Breaking Down Ultralife Corporation (ULBI) Financial Health: Key Insights for Investors

You're looking at Ultralife Corporation (ULBI) and seeing a classic growth-versus-profitability puzzle, especially after their latest earnings report. Honestly, the headline numbers for Q3 2025 are a mixed bag that demands a closer look: revenue surged 21.5% year-over-year to $43.4 million, which is defintely a win, but it was overshadowed by a sharp swing to a net loss of about $1.2 million, or -$0.07 per share, missing the consensus estimate of $0.21. Here's the quick math: that loss is a 547% deterioration from the prior year, driven largely by a decline in gross margin to 22.2% and a hit from $1.1 million in one-time costs related to operational streamlining and the Electrochem acquisition. Still, the underlying demand is strong, with the backlog exiting the quarter at $90.1 million, fueled by robust government/defense sales, so the question isn't about sales, but about execution and margin recovery. We need to map out if this profitability dip is a temporary speed bump from integration costs or a sign of deeper structural issues.

Revenue Analysis

You need to know where the money is coming from, especially when a company like Ultralife Corporation (ULBI) is showing strong top-line growth but struggling with profitability. The direct takeaway is that ULBI's revenue growth is real, but it is overwhelmingly concentrated in one segment, and much of the increase is inorganic, meaning it came from an acquisition, not just core business expansion.

For the third quarter of 2025, Ultralife Corporation reported total revenue of $43.4 million, a significant jump of 21.5% compared to the $35.7 million reported in the third quarter of 2024. This growth rate looks great on paper, but you have to look past the headline number. When you strip out the impact of the Electrochem acquisition, the organic year-over-year growth rate for the quarter was a much more modest 2.5%. That's a huge difference. The acquisition is defintely a key driver, not the underlying market demand for the legacy business.

Segment Contribution and Primary Sources

Ultralife Corporation operates with two main business segments, but the revenue contribution is heavily skewed. The Battery & Energy Products segment is the clear powerhouse, while Communications Systems is a distant second. This concentration represents both a strength-a successful core product-and a risk-a lack of diversification.

• Battery & Energy Products: Generated $39.9 million in Q3 2025.
• Communications Systems: Contributed only $3.42 million in Q3 2025.

Here's the quick math: the Battery & Energy Products segment accounted for approximately 92.1% of the total revenue in the quarter, with the Communications Systems segment making up the rest. The Battery segment's sales increased by 22.8% year-over-year, reflecting strong demand from government/defense customers, particularly U.S.-based global primes, and the inclusion of Electrochem's product line. You can dive deeper into the market dynamics in Exploring Ultralife Corporation (ULBI) Investor Profile: Who's Buying and Why?

The Impact of Strategic Changes

The biggest change to the revenue profile in 2025 is the full integration of Electrochem Solutions, Inc., which Ultralife acquired in late 2024. This acquisition is the primary reason the Battery & Energy Products segment saw such a high growth rate and now dominates the revenue mix. The acquisition is a clear strategic move to bolster their power solutions offerings.

However, the Communications Systems segment is facing headwinds. Its revenue decline is largely attributed to delayed purchase orders, which is a common but frustrating issue in defense contracting and specialized electronics. This segment's volatility is a drag on overall performance, especially when considering the Trailing Twelve Months (TTM) revenue, which stood at $186.53 million as of Q3 2025, showing a TTM growth of 12.94%. The reliance on the Battery segment means any material supply chain or quality issues there-which have already been cited as impacting gross margin-could immediately destabilize the entire company's revenue base. You need to watch that Battery segment gross margin closely.

Profitability Metrics

You're seeing the headlines about Ultralife Corporation (ULBI) revenue growth, but the real story for investors is the sharp deterioration in profitability throughout 2025. The company's margins show a clear downward trend, culminating in an operating and net loss in the third quarter.

The core takeaway is this: while top-line growth is strong, operational efficiency is struggling to keep pace, leading to a significant margin compression that puts Ultralife Corporation (ULBI) well below key industry peers in the defense and power solutions space. You need to focus on the cost of goods sold (COGS) and operating expenses (OpEx) to understand the near-term risk.

Gross, Operating, and Net Margins in 2025

Ultralife Corporation (ULBI) saw a quarter-over-quarter decline across all three major profitability metrics in 2025, a trend that signals deep-seated operational challenges despite a strong backlog of $90.1 million exiting Q3 2025. Here's the quick math on the margin erosion:

• Gross Margin fell from 25.1% in Q1 2025 to 22.2% in Q3 2025.
• Operating Margin dropped from 6.7% in Q1 2025 to a loss of -2.3% in Q3 2025.
• Net Profit Margin swung from 3.7% (Q1) to a net loss of -2.76% (Q3), resulting in a GAAP net loss of $1.2 million for the quarter.

The gross margin decline is particularly concerning because it points directly to production issues, not just overhead. Mission Statement, Vision, & Core Values of Ultralife Corporation (ULBI).

Operational Efficiency and Industry Comparison

The root of the margin problem is a mix of external and internal factors. The gross margin pressure in the Battery & Energy Products segment (which is 92% of revenue) stems from manufacturing inefficiencies, primarily due to quality issues with incoming raw materials, which lowered factory throughput. Also, unfavorable product mix shifts, including declines in generally higher-margin medical and oil & gas sales, plus the impact of tariffs, are hitting the cost of goods sold (COGS).

Operating expenses (OpEx) rose to $10.6 million in Q3 2025, up 29.4% year-over-year, mainly due to the inclusion of the Electrochem acquisition and $1.1 million in one-time, non-recurring costs, such as a provision to close the Calgary facility. This is a necessary, albeit painful, part of integrating an acquisition, but it crushed the operating line this year.

When you compare Ultralife Corporation (ULBI) to its peers, the profitability gap is clear. Here is where the Q3 2025 performance lands:

• ULBI's Q3 Gross Margin of 22.2% is below the trailing gross margin of 27% seen at comparable US power systems companies.
• ULBI's Q3 Operating Margin of -2.3% is dramatically lower than the 11.4% operating margin forecast for the average Defense Primes in 2025.
• Even new US battery manufacturing startups typically target a net profit margin between 3% and 8% in early operations, a range Ultralife Corporation (ULBI) fell short of with its -2.76% Q3 net loss.

Management is defintely aware of this, focusing on vertical integration and cost savings from the Calgary closure, which are expected to deliver roughly $0.8 million in annual savings in 2026. But for now, the operational execution is the biggest drag on the stock. Investors need to see Q4 2025 margins stabilize to confirm the worst of the integration and one-time costs are over.

Next step: Check the Q4 2025 guidance for gross margin stabilization to see if the cost pressures are easing.

Debt vs. Equity Structure

When you look at Ultralife Corporation (ULBI), the first thing to understand is how they fund their operations-the mix of debt versus equity (shareholders' money). A company's capital structure tells you a lot about its risk profile and management's confidence. For Ultralife, the picture as of the third quarter of 2025 is one of manageable debt, but it's important to see the recent shift.

The company's total debt is substantial, but it is well-defined. As of September 30, 2025, the total principal outstanding on their Term Loan was approximately $50.9 million. This debt is split into a long-term component of $46.5 million, with the current portion of long-term debt-what's due in the next year-at $3.8 million. This breakdown shows the bulk of the obligation is not an immediate liquidity concern, which is defintely a good sign.

Here's the quick math on their leverage: the Debt-to-Equity (D/E) ratio for Ultralife Corporation is currently at about 39.4%. This ratio measures the proportion of a company's financing that comes from debt versus shareholders' equity, which stood at roughly $138.6 million. To be fair, this is a healthy figure when benchmarked against the broader Industrials sector, where the average D/E ratio is closer to 60.1%. Ultralife is using less leverage than its peers, which provides a cushion in an economic downturn.

• Debt-to-Equity: 39.4% (Below the sector average).
• Total Debt: Approximately $50.9 million.
• Total Equity: Approximately $138.6 million.

Ultralife Corporation is actively managing its debt load. In the first nine months of 2025, the company reduced its debt principal by $4.1 million, which already exceeds the full-year amortization requirement of $2.8 million under their debt agreement. This tells you management is prioritizing debt reduction over just meeting the minimum payment schedule. The company's primary debt structure is a New Credit Agreement, which includes a Term Loan Facility and a $30 million Revolving Credit Facility. They have no present draws on the revolver, so they still have a significant, unused line of credit available for working capital or opportunistic acquisitions. This capacity is a form of liquidity that doesn't show up in the D/E ratio.

The balance between debt and equity is currently tilted toward equity funding, which is less risky. They use debt-the Term Loan-to finance growth, including recent M&A activity like the Electrochem acquisition, but they are not over-leveraged. The lack of draws on the revolver and the accelerated principal reduction show a conservative approach to capital deployment, even with a leveraged business model. This strategic choice provides financial flexibility for future investments without immediately diluting shareholders. You can find more detail on their operational strategy in our full post: Breaking Down Ultralife Corporation (ULBI) Financial Health: Key Insights for Investors.

Here is a snapshot of the key debt components:

Finance: Monitor the fixed charge coverage ratio covenant in the New Credit Agreement, which must be equal to or greater than 1.15 to 1.00 for the fiscal quarter ending March 31, 2025, to ensure compliance.

Liquidity and Solvency

You want to know if Ultralife Corporation (ULBI) has the cash on hand to manage its day-to-day operations and fund its growth. The short answer is yes, the company's liquidity position is defintely solid, but a closer look at the Quick Ratio shows inventory is doing a lot of the heavy lifting.

As of the third quarter of 2025 (Q3 2025), Ultralife Corporation's (ULBI) Current Ratio-a key measure of short-term debt coverage-stood at a healthy 3.0. This means the company holds $3.00 in current assets for every dollar of current liabilities. However, the Quick Ratio (or acid-test ratio), which strips out inventories to show how fast assets can become cash, was 1.42. Here's the quick math: Current Assets of $100.619 million minus Inventories of $52.747 million, all divided by Current Liabilities of $33.698 million. A 1.42 Quick Ratio is still strong; anything over 1.0 is generally good.

This difference between the two ratios highlights an important working capital trend: a significant portion of the company's liquidity is tied up in inventory, which totaled $52.747 million in Q3 2025. While total working capital remains robust at $66.921 million, you need to watch this inventory level. If demand slows, that inventory could take longer to convert to cash, putting pressure on the business.

Looking at the cash flow statements provides more color on how Ultralife Corporation (ULBI) is managing its money. The Trailing Twelve Months (TTM) Operating Cash Flow (OCF) ending mid-2025 was a solid $17.1 million, showing the core business is generating cash. Investing Cash Flow (CFI) was a negative -$51.22 million over the TTM period, but this figure is heavily skewed by the Electrochem acquisition in late 2024. The good news is that management is actively reducing debt: they paid down $4.1 million in debt principal in the first nine months of 2025 alone, exceeding the full-year amortization requirement of $2.8 million.

The biggest liquidity strength is that strong balance sheet and the $90.1 million backlog exiting Q3 2025, which gives you clear visibility on future revenue. But, the near-term risk is the recent operating loss of $1.0 million in Q3 2025, which included $1.1 million in one-time costs for facility closure and acquisition transition. This highlights a profitability challenge, driven by manufacturing inefficiencies and supply chain quality issues, that could erode cash if not fixed quickly.

Exploring Ultralife Corporation (ULBI) Investor Profile: Who's Buying and Why?

Valuation Analysis

You want to know if Ultralife Corporation (ULBI) is a buy, a sell, or a hold right now. Based on the most recent financial data from November 2025, the stock appears to be significantly undervalued on a book value basis, but its earnings multiples suggest a more complex, or even overvalued, picture relative to its current low profitability.

Let's look at the core valuation multiples, which are the language of true financial health. Here's the quick math on the trailing twelve months (TTM) data, which gives us the clearest picture of the last year of performance:

• Price-to-Book (P/B) Ratio: At a P/B of around 0.63x to 0.65x, the market is pricing Ultralife Corporation at less than two-thirds of its net tangible assets. This is a classic sign of a potentially undervalued stock, suggesting you could be buying a dollar of assets for only about 63 cents.
• Price-to-Earnings (P/E) Ratio: The TTM GAAP P/E ratio is high, sitting between 50.8x and 51.5x. This is defintely a head-scratcher. A P/E this high usually signals either massive expected growth or, in this case, very low recent net income, which makes the earnings look expensive. The industry average P/E is much higher, so this needs context.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: The EV/EBITDA is in the range of 10.1x to 12.4x. This multiple is more reasonable than the P/E, and it's actually better than the Industrial Products industry median of 16.39x, suggesting its operating cash flow (EBITDA) is not as expensive as its net income (P/E) suggests.

The low P/B ratio is your primary signal for potential value. The high P/E is a warning sign about recent profitability, but the better EV/EBITDA tells me the core business is generating decent cash flow before non-cash charges and taxes. You need to dig into why earnings are so low. For a deeper dive into who is buying and why, you should check out Exploring Ultralife Corporation (ULBI) Investor Profile: Who's Buying and Why?

The market has not been kind to the stock price over the last year. As of November 2025, the stock has seen a decline of about 30.78% over the last 12 months, with the year-to-date return falling by 32.08%. The stock closed recently at approximately $5.05. This downward trend is a clear near-term risk, but it also creates the value opportunity reflected in the P/B ratio.

For income-focused investors, Ultralife Corporation does not currently pay a dividend, so the dividend yield and payout ratio are both 0.00%. This is a growth-or-bust equity, not an income play.

Wall Street analysts are currently cautious. The consensus rating on Ultralife Corporation is a Hold. While one analyst has a 'Strong Buy' rating with a 12-month price target of $14.0, the general sentiment is to maintain existing positions rather than start new ones. This 'Hold' signal is a clear indication that the market is waiting for the company to prove it can translate its strong book value and operating cash flow into consistent, higher net income.

What this estimate hides is the impact of one-time costs or non-cash charges that can temporarily inflate the P/E ratio. The fact that the EV/EBITDA looks better suggests the underlying business is healthier than the P/E alone indicates. Your action item is to watch the next few quarters for a sustained improvement in net income and a corresponding drop in that P/E ratio. Finance: track Q4 2025 and Q1 2026 GAAP EPS to confirm a profitability trend.

Risk Factors

You're looking at Ultralife Corporation (ULBI) and seeing a strong $90.1 million backlog, but the Q3 2025 earnings tell a more complex story. The direct takeaway is this: operational execution and supply chain stability are the immediate risks, not just market demand. They are facing real pressure on margins right now, but they have a clear plan to cut costs and streamline operations.

Honestly, the biggest near-term headache is internal. The company reported a Q3 2025 operating loss of $1.0 million, a significant swing from operating income in the prior year, and a consolidated gross margin decline of 210 basis points to 22.2%. Here's the quick math: the decline is largely due to quality issues with incoming materials, which hammered manufacturing efficiency. This is a classic operational risk-when your inputs are bad, your production line suffers, and your profit margin shrinks. It's defintely something management must fix fast.

On the external front, there are three clear macro risks you need to map to your investment thesis:

• Defense Spending Volatility: While Government Defense sales were up 19% in Q3 2025, the company is still exposed to the risk of delays or reductions in U.S. and foreign military spending.
• Geopolitical Headwinds: Uncertain global economic conditions and geopolitical factors directly hit their commercial business, causing a 13.3% decline in oil and gas sales for the quarter.
• Acquisition Debt Cost: The increase in interest expense on the acquisition debt from the Electrochem acquisition contributed to a higher other expense of $0.8 million for Q3 2025, up from $0.2 million a year earlier.

The financial risk is clear: Ultralife Corporation (ULBI) swung to a GAAP net loss of $1.2 million, or -$0.07 per share, in Q3 2025, which is a 547% deterioration from the prior year's net income. What this estimate hides is that a significant portion-$1.1 million-was a one-time, non-recurring cost related to the closure of the Calgary facility. This is a strategic risk that's already been executed, but it hits the current year's numbers hard.

Still, management is taking clear action to mitigate these risks. They are closing redundant facilities and consolidating operations, with the Calgary facility closure expected to deliver annual savings of approximately $0.8 million starting in 2026. They are also focused on improving gross margins through pricing strategies, material cost deflation, and lean productivity projects to address those manufacturing inefficiencies.

The company's mitigation strategies center on operational efficiency and supply chain resilience, which is the right move when you're dealing with margin pressure. For a deeper dive into the company's valuation, you should read the full report at Breaking Down Ultralife Corporation (ULBI) Financial Health: Key Insights for Investors.

Here is a summary of the Q3 2025 financial impact of the key risks:

Next step: Dig into the Q4 2025 guidance for any signs that the supply chain quality issues are easing.

Growth Opportunities

You're looking at Ultralife Corporation (ULBI) and seeing mixed signals: solid top-line growth but a recent profitability miss. The direct takeaway is that ULBI's future growth hinges on successfully integrating the Electrochem acquisition and converting a strong defense backlog into profitable revenue, but near-term execution risk is high.

The company is defintely pushing growth through three clear channels: strategic acquisition, robust government/defense demand, and focused product innovation. The biggest immediate driver is the $50.0 million acquisition of Electrochem Solutions, completed in late 2024. This move was designed to create scale and manufacturing efficiencies, and it's working on the revenue side; the Battery & Energy Products segment, which includes Electrochem, saw sales increase 22.8% in the third quarter of 2025.

Key Growth Drivers: Acquisition and Defense

The core of Ultralife's momentum comes from its position as a critical supplier to the government and defense sector. In Q3 2025, government/defense sales grew by 19%, driven by strong demand from a U.S.-based global prime contractor. This high-confidence demand is reflected in the company's backlog, which stood at a healthy $95.0 million exiting Q1 2025, representing about 55% of trailing twelve-month sales. This backlog provides a clear runway for revenue into 2026.

Product innovation is also laying groundwork for new markets. The company is advancing its thin cell technology for the medical wearable sector and is rolling out a new portable power bank for medical equipment, expanding its X5 medical car product line. In Communications Systems, they launched the compact, energy-efficient A-2303 amplifier for military depot support applications, which delivers 20 Watt of power.

Future Revenue and Earnings Estimates

For the full 2025 fiscal year, analysts are projecting sales of approximately $215.93 million. Here's the quick math on the recent performance: while Q3 2025 revenue was $43.37 million-a 21.5% jump year-over-year-the company reported a non-GAAP earnings per share (EPS) of -$0.07, missing the analyst estimate of $0.22. That miss, and the net loss of $1.25 million for the quarter, shows the profitability challenge is real, stemming from supply chain inefficiencies and one-time costs.

What this estimate hides is the margin pressure. Management is tackling this head-on with operational optimization, which includes the planned closure of the Calgary facility by Q1 2026, expected to generate annual savings of approximately $0.8 million. The full integration of Electrochem's Enterprise Resource Planning (ERP) system, anticipated to be completed in the second half of 2025, is another key step to boost efficiency and margins.

Strategic Initiatives and Competitive Edge

Ultralife's core competitive advantage is its North American-based manufacturing footprint, which is critical for securing and fulfilling sensitive government/defense contracts. This domestic focus is a key differentiator, especially as the company's U.S.-based revenue mix has risen to 75% for the first nine months of 2025. This strategy helps mitigate tariff and supply chain risks that plague competitors with heavier offshore reliance.

Strategic initiatives for the near-term are clear:

• Convert the $95.0 million backlog into profitable sales.
• Complete the Electrochem integration to realize vertical integration synergies.
• Unify all sub-brands under the master Ultralife brand to enhance market recognition.
• Accelerate new product qualifications, especially in the high-growth medical wearable segment.

You can see the full strategic picture, including the company's long-term vision, by reviewing the Mission Statement, Vision, & Core Values of Ultralife Corporation (ULBI).

The table below summarizes the financial reality and the analyst consensus for the full year, showing the gap between top-line growth and bottom-line performance that management must close.

So, the growth is there, but the focus for 2026 must shift from pure revenue growth to operational efficiency and margin expansion. Finance: Track the gross margin trend in Q4 2025 and Q1 2026 to confirm the operational savings are materializing.