Executive Summary

Q3 revenue and earnings decelerated on order timing and supply chain delays: sales $35.7M (down 9.6% YoY; down 17.0% QoQ), GAAP EPS $0.02 (vs $0.08 YoY; $0.18 in Q2); consolidated gross margin compressed to 24.3% (vs 26.9% in Q2) as Communications Systems revenue fell 58% YoY and mix turned unfavorable .
Management cited “timing of expected larger purchase orders” in Comms and “muted” Battery growth due to supply chain timing and customer pushouts; a follow-on Leader Radio order expected in Q3 arrived in October, pointing to some Q4 catch-up potential .
Balance sheet progress continued: total debt reduced to ~$8.0M at Q3-end from $12.1M at Q2-end and $25.3M at Q1-end; backlog normalized to $78M (from $93M in Q2) with management noting it rose to ~$83M a week into Q4 as POs flowed .
Strategic catalyst: closed Electrochem acquisition (10/31) for $50M cash; seller disclosed Electrochem TTM revenue ~$34–36M and EBITDA ~$5M; integration targeted to complete 1H25, with management emphasizing scale, vertical integration, and cross-sell synergies .
Street estimates: S&P Global consensus retrieval was unavailable at time of analysis due to API limit; estimate comparisons are therefore noted as N/A and should be updated when data access is restored.

What Went Well and What Went Wrong

What Went Well
- Completed Electrochem acquisition, adding high-temp, high-reliability primary lithium capability; synergy opportunities across procurement, packs, and cross-selling highlighted by CEO; integration playbook underway with completion targeted 1H25 .
- Battery & Energy Products segment grew 1.9% YoY to $32.5M, with strong government/defense (+28.9% YoY) and oil & gas (+1.5% YoY) demand; Battery gross margin improved 50 bps YoY to 24.7% on higher Newark volume .
- Continued deleveraging: debt cut by $4.1M sequentially to ~$8.0M, aiding future interest expense; working capital $60.2M with current ratio 3.3, positioning for execution and integration .
What Went Wrong
- Communications Systems revenue fell 58.2% YoY to $3.2M due to prior-year large program comps and Q3 timing shortfall; segment gross margin reduced to 20.1% (vs 27.0% YoY) on lower volume and mix .
- Consolidated margin compression: gross margin down to 24.3% (from 26.9% in Q2) and operating margin to 1.4% (from 9.1% in Q2), reflecting mix and $0.3M one-time acquisition costs .
- Supply chain and customer pushouts dampened Battery growth and raised inventories; management framed headwinds as roughly 50/50 between supply chain and order delays, with a broad-based impact across end-markets (medical, Comms) .

Financial Results

Headline P&L vs prior periods

Metric	Q3 2023	Q1 2024	Q2 2024	Q3 2024
Revenue ($M)	39.488	41.9	42.983	35.694
Gross Margin %	24.8%	27.4%	26.9%	24.3%
Operating Income ($M)	2.135	4.1	3.917	0.511
Operating Margin %	5.4%	9.7%	9.1%	1.4%
GAAP Diluted EPS ($)	0.08	0.18	0.18	0.02

Adjusted profit metrics

Metric	Q3 2023	Q1 2024	Q2 2024	Q3 2024
Adjusted EBITDA ($M)	3.480	5.2	5.415	1.919
Adjusted EBITDA Margin %	8.8%	12.5%	12.6%	5.4%
Adjusted EPS ($)	0.10	0.21	0.22	0.01

Note: Q3 included ~$0.3M acquisition-related costs; non-GAAP reconciliations provided in press release/8-K .

Segment revenue and margins

Metric	Q3 2023	Q1 2024	Q2 2024	Q3 2024
Battery & Energy Products Revenue ($M)	31.919	35.0	36.683	32.529
Communications Systems Revenue ($M)	7.569	6.9	6.300	3.165
Battery Gross Margin %	24.2%	25.7%	27.1%	24.7%
Communications Gross Margin %	27.0%	35.8%	25.6%	20.1%

Balance sheet / operating KPIs

KPI	Q1 2024	Q2 2024	Q3 2024
Backlog ($M)	97.4	93.0	78.0 (rose to ~83 a week into Q4)
Total Debt ($M)	25.3 (end Q1)	12.1 (end Q2)	~8.0 (end Q3)
Inventory ($M)	N/A	41.392	43.994
Working Capital ($M)	70.9	63.2	60.2
Current Ratio (x)	4.0	4.1	3.3
Consolidated Sales Mix (Commercial/Govt)	58/42	64/36	63/37

Actual vs Estimates (S&P Global)

Metric	Q3 2024 Actual	S&P Global Consensus	Surprise
Revenue ($M)	35.694	N/A	N/A
GAAP Diluted EPS ($)	0.02	N/A	N/A

Note: S&P Global consensus could not be retrieved due to temporary API rate limits; update pending.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Formal financial guidance (revenue/EPS/margins)	FY/Q4 2024	None provided	None provided	Maintained “no formal guidance” posture (no quantitative outlook issued) .
Electrochem integration	1H 2025	N/A	Main integration activities expected complete in 1H 2025	New qualitative timeline
EL8000 DC power supply availability	2025	N/A	In validation; “production ready and available for sale next year”	New product timing detail
Leader Radio follow-on order timing	Q3→Q4 2024	Expected in Q3	Received in October (Q4)	Slipped to Q4

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
Order timing / backlog normalization	Level-loading improved execution; backlog 97.4M (Q1); 93.0M (Q2)	Backlog 78.0M at Q3-end; management notes normalized post-COVID levels and rose to ~83M a week into Q4 as POs flowed	Normalizing /
lumpy quarter-to-quarter
Supply chain disruptions	Improved conditions; S&OP discipline; still dependent on customer supply chains	Headwinds ~50/50 supply chain vs order delays; specific component/timing issues now rectified	Mixed near term
Comms Systems trajectory	Stronger in Q1 (EL8000; airborne power), Q2 down YoY on tough comps	Q3 down 58% YoY; delayed Leader Radio order slipped to Oct; new radio-agnostic 20W amplifier launched	Soft now; product launches set up 2025
Battery margin initiatives	GM improved to 25.7% (Q1), 27.1% (Q2) on higher absorption and pricing	Battery GM 24.7% ( +50 bps YoY), but sequentially lower on timing/inefficiencies; lean/material savings ongoing	Mixed ST; LT improvement agenda intact
Thin cell / Thionyl Chloride pipeline	Equipment in place; multiple medical qualifications; long cycles	Funnel strengthening; medical wearables, item tracking; large opportunities emerging	Building momentum
Electrochem M&A	—	Closed Oct 31; TTM ~$34–36M revenue; ~$5M EBITDA disclosed by seller; vertical integration and cross-sell synergies	Positive strategic addition

Management Commentary

“Ultralife’s third quarter results were weighed down by the timing of expected larger purchase orders for our Communications Systems segment and by the muted growth for our Battery & Energy Products segment due to some supply chain timing and customers’ requests delaying orders into the fourth quarter and first half of 2025.” — Mike Manna, CEO .
“Adjusted EBITDA…was $1.9 million, or 5.4% of sales… [TTM] $17.5 million, or 10.5% of sales.” — Philip Fain, CFO .
“We favorably negotiated our lithium metal contracts and several of our printed circuit boards and expect to realize savings in the hundreds of thousands of dollars per year.” — CEO .
“We’ve launched a new amplification product… the smallest, lightest, most power-efficient 20-watt man-portable amplifier in the marketplace… expected to be available for production orders by the end of the year.” — CEO .
“Having closed [Electrochem]… we see this as a synergistic business with little customer and product overlap… vertical integration opportunities… positioned for future growth.” — CEO .

Q&A Highlights

Headwinds split ~50/50 between supply chain issues and customer order delays; management emphasized no order losses, just timing .
EL8000 opportunity TAM: ~$5–10M commercial and ~$20–30M military; ramp depends on server blade availability and enabling DC power supply validation .
Size of delayed Q3 Comms order: just under $2.5M, shifted to Q4 .
Electrochem disclosure: seller (Integer) indicated model with ~$36M revenue and ~$5M EBITDA; ULBI to file audited carve-out by Jan 16, 2025 .
Backlog normalization: trending back toward pre-COVID $40–50M range; week into Q4 backlog increased to ~$83M as annual POs arrived .

Estimates Context

S&P Global consensus for Q3 2024 revenue and EPS could not be retrieved due to an API rate limit; as a result, beat/miss analysis vs. Street is N/A pending data access restoration. Management’s qualitative remarks suggest Q3 shortfalls were primarily timing-related (orders received in October and supply chain delays), with some visibility into Q4 catch-up .
Once S&P Global data are available, we recommend updating the revenue/EPS surprise and assessing estimate revisions into Q4/FY.

Key Takeaways for Investors

Q3 was a timing-driven air pocket: Comms revenue slippage and supply chain/cust. pushouts compressed margins; some orders shifted to Q4 (e.g., Leader Radio), implying potential sequential recovery .
Underlying demand in Battery remained resilient (gov/defense +28.9% YoY) with Battery margins up YoY; lean/material deflation provide medium-term GM levers despite quarter-to-quarter lumpiness .
Balance sheet de-risking accelerated: debt reduced from $25.3M (Q1) to ~$8.0M (Q3), lowering interest burden and increasing flexibility for integration and growth initiatives .
Electrochem adds scale and portfolio breadth in high-reliability primary lithium; vertical integration and cross-sell should enhance growth and margins as integration completes by 1H25 .
Product catalysts into 2025: radio-agnostic 20W amplifier launch, EL8000 vehicular DC power supply introduction, MRC 2104 airborne power ramp, and expanding thin cell/Thionyl pipeline in medical/IoT .
Backlog normalization reduces visibility vs. post-COVID peaks but appears healthy and rising early in Q4; watch quarterly order timing to avoid over-extrapolating a single quarter .
Near-term trading: monitor Q4 shipments (delayed orders), Comms mix, and early Electrochem contribution; medium-term thesis hinges on execution of synergy capture, gross margin improvement, and conversion of the pipeline in thin cell and high-reliability primary chemistries .

ULTRALIFE CORP (ULBI)·Q3 2024 Earnings Summary