultralifecore.com, where you will find the release under Investor News in the Investor Relations section.
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