Executive Summary

Revenue $50.7M, up 21.0% YoY; Battery & Energy Products +32.4% to $46.3M, Communications Systems -36.2% to $4.4M .
GAAP EPS $0.11 and adjusted EPS $0.13; adjusted EBITDA $5.4M; gross margin 25.1% (+90 bps sequential, -230 bps YoY) .
Backlog with high-confidence orders $95.0M vs $102.2M exiting Q4 2024, with management citing strong replenishment rate and diversified end markets .
Revenue beat consensus ($48.0M*) while EPS missed ($0.15* vs $0.13 “Primary EPS” actual per SPGI); limited coverage (1 estimate) increases volatility risk. Values retrieved from S&P Global.*

What Went Well and What Went Wrong

What Went Well

Battery & Energy Products saw robust growth (+32.4% YoY to $46.3M) driven by Electrochem and 53.6% YoY strength in government/defense; domestic mix rose to 78% (Battery segment) reflecting demand from U.S. primes .
Sequential margin improvement and cash discipline: consolidated GM 25.1% (+130 bps q/q for Battery segment) and inventories down 7% from YE, freeing cash for capex; adjusted EBITDA $5.4M (10.7% of sales) .
Management confidence and tariff mitigation: “We are actively implementing our tariff mitigation plan… tariff surcharges, adjusting inventory movements, and reviewing sourcing and manufacturing locations” — CEO Mike Manna .

What Went Wrong

Communications Systems revenue declined 36.2% YoY to $4.4M and GM fell to 29.5% (vs 35.8% last year) on lower factory volume/product mix; operating margin compressed to 6.7% (vs 9.7% LY) .
Higher OpEx ($9.3M vs $7.4M) with inclusion of Electrochem and increased NPD spend; interest expense and FX raised other expense to $0.9M; GAAP EPS down YoY to $0.11 (from $0.18) .
Backlog decreased to $95.0M vs $102.2M at Q4 exit; medical battery sales declined 12.3% YoY (expected to recover H2’25), underscoring near-term mix headwinds .

Financial Results

Core Financials vs Prior Quarters

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Millions)	$35.7	$43.9	$50.7
Gross Profit ($USD Millions)	$8.7	$10.6	$12.7
Gross Margin %	24.3%	24.2%	25.1%
Operating Income ($USD Millions)	$0.5	$1.5	$3.4
Operating Margin %	1.4%	3.4%	6.7%
GAAP Diluted EPS ($USD)	$0.02	$0.01	$0.11
Adjusted EPS ($USD)	$0.01	$0.01	$0.13
Adjusted EBITDA ($USD Millions)	$1.9	$3.9	$5.4

Segment Breakdown

Metric	Q3 2024	Q4 2024	Q1 2025
Battery & Energy Products Revenues ($USD Millions)	$32.5	$39.9	$46.3
Communications Systems Revenues ($USD Millions)	$3.2	$4.0	$4.4
Battery & Energy Gross Margin %	24.7%	23.4%	24.7%
Communications Systems Gross Margin %	20.1%	31.9%	29.5%

KPIs and Operating Metrics

KPI	Q3 2024	Q4 2024	Q1 2025
Backlog ($USD Millions)	$78.0	$102.2	$95.0
Inventories, Net ($USD Millions)	$44.0	$51.4	$47.9
Working Capital ($USD Millions)	$60.2	$67.9	$70.0
Current Ratio (x)	3.3	3.3	3.2
Battery Segment Domestic : International (%)	56 : 44	62 : 38	78 : 22
Battery Segment Commercial : Government Defense (%)	69 : 31	70 : 30	64 : 36

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Free Cash Flow trend	FY 2025	N/A	Expect “even” cash flow throughout 2025	Introduced
Electrochem ERP integration	H1 2025	Complete H1 2025	On track to complete by end of Q2 2025	Maintained
Gross margin initiatives	2025	Steady improvement expected	Continued gains; engaged external firm for Q2 assessments	Expanded
Medical battery trajectory	H2 2025	N/A	Expect recovery in back half of 2025	Introduced
Comms Systems order timing	2024–2025	Delays pushed into 2025	Follow-on order pushed beyond Q1 due to material lead times	Updated

No explicit quantitative revenue/EPS/tax/OpEx guidance was provided in Q1 2025 materials; commentary focused on operational milestones and margin/FCF trajectory .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024 and Q4 2024)	Current Period (Q1 2025)	Trend
Tariffs / Macro	Supply chain constraints and order push-outs; no tariff program disclosed	Active tariff mitigation plan; variable surcharges; inventory flow adjustments; sourcing/manufacturing reviews	Rising focus; formal mitigation underway
Electrochem integration	Acquisition closed 10/31; integration planned H1’25	ERP carve-out on track for Q2 completion; vertical integration benefits to P&L	Progressing as planned
Comms Systems pipeline	New 20W amplifier sampling; DC power supply validation; server cases pipeline	20W amplifier preproduction in June; 3U portable server case verification; radio mount upgrade kit available in Q2	Advancing commercialization
Medical wearable thin cell	Qualification ongoing; funnel growth	Partner achieved FDA/EU MDR approvals (Q4); production orders mid-2025; limited shipments later in 2025	Nearing commercialization
Regional/customer mix	Domestic/international battery split 56:44 (Q3); 62:38 (Q4)	Domestic/international battery split 78:22; heightened demand by U.S. primes	Increasing domestic mix
Regulatory/legal	Cyber insurance litigation initiated (BI claim)	No update; continued operational focus	Stable/ongoing

Management Commentary

“Integration of our Electrochem acquisition continues to progress well, positioning us to capture manufacturing cost efficiencies and savings through U.S.-based vertical integration.” — CEO Mike Manna .
“We are actively implementing our tariff mitigation plan… tariff surcharges, adjusting inventory movements, and reviewing sourcing and manufacturing locations.” — CEO Mike Manna .
“Electrochem’s contribution margin is very, very favorable… recognizing that through pure vertical integration… very accretive.” — CFO Phil Fain .
“Q1 actually was a better quarter than we anticipated… medical sales were down YoY… we expect that to come full circle back in the back half of the year.” — CEO Mike Manna .

Q&A Highlights

Tariff pass-throughs: Customers focused on upfront cash consumed at the border; company implementing variable surcharge (not a price increase) that may adjust or be eliminated as conditions change .
Electrochem milestones: ERP carve-out nearing completion; vertical integration to replace external cell purchases in oil & gas packs; benefits expected into Q3–Q4 .
IVAS battery commercialization: Near-term focus is foreign military markets; commercial engagements exist but military demand expected to dominate initial adoption .
End-market trends: Government/defense demand remains strong with potential NATO-driven increases; medical demand viewed as steady with expected H2 2025 replacement cycle recovery .
Free cash flow: Targeting level-loaded operations across supply purchase, production, and sales to sustain even FCF and accelerate debt paydown ahead of amortization schedules .

Estimates Context

Metric	Q1 2025 Consensus*	Q1 2025 Actual	Surprise	# of Estimates*
Revenue ($USD)	$48.0M*	$50.746M	+$2.746M (Beat)	1*
Primary EPS ($USD)	$0.15*	$0.13 (SPGI “Primary EPS” actual)*	-$0.02 (Miss)	1*

Values retrieved from S&P Global.*
Note: GAAP diluted EPS reported $0.11 ; adjusted EPS $0.13 .

Key Takeaways for Investors

Revenue beat and EPS miss with limited sell-side coverage; top-line buoyed by Battery & Energy Products and Electrochem, while Comms Systems remains lumpy due to timing .
Sequential margin improvement and inventory reduction support cash generation; management targets “even” free cash flow and accelerated debt reduction in 2025 .
Electrochem integration is a near-term operational catalyst (ERP completion by Q2), with vertical integration margin uplift expected to flow through H2 2025 .
Government/defense demand remains strong; medical battery softness likely transitory with expected H2 2025 replacement cycle recovery .
Tariff mitigation plan (surcharges, sourcing/manufacturing reviews) aims to offset near-term headwinds; monitor customer pass-through acceptance and border cash impacts .
Comms Systems product pipeline (20W amplifier, server cases, DC power supply) advances toward broader commercialization; timing and mix will drive margin variability .
With backlog at $95M (55% of TTM sales cited) and diversified end markets, execution on margin programs and delivery timing are the key stock reaction drivers near term .

ULTRALIFE CORP (ULBI)·Q1 2025 Earnings Summary