Ultralife Corporation reported higher sales and a return to operating and net income in the third quarter, with stronger margins and a record backlog. Growth was led by battery sales to government and defense customers, while commercial battery sales and communications systems revenue declined.
The results come as Ultralife awaits its agreed acquisition by EnerSys, an all-cash transaction valued at about $320 million, including the assumption of net debt. The deal is expected to close in the first quarter of 2027.
Key details
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Sales rose 11.3% year over year to $48.3 million. Battery & Energy Products revenue increased 12.9% to $45.1 million. Communications Systems sales fell 7.1% to $3.2 million.
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Government and defense battery sales grew 56.7%, primarily reflecting a large order for conformal wearable batteries. That growth was partly offset by a 5.8% decline in commercial sales, which Ultralife attributed mainly to softness in the global oil and gas market.
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Backlog reached $136.0 million at quarter-end, the highest level in company history. That compares with $117.5 million at the end of the second quarter and $90.3 million a year earlier.
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Gross profit increased to $13.3 million from $9.6 million, and gross margin expanded to 27.5% from 22.2%. Battery & Energy Products margin rose to 26.7% from 22.1%, reflecting improved manufacturing efficiency, greater vertical integration of thionyl-chloride cells and favorable product mix. Communications Systems margin increased to 40.1% from 23.3%, mainly because of lower warranty costs and sales mix.
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Operating expenses declined to $10.1 million from $10.6 million and fell to 20.9% of revenue from 24.4%. Higher spending on new product development was offset by fewer one-time costs than a year earlier, when expenses included costs related to the Calgary facility closure and consulting work.
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Operating income was $3.2 million, compared with an operating loss of $1.0 million in the year-earlier quarter. Net income was $2.4 million, or 14 cents per share, versus a net loss of $1.2 million, or 7 cents per share.
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Adjusted EBITDA rose to $5.6 million, or 11.7% of sales, from $2.0 million, or 4.7% of sales. Trailing 12-month adjusted EBITDA was $20.7 million, equal to 10.8% of sales.
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Other expense was $0.4 million, primarily reflecting interest on financing for the Electrochem acquisition, partly offset by an estimated benefit from a refundable U.S. manufacturing tax credit for qualifying battery cells and packs.
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Ultralife will not hold a conference call to discuss the quarter because of the pending EnerSys transaction.
What changes for investors: The quarter showed stronger sales, margins and profitability, alongside a substantial increase in backlog. The acquisition agreement remains the major corporate development: Ultralife has agreed to be acquired by EnerSys for cash, with closing expected in early 2027.