Ultralife Q3 earnings rebound to $2.37M profit
The $16.00-per-share cash offer requires tenders of at least a majority of shares and applicable U.S. and U.K. regulatory clearances.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Ultralife Corporation reported third-quarter 2026 revenue of $48.271 million, up 11.3% year over year, and net income attributable to the company of $2.368 million, versus a $1.220 million loss. Gross margin—the share of sales left after product costs—was 27.5%, compared with 22.2%; government/defense sales rose 42.5%, while commercial sales fell 5.8%. Adjusted EBITDA, the company’s adjusted earnings measure, was $5.636 million, versus $2.048 million.
For the nine months, revenue was $143.659 million versus $142.678 million, while cash generated by operations was $0.513 million versus $9.501 million. A $1.102 million tariff refund reduced cost of products sold and was received in cash in the second quarter.
On October 27, 2026, Ultralife agreed to be acquired by EnerSys in a tender offer at $16.00 per share in cash, approximately 166% above the $6.01 closing price on October 26, 2026. The transaction was valued at approximately $320 million. The offer requires tenders of at least a majority of outstanding shares and regulatory clearances; the Offer and Merger remained pending, with closing expected in the first quarter of calendar year 2027.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Hollow bars mark forward-looking points. How the balance works
Positive
- Major point. Forward-looking: it has not happened yet and may not happen.Proposed cash tender offer: $16.00 per share, approximately 166% premium.
- Moderate pointThird-quarter revenue rose 11.3%; net income was $2.368 million.
Negative
- Moderate pointNine-month operating cash flow was $0.513 million, versus $9.501 million.
Filing Explained
If the deal closes, eligible Ultralife options and restricted shares are settled in cash, with no awards converted into EnerSys equity.
Supporting stockholders had agreed, subject to stated exceptions and conditions, to tender
If the transaction closes, options with exercise prices below
The agreement provides for a
Key Figures
Key Terms
Adjusted EBITDA financial
Minimum Condition regulatory
45X Advanced Manufacturing Production Credit regulatory
borrowing base limits financial
net operating loss carryforwards financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were ULBI’s third-quarter 2026 revenue and earnings?
What is EnerSys offering for ULBI shares?
What conditions must be met for the ULBI merger to close?
How many ULBI shares did the supporting stockholders own?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from ____________ to ____________
Commission file number:
(Exact name of registrant as specified in its charter)
|
(State or other jurisdiction of incorporation or organization)
(Address of principal executive offices) (Zip Code) |
(I.R.S. Employer Identification No.)
( (Registrant’s telephone number, including area code) |
None
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
|
Common Stock, $0.10 par value per share |
|
|
|
(Title of each class) |
(Trading Symbol) |
(Name of each exchange on which registered) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data file required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
|
Large accelerated filer ☐ |
|
|
Non-accelerated filer ☐ |
Smaller reporting company
|
|
Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of November 2, 2026, the registrant had
ULTRALIFE CORPORATION AND SUBSIDIARIES
INDEX
|
Page |
||
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PART I. |
FINANCIAL INFORMATION |
|
|
Item 1. |
Consolidated Financial Statements (unaudited): |
|
|
Consolidated Balance Sheets as of September 30, 2026 and December 31, 2025 |
1 |
|
|
Consolidated Statements of Income and Comprehensive Income for the Three and Nine-Month Periods Ended September 30, 2026 and September 30, 2025 |
2 |
|
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Consolidated Statements of Cash Flows for the Nine-Month Periods Ended September 30, 2026 and September 30, 2025 |
3 |
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Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine-Month Periods Ended September 30, 2026 and September 30, 2025 |
4 |
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Notes to Consolidated Financial Statements (unaudited) |
5 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
19 |
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Item 4. |
Controls and Procedures |
32 |
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PART II. |
OTHER INFORMATION |
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Item 6. |
Exhibits |
34 |
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Signatures |
35 |
PART I. FINANCIAL INFORMATION
Item 1. CONSOLIDATED FINANCIAL STATEMENTS
|
ULTRALIFE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In Thousands except share amounts) (Unaudited) |
|
September 30, 2026 |
December 31, 2025 |
|||||||
| ASSETS | ||||||||
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Current assets: |
||||||||
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Cash |
$ | $ | ||||||
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Trade accounts receivable, net of allowance for expected credit losses of $ |
||||||||
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Inventories, net |
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Prepaid expenses and other current assets |
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Total current assets |
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Property, plant and equipment, net |
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Goodwill |
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Other intangible assets, net |
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Deferred income taxes, net |
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Other noncurrent assets |
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Total assets |
$ | $ | ||||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
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Current liabilities: |
||||||||
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Accounts payable |
$ | $ | ||||||
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Current portion of long-term debt |
||||||||
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Accrued compensation and related benefits |
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Accrued expenses and other current liabilities |
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Total current liabilities |
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Long-term debt, net |
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Deferred income taxes |
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Other noncurrent liabilities |
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Total liabilities |
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Commitments and contingencies (Note 8) |
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|
||||||
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Stockholders’ equity: |
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Preferred stock – par value $.10 per share; authorized |
||||||||
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Common stock – par value $.10 per share; authorized |
||||||||
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Capital in excess of par value |
||||||||
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Accumulated deficit |
( |
) | ( |
) | ||||
|
Accumulated other comprehensive loss |
( |
) | ( |
) | ||||
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Treasury stock - at cost; |
( |
) | ( |
) | ||||
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Total Ultralife Corporation equity |
||||||||
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Non-controlling interest |
||||||||
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Total stockholders’ equity |
||||||||
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Total liabilities and stockholders’ equity |
$ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
ULTRALIFE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(In Thousands except per share amounts)
(Unaudited)
|
Three-month period ended |
Nine-month period ended |
|||||||||||||||
|
September 30, 2026 |
September 30, 2025 |
September 30, 2026 |
September 30, 2025 |
|||||||||||||
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Revenues |
$ | $ | $ | $ | ||||||||||||
|
Cost of products sold |
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Gross profit |
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Operating expenses: |
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Research and development |
||||||||||||||||
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Selling, general and administrative |
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Total operating expenses |
||||||||||||||||
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Operating income (loss) |
( |
) | ||||||||||||||
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Other expense (income): |
||||||||||||||||
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Interest and financing expense |
||||||||||||||||
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Miscellaneous (income) expense |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
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Total other expense |
||||||||||||||||
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Income (loss) before income taxes |
( |
) | ||||||||||||||
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Income tax provision (benefit) |
( |
) | ||||||||||||||
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Net income (loss) |
( |
) | ||||||||||||||
|
Net income (loss) attributable to non-controlling interest |
( |
) | ( |
) | ( |
) | ||||||||||
|
Net income (loss) attributable to Ultralife Corporation |
$ | $ | ( |
) | $ | $ | ||||||||||
|
Other comprehensive (loss) income: |
||||||||||||||||
|
Foreign currency translation adjustments |
( |
) | ( |
) | ( |
) | ||||||||||
|
Comprehensive income (loss) attributable to Ultralife Corporation |
$ | $ | ( |
) | $ | $ | ||||||||||
| Net income (loss) per share attributable to Ultralife common stockholders – basic | $ | .14 | $ | (.07 | ) | $ | .27 | $ | .09 | |||||||
|
Net income (loss) per share attributable to Ultralife common stockholders – diluted |
$ | .14 | $ | (.07 | ) | $ | .27 | $ | .09 | |||||||
|
Weighted average shares outstanding – basic |
||||||||||||||||
|
Potential common shares |
||||||||||||||||
|
Weighted average shares outstanding - diluted |
||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
|
ULTRALIFE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited) |
|
Nine-month period ended |
||||||||
|
September 30, 2026 |
September 30, 2025 |
|||||||
|
OPERATING ACTIVITIES: |
||||||||
|
Net income |
$ | $ | ||||||
|
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
|
Depreciation |
||||||||
|
Amortization of intangible assets |
||||||||
|
Amortization of financing fees |
||||||||
|
Stock-based compensation |
||||||||
|
Deferred income taxes |
||||||||
|
Changes in operating assets and liabilities: |
||||||||
|
Accounts receivable |
( |
) | ( |
) | ||||
|
Inventories |
( |
) | ( |
) | ||||
|
Prepaid expenses and other assets |
( |
) | ||||||
|
Accounts payable and other liabilities |
||||||||
|
Net cash provided by operating activities |
||||||||
|
INVESTING ACTIVITIES: |
||||||||
|
Purchases of property, plant and equipment |
( |
) | ( |
) | ||||
|
Proceeds from sale of equipment |
||||||||
|
Net cash used in investing activities |
( |
) | ( |
) | ||||
|
FINANCING ACTIVITIES: |
||||||||
|
Borrowings on credit facilities |
||||||||
|
Payments on credit facilities |
( |
) | ( |
) | ||||
|
Debt issuance costs |
( |
) | ||||||
|
Proceeds from exercise of stock options |
||||||||
|
Net cash provided by (used in) financing activities |
( |
) | ||||||
|
Effect of exchange rate changes on cash |
( |
) | ( |
) | ||||
|
(DECREASE) INCREASE IN CASH |
( |
) | ||||||
|
Cash, Beginning of period |
||||||||
|
Cash, End of period |
$ | $ | ||||||
|
The accompanying notes are an integral part of these consolidated financial statements. |
|
ULTRALIFE CORPORATION AND SUBSIDIARIES |
|||||||||||||||
|
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY |
|||||||||||||||
|
(In thousands except share amounts) (Unaudited) |
|
Capital |
Accumulated |
|||||||||||||||||||||||||||||||
|
Common Stock |
in Excess |
Other |
Non- |
|||||||||||||||||||||||||||||
|
Number of |
of Par |
Comprehensive |
Accumulated |
Treasury |
Controlling |
|||||||||||||||||||||||||||
|
Shares |
Amount |
Value |
Income (Loss) |
Deficit |
Stock |
Interest |
Total |
|||||||||||||||||||||||||
|
Balance – December 31, 2024 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||||||||||
|
Net income |
( |
) | ||||||||||||||||||||||||||||||
|
Stock option exercises |
||||||||||||||||||||||||||||||||
|
Stock-based compensation – stock options |
||||||||||||||||||||||||||||||||
|
Stock-based compensation - restricted stock |
||||||||||||||||||||||||||||||||
|
Foreign currency translation adjustments |
||||||||||||||||||||||||||||||||
|
Balance – September 30, 2025 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||||||||||
|
Balance – December 31, 2025 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||||||||||
|
Net income (loss) |
( |
) | ||||||||||||||||||||||||||||||
|
Stock option exercises |
||||||||||||||||||||||||||||||||
|
Stock-based compensation – stock options |
||||||||||||||||||||||||||||||||
|
Stock-based compensation - restricted stock |
( |
) | ( |
) | ||||||||||||||||||||||||||||
|
Foreign currency translation adjustments |
( |
) | ( |
) | ||||||||||||||||||||||||||||
|
Balance – September 30, 2026 |
$ | $ | ( |
) | ( |
) | ( |
) | $ | $ | ||||||||||||||||||||||
|
Balance – June 30, 2025 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||||||||||
|
Net income (loss) |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||
|
Stock option exercises |
||||||||||||||||||||||||||||||||
|
Stock-based compensation – stock options |
||||||||||||||||||||||||||||||||
|
Stock-based compensation - restricted stock |
||||||||||||||||||||||||||||||||
|
Foreign currency translation adjustments |
( |
) | ( |
) | ||||||||||||||||||||||||||||
|
Balance – September 30, 2025 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||||||||||
|
Balance – June 30, 2026 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||||||||||
|
Net income (loss) |
||||||||||||||||||||||||||||||||
|
Stock option exercises |
||||||||||||||||||||||||||||||||
|
Stock-based compensation – stock options |
||||||||||||||||||||||||||||||||
|
Stock-based compensation - restricted stock |
||||||||||||||||||||||||||||||||
|
Foreign currency translation adjustments |
( |
) | ( |
) | ||||||||||||||||||||||||||||
|
Balance – September 30, 2026 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | $ | |||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
ULTRALIFE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share amounts)
(Unaudited)
|
1. |
BASIS OF PRESENTATION |
The accompanying unaudited consolidated financial statements of Ultralife Corporation and its subsidiaries (the “Company” or “Ultralife”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Rule 8-03 of Regulation S-X. Accordingly, they do not include all the information and notes for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals and adjustments) considered necessary for a fair presentation of the consolidated financial statements have been included. Results for interim periods should not be considered indicative of results to be expected for a full year. Reference should be made to the consolidated financial statements and related notes thereto contained in our Form 10-K for the year ended December 31, 2025.
The December 31, 2025 consolidated balance sheet information referenced herein was derived from audited financial statements but does not include all disclosures required by GAAP.
Certain items previously reported in specific financial statement captions have been reclassified to conform to the current presentation.
Recent Business Developments
In connection with the importation of certain raw materials and components used in the manufacture of its products, the Company previously paid tariffs imposed pursuant to the International Emergency Economic Powers Act ("IEEPA"). Such tariff costs were included in inventory and recognized in cost of products sold as the related inventory was sold.
During the second quarter of 2026, the Company received cash refunds of previously paid IEEPA tariffs following legal developments related to the validity of certain IEEPA tariffs and the implementation of refund procedures by U.S. Customs and Border Protection. The Company accounts for IEEPA tariff refunds as gain contingencies and recognizes such amounts only when the related contingencies have been resolved and the amounts are realized or realizable. Accordingly, during the nine-month period ended September 30, 2026, the Company recognized a net refund of $
The Company continues to evaluate potential claims for additional IEEPA tariff refunds. Additional recoveries remain subject to governmental review, claim validation, administrative processing and ongoing legal proceedings. Accordingly, as of September 30, 2026, the Company had not recorded a receivable or recognized any amounts related to potential future IEEPA tariff recoveries as realization of such amounts is not considered sufficiently probable at this time.
Recent Accounting Guidance Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03 “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” which requires public entities to disclose specified information about certain costs and expenses. ASU 2024-03 is effective for the Company’s annual reporting period beginning January 1, 2027, and interim reporting periods beginning January 1, 2028, with early adoption permitted. The Company is currently evaluating the impact that ASU 2024-03 will have on its consolidated financial statements.
|
2. |
DEBT |
On October 31, 2024, Ultralife, SWE, CLB, Excell USA, and Electrochem, as borrowers, and certain other subsidiaries of the Company, entered into a new Credit and Security Agreement with KeyBank National Association (“KeyBank” or the “Bank”), as lender and administrative agent (the “New Credit Agreement”). The proceeds of the loans under the New Credit Agreement were used, in part, to repay outstanding indebtedness under the Company’s then existing Credit and Security Agreement with KeyBank (the “Amended Credit Agreement”).
The New Credit Agreement, among other things, provides in its term loan provisions for a
Upon closing of the acquisition of all issued and outstanding shares of Electrochem on October 31, 2024, the Company borrowed the full amount of the Term Loan Facility.
As of September 30, 2026, the Company had $
The New Credit Agreement also provides under its revolving credit provisions for revolving loans, letters of credit, and swing loans (“Revolving Credit Facility”). Upon the effectiveness of the New Credit Agreement, any amounts outstanding under letters of credit issued pursuant to the Amended Credit Agreement became issued under the New Credit Agreement. The availability under the Revolving Credit Facility is subject to certain borrowing base limits based on trade receivables and inventories. All unpaid principal and accrued and unpaid interest with respect to the Revolving Credit Facility is due and payable in full on October 31, 2029.
The Company may voluntarily prepay principal amounts outstanding under the New Credit Agreement at any time subject to certain advance notifications and other restrictions.
In addition to the customary affirmative and negative covenants, the Company must maintain a consolidated fixed charge coverage ratio, as defined in the New Credit Agreement, of equal to or greater than
Borrowings under the New Credit Agreement are secured by substantially all the assets of the Company and certain of its present and future subsidiaries who are or become parties to, or guarantors under the New Credit Agreement.
Interest will accrue on outstanding indebtedness under the Term Loan Facility and Revolving Credit Facilities at a variable rate of interest based on designated interest rate benchmarks plus a varying margin determined by reference to the consolidated total leverage ratio in effect from time to time. Our borrowing rate was
The Company must pay a fee of twenty, twenty-five or thirty basis points (depending on the consolidated total leverage ratio in effect from time to time) based on the average daily unused availability under the Revolving Credit Facility.
The Company must make payments to the extent borrowings exceed the maximum amount then permitted to be borrowed and from the proceeds of certain transactions. Upon the occurrence of an event of default, the outstanding obligations may be accelerated, and the Bank will have other customary remedies including resort to the security interest the Company provided to the Bank.
Future minimum principal repayment obligations on our New Credit Agreement as of September 30, 2026 are as follows:
|
2026 |
$ | |||
|
2027 |
||||
|
2028 |
||||
|
2029 |
||||
|
Total |
$ |
|
3. |
EARNINGS PER SHARE |
Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) attributable to Ultralife by the weighted average shares outstanding during the period. Diluted EPS includes the dilutive effect of securities when the average market price exceeds the exercise price of the securities, if any, and is calculated using the treasury stock method.
For the three-month period ended September 30, 2026, there were
There were
For the nine-month period ended September 30, 2026, there were
There were
|
4. |
SUPPLEMENTAL BALANCE SHEET INFORMATION |
Fair Value Measurements and Disclosures
The fair value of financial instruments approximated their carrying values at September 30, 2026, and December 31, 2025. The fair value of cash, accounts receivable, accounts payable, accrued liabilities, and the current portion of long-term debt approximates carrying value due to the short-term nature of these instruments. The carrying value of long-term debt approximates fair value, as the variable interest rates approximate current market rates.
Cash
The composition of the Company’s cash was as follows:
|
September 30, |
December 31, |
|||||||
|
2026 |
2025 |
|||||||
|
Cash |
$ | $ | ||||||
|
Restricted Cash |
||||||||
|
Total |
$ | $ | ||||||
During the third quarter of 2026, the Company’s Newark facility experienced a fire, and the Company expects the related losses to be covered by insurance, subject to a $
Inventories, Net
Inventories are stated at the lower of cost or net realizable value, net of obsolescence reserves, with cost determined under the first-in, first-out (FIFO) method. The composition of inventories, net was:
|
September 30, |
December 31, |
|||||||
|
2026 |
2025 |
|||||||
|
Raw materials |
$ | $ | ||||||
|
Work in process |
||||||||
|
Finished goods |
||||||||
|
Total |
$ | $ | ||||||
Property, Plant and Equipment, Net
Major classes of property, plant and equipment consisted of the following:
|
September 30, |
December 31, |
|||||||
|
2026 |
2025 |
|||||||
|
Land |
$ |
$ | ||||||
|
Buildings and leasehold improvements |
||||||||
|
Machinery and equipment |
||||||||
|
Furniture and fixtures |
||||||||
|
Computer hardware and software |
||||||||
|
Construction in process |
||||||||
|
Less: Accumulated depreciation |
( |
) | ( |
) | ||||
|
Property, plant and equipment, net |
$ | $ | ||||||
Depreciation expense for property, plant and equipment was as follows:
|
Three-month period ended |
Nine-month period ended |
|||||||||||||||
|
September 30, |
September 30, |
September 30, |
September 30, |
|||||||||||||
|
2026 |
2025 |
2026 |
2025 |
|||||||||||||
|
Depreciation expense |
$ | $ | $ | $ | ||||||||||||
Goodwill
The following table summarizes the goodwill activity by segment for the nine-month period ended September 30, 2026:
| Battery &
Energy |
Communications |
|||||||||||
|
Products |
Systems |
Total |
||||||||||
|
Balance – December 31, 2025 |
$ | $ | $ | |||||||||
|
Effect of foreign currency translation |
||||||||||||
|
Balance – September 30, 2026 |
$ | $ | $ | |||||||||
Other Intangible Assets, Net
The composition of other intangible assets was:
|
at September 30, 2026 |
||||||||||||
|
Accumulated |
||||||||||||
|
Cost |
Amortization |
Net |
||||||||||
|
Customer relationships |
$ | $ | $ | |||||||||
|
Patents and technology |
||||||||||||
|
Other |
||||||||||||
|
Total other intangible assets |
$ | $ | $ | |||||||||
|
at December 31, 2025 |
||||||||||||
|
Accumulated |
||||||||||||
|
Cost |
Amortization |
Net |
||||||||||
|
Customer relationships |
$ | $ | $ | |||||||||
|
Patents and technology |
||||||||||||
|
Other |
||||||||||||
|
Total other intangible assets |
$ | $ | $ | |||||||||
The change in the cost of total intangible assets from December 31, 2025, to September 30, 2026, is the effect of foreign currency translations.
Amortization expense for other intangible assets was as follows:
|
Three-month period ended |
Nine-month period ended |
|||||||||||||||
|
September 30, |
September 30, |
September 30, |
September 30, |
|||||||||||||
|
2026 |
2025 |
2026 |
2025 |
|||||||||||||
|
Amortization included in: |
||||||||||||||||
|
Selling, general and administrative |
$ | $ | $ | $ | ||||||||||||
|
Research and development |
||||||||||||||||
|
Total amortization expense |
$ | $ | $ | $ | ||||||||||||
|
5. |
STOCK-BASED COMPENSATION |
We recorded non-cash stock compensation expense in each period as follows:
|
Three-month period ended |
Nine-month period ended |
|||||||||||||||
|
September 30, |
September 30, |
September 30, |
September 30, |
|||||||||||||
|
2026 |
2025 |
2026 |
2025 |
|||||||||||||
|
Stock options |
$ | $ | $ | $ | ||||||||||||
|
Restricted stock |
( |
) | ||||||||||||||
|
Total |
$ | $ | $ | $ | ||||||||||||
We have stock options outstanding from various stock-based employee compensation plans for which we record compensation cost relating to share-based payment transactions in our financial statements. As of September 30, 2026, there was $
The following table summarizes stock option activity for the nine-month period ended September 30, 2026:
|
Number of Shares |
Weighted Average Exercise Price |
Weighted Average Remaining Contractual Term (years) |
Aggregate Intrinsic Value |
|||||||||||||
|
Outstanding at January 1, 2026 |
$ | |||||||||||||||
|
Granted |
$ | |||||||||||||||
|
Exercised |
( |
) | $ | |||||||||||||
|
Forfeited or expired |
( |
) | $ | |||||||||||||
|
Outstanding at September 30, 2026 |
$ | $ | ||||||||||||||
|
Vested and expected to vest at September 30, 2026 |
$ | $ | ||||||||||||||
|
Exercisable at September 30, 2026 |
$ | $ | ||||||||||||||
Cash received from stock option exercises under our stock-based compensation plans for the three-month periods ended September 30, 2026, and September 30, 2025, was $
Restricted stock awards vest in equal annual installments over three (
|
6. |
INCOME TAXES |
Our effective tax rate for the nine-month period ended September 30, 2026, and 2025 was
On July 4, 2025, the One Big Beautiful Bill Act was signed into law in the United States which includes a broad range of tax provisions affecting businesses. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company has included the estimated impacts of the bill in the consolidated financial statements for the three and nine-month periods ended September 30, 2026.
As of December 31, 2025, our federal net operating loss (“NOL”) carryforwards, state net operating loss carryforwards, and federal general business tax credit carryforwards were $
As of September 30, 2026, for certain past operations in the U.K., we continue to report a valuation allowance for NOL carryforwards of approximately $
As of September 30, 2026, we have not recognized a valuation allowance against our other foreign deferred tax assets, as realization is considered to be more likely than not.
As of September 30, 2026, the Company maintains its assertion that all foreign earnings will be indefinitely reinvested in those operations, other than earnings generated in the U.K.
There were no unrecognized tax benefits related to uncertain tax positions at September 30, 2026, and December 31, 2025.
As a result of our operations, we file income tax returns in various jurisdictions including U.S. federal, U.S. state and foreign jurisdictions. We are routinely subject to examination by taxing authorities in these various jurisdictions. Our U.S. tax matters for 2022 thru 2025 remain subject to IRS examination. Our U.S. tax matters for 2005-2007, 2009, and 2011-2015 also remain subject to IRS examination due to the remaining availability of net operating loss carryforwards generated in those years. Our U.S. tax matters for 2015 thru 2024 remain subject to examination by various state and local tax jurisdictions. Our tax matters for the years 2015 through 2024 remain subject to examination by the respective foreign tax jurisdiction authorities.
|
7. |
OPERATING LEASES |
The Company has operating leases predominantly for operating facilities. As of September 30, 2026, the remaining lease terms on our operating leases range from approximately one (
The components of lease expense for the current and prior-year comparative periods were as follows:
|
Three-month periods ended |
Nine-month periods ended |
|||||||||||||||
|
September 30, 2026 |
September 30, 2025 |
September 30, 2026 |
September 30, 2025 |
|||||||||||||
|
Operating lease cost |
$ | $ | $ | $ | ||||||||||||
|
Variable lease cost |
||||||||||||||||
|
Total lease cost |
$ | $ | $ | $ | ||||||||||||
Supplemental cash flow information related to leases was as follows:
|
Nine-month period ended September 30, |
||||||||
|
2026 |
2025 |
|||||||
|
Cash paid for amounts included in the measurement of lease liabilities: |
||||||||
|
Operating cash flows from operating leases |
$ | $ | ||||||
|
Right-of-use assets obtained in exchange for lease liabilities: |
$ | $ | ||||||
Supplemental consolidated balance sheet information related to leases was as follows:
|
Balance sheet classification |
September 30, 2026 |
December 31, 2025 |
|||||||
|
Assets: |
|||||||||
|
Operating lease right-of-use asset |
Other noncurrent assets |
$ | $ | ||||||
|
Liabilities: |
|||||||||
|
Current operating lease liability |
Accrued expenses and other current liabilities |
$ | $ | ||||||
|
Operating lease liability, net of current portion |
Other noncurrent liabilities |
||||||||
|
Total operating lease liability |
$ | $ | |||||||
|
Weighted-average remaining lease term (years) |
|||||||||
|
Weighted-average discount rate |
% | % | |||||||
Future minimum lease payments as of September 30, 2026, are as follows:
|
Maturity of operating lease liabilities |
||||
|
2026 |
$ | |||
|
2027 |
||||
|
2028 |
||||
|
2029 |
||||
|
2030 |
||||
|
Thereafter |
||||
|
Total lease payments |
||||
|
Less: Imputed interest |
( |
) | ||
|
Present value of remaining lease payments |
$ |
|
8. |
COMMITMENTS AND CONTINGENCIES |
Purchase Commitments
As of September 30, 2026, we have made commitments to purchase approximately $
Product Warranties
We estimate future warranty costs to be incurred for product failure rates, material usage and service costs in the development of our warranty obligations. Estimated future costs are based on actual past experience and are generally estimated as a percentage of sales over the warranty period. Changes in our product warranty liability during the nine-month periods ended September 30, 2026 and 2025 were as follows:
|
Nine-month period ended September 30, |
||||||||
|
2026 |
2025 |
|||||||
|
Accrued warranty obligations – beginning |
$ | $ | ||||||
|
Accruals for warranties issued |
||||||||
|
Settlements made |
( |
) | ( |
) | ||||
|
Accrued warranty obligations – ending |
$ | $ | ||||||
Contingencies and Legal Matters
We are subject to legal proceedings and claims that arise from time to time in the normal course of business. We believe that the final disposition of any such matters will not have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, recognizing that legal matters are subject to inherent uncertainties, there exists the possibility that ultimate resolution of these matters could have a material adverse impact on the Company’s financial position, results of operations or cash flows. We are not aware of any such situations at this time.
|
9. |
REVENUE RECOGNITION |
Revenues are generated from the sale of products. Performance obligations are met and revenue is recognized upon transfer of control to the customer, which is generally upon shipment. When contract terms require transfer of control upon delivery at a customer’s location, revenue is recognized on the date of delivery. For products shipped under vendor-managed inventory arrangements, revenue is recognized and billed when the product is consumed by the customer, at which point control has transferred and there are no further obligations by the Company. Revenue is measured as the amount of consideration we expect to receive in exchange for shipped product. Sales, value-added and other taxes billed and collected from customers are excluded from revenue. Customers, including distributors, do not have a general right of return.
Separately priced extended warranty contracts are offered on certain Communications Systems products for a duration of up to eight (
As of September 30, 2026, there was deferred revenue on extended warranty contracts of $
As of December 31, 2025, there was deferred revenue on extended warranty contracts of $
As of September 30, 2026, and December 31, 2025, the Company had no other unsatisfied performance obligations for contracts with an original expected duration of greater than one year. Pursuant to Topic 606, we have applied the practical expedient with respect to disclosure of the deferral and future expected timing of revenue recognition for transaction price allocated to remaining performance obligations.
|
10. |
BUSINESS SEGMENT INFORMATION |
Operating segments represent a component of the Company that engages in business activities from which it may recognize revenues and incur expenses whose operating results are regularly reviewed by the public entity’s chief operating decision maker (“CODM”) to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. Upon identification of operating segments, the Company determines which of those operating segments are required to be presented as reportable segments based on the quantitative thresholds.
We structure our operations primarily around the products we sell and report our financial results in the following two reportable segments: Battery & Energy Products and Communications Systems. The Battery & Energy Products segment includes Lithium 9-volt, cylindrical and various other non-rechargeable batteries, in addition to rechargeable batteries, uninterruptable power supplies, charging systems and accessories. The Communications Systems segment includes RF amplifiers, power supplies, cable and connector assemblies, amplified speakers, equipment mounts, case equipment, man-portable systems, integrated communication systems for fixed or vehicle applications and communications and electronics systems design.
Our CODM is Mike Manna, President & Chief Executive Officer. Both of our operating segments are regularly reviewed by the CODM through weekly revenue, gross margin and consolidated financial forecast updates, bi-weekly business and financial reviews to assess business performance, top priorities, utilization of resources and to regularly communicate with segment management, who are part of the CODM’s executive leadership team, and monthly meetings with the executive leadership team. In his role as CODM, Mr. Manna is deeply involved in business operations through daily updates by the segment management and ongoing financial, revenue and operations discussions.
The primary financial measures used by the CODM to monitor and evaluate resource allocation and the performance of the operating segments is segment contribution, as defined by gross profit less direct selling, general and administrative (“SG&A”) and research and development expenses. This metric is used as a consistent benchmark for comparison across reporting periods.
The significant segment expenses regularly reviewed by the CODM and included in segment contribution are cost of products sold and direct R&D and SG&A expenses. There are no other segment items included in segment contribution beyond the significant expenses disclosed.
Corporate general and administrative (“G&A”) expenses, including costs associated with our acquisitions, include corporate functions including board of directors, executive officers, accounting & finance, human resources, legal, information technology and their related functional expenses. These costs are not directly allocable to the operating segments.
The CODM does not review segment assets at a level other than that presented in the Company’s consolidated balance sheets.
Three-month period ended September 30, 2026:
|
Battery & Energy Products |
Communicat ions Systems |
Corporate |
Total |
|||||||||||||
|
Revenues |
$ | $ | $ | $ | ||||||||||||
|
Cost of products sold |
( |
) | ( |
) | ( |
) | ||||||||||
|
Gross profit |
||||||||||||||||
|
Direct SG&A expenses |
( |
) | ( |
) | - | ( |
) | |||||||||
|
Research and development |
( |
) | ( |
) | ( |
) | ||||||||||
|
Segment contribution |
||||||||||||||||
|
Corporate G&A expenses |
( |
) | ( |
) | ||||||||||||
|
Operating income |
||||||||||||||||
|
Other expenses, net |
( |
) | ( |
) | ||||||||||||
|
Income tax provision |
( |
) | ( |
) | ||||||||||||
|
Non-controlling interest |
( |
) | ( |
) | ||||||||||||
|
Net income attributable to Ultralife Corporation |
$ | |||||||||||||||
|
Total assets |
$ | $ | $ | $ | ||||||||||||
|
Depreciation and amortization of intangible assets |
$ | $ | $ | $ | ||||||||||||
Three-month period ended September 30, 2025:
|
Battery & Energy Products |
Communicat ions Systems |
Corporate |
Total |
|||||||||||||
|
Revenues |
$ | $ | $ | $ | ||||||||||||
|
Cost of products sold |
( |
) | ( |
) | ( |
) | ||||||||||
|
Gross profit |
||||||||||||||||
|
Direct SG&A expenses |
( |
) | ( |
) | - | ( |
) | |||||||||
|
Research and development |
( |
) | ( |
) | ( |
) | ||||||||||
|
Segment contribution |
( |
) | ||||||||||||||
|
Corporate G&A expenses |
( |
) | ( |
) | ||||||||||||
|
Operating loss |
( |
) | ||||||||||||||
|
Other expenses, net |
( |
) | ( |
) | ||||||||||||
|
Income tax benefit |
||||||||||||||||
|
Non-controlling interest |
||||||||||||||||
|
Net loss attributable to Ultralife Corporation |
$ | ( |
) | |||||||||||||
|
Total assets |
$ | $ | $ | $ | ||||||||||||
|
Depreciation and amortization of intangible assets |
$ | $ | $ | $ | ||||||||||||
Nine-month period ended September 30, 2026:
|
Battery & Energy Products |
Communicat ions Systems |
Corporate |
Total |
|||||||||||||
|
Revenues |
$ | $ | $ | $ | ||||||||||||
|
Cost of products sold |
( |
) | ( |
) | ( |
) | ||||||||||
|
Gross profit |
||||||||||||||||
|
Direct SG&A expenses |
( |
) | ( |
) | - | ( |
) | |||||||||
|
Research and development |
( |
) | ( |
) | ( |
) | ||||||||||
|
Segment contribution |
( |
) | ||||||||||||||
|
Corporate G&A expenses |
( |
) | ( |
) | ||||||||||||
|
Operating income |
||||||||||||||||
|
Other expenses, net |
( |
) | ( |
) | ||||||||||||
|
Income tax provision |
( |
) | ( |
) | ||||||||||||
|
Non-controlling interest |
||||||||||||||||
|
Net income attributable to Ultralife Corporation |
$ | |||||||||||||||
|
Total assets |
$ | $ | $ | $ | ||||||||||||
|
Depreciation and amortization of intangible assets |
$ | $ | $ | $ | ||||||||||||
Nine-month period ended September 30, 2025:
|
Battery & Energy Products |
Communicat ions Systems |
Corporate |
Total |
|||||||||||||
|
Revenues |
$ | $ | $ | $ | ||||||||||||
|
Cost of products sold |
( |
) | ( |
) | ( |
) | ||||||||||
|
Gross profit |
||||||||||||||||
|
Direct SG&A expenses |
( |
) | ( |
) | - | ( |
) | |||||||||
|
Research and development |
( |
) | ( |
) | ( |
) | ||||||||||
|
Segment contribution |
( |
) | ||||||||||||||
|
Corporate G&A expenses |
( |
) | ( |
) | ||||||||||||
|
Operating income |
||||||||||||||||
|
Other expenses, net |
( |
) | ( |
) | ||||||||||||
|
Income tax provision |
( |
) | ( |
) | ||||||||||||
|
Non-controlling interest |
||||||||||||||||
|
Net income attributable to Ultralife Corporation |
$ | |||||||||||||||
|
Total assets |
$ | $ | $ | $ | ||||||||||||
|
Depreciation and amortization of intangible assets |
$ | $ | $ | $ | ||||||||||||
The following tables disaggregate our business segment revenues by major source and geography.
Commercial and Government/Defense Revenue Information:
Three-month period ended September 30, 2026:
|
Total Revenue |
Commercial |
Government/ Defense |
||||||||||
|
Battery & Energy Products |
$ | $ | $ | |||||||||
|
Communications Systems |
||||||||||||
|
Total |
$ | $ | $ | |||||||||
| % | % | |||||||||||
Three-month period ended September 30, 2025:
|
Total Revenue |
Commercial |
Government/ Defense |
||||||||||
|
Battery & Energy Products |
$ | $ | $ | |||||||||
|
Communications Systems |
||||||||||||
|
Total |
$ | $ | $ | |||||||||
| % | % | |||||||||||
Nine-month period ended September 30, 2026:
|
Total Revenue |
Commercial |
Government/ Defense |
||||||||||
|
Battery & Energy Products |
$ | $ | $ | |||||||||
|
Communications Systems |
||||||||||||
|
Total |
$ | $ | $ | |||||||||
| % | % | |||||||||||
Nine-month period ended September 30, 2025:
|
Total Revenue |
Commercial |
Government/ Defense |
||||||||||
|
Battery & Energy Products |
$ | $ | $ | |||||||||
|
Communications Systems |
||||||||||||
|
Total |
$ | $ | $ | |||||||||
| % | % | |||||||||||
U.S. and Non-U.S. Revenue Information1:
Three-month period ended September 30, 2026:
|
Total Revenue |
United States |
Non-United States |
||||||||||
|
Battery & Energy Products |
$ | $ | $ | |||||||||
|
Communications Systems |
||||||||||||
|
Total |
$ | $ | $ | |||||||||
| % | % | |||||||||||
Three-month period ended September 30, 2025:
|
Total Revenue |
United States |
Non-United States |
||||||||||
|
Battery & Energy Products |
$ | $ | $ | |||||||||
|
Communications Systems |
||||||||||||
|
Total |
$ | $ | $ | |||||||||
| % | % | |||||||||||
Nine-month period ended September 30, 2026:
|
Total Revenue |
United States |
Non-United States |
||||||||||
|
Battery & Energy Products |
$ | $ | $ | |||||||||
|
Communications Systems |
||||||||||||
|
Total |
$ | $ | $ | |||||||||
| % | % | |||||||||||
Nine-month period ended September 30, 2025:
|
Total Revenue |
United States |
Non-United States |
||||||||||
|
Battery & Energy Products |
$ | $ | $ | |||||||||
|
Communications Systems |
||||||||||||
|
Total |
$ | $ | $ | |||||||||
| % | % | |||||||||||
1 Sales classified to U.S. include shipments to U.S.-based prime contractors which in some cases may serve non-U.S. projects.
|
11. |
SUBSEQUENT EVENTS |
As previously announced, on October 27, 2026, Ultralife entered into an Agreement and Plan of Merger with EnerSys (NYSE: ENS) under which upon closing EnerSys will acquire Ultralife in an all-cash transaction valued at approximately $
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. This report contains certain forward-looking statements and information that are based on the beliefs of management as well as assumptions made by management and information currently available to management. The statements contained in this report relating to matters that are not historical facts are forward-looking statements that involve risks and uncertainties, including, but not limited to, uncertain global economic conditions including the impact of inflation, tariffs, interest rates and supply chain disruptions affecting our business, revenues and earnings adversely; our reliance on certain key customers for a significant portion of our revenues; reductions or delays in U.S. and foreign military spending; our efforts to develop new products or new commercial applications for our products could be prolonged; potential disruptions or delays in our supply of raw materials and components or material increases in their costs due to business conditions, new or additional tariffs, global conflicts, weather, sourcing requirements or other factors not under our control; our resources being overwhelmed by our growth; our ability to recruit and retain top management and key personnel; breaches in information systems security and other disruptions in our information technology systems; fluctuations in the price of oil and the resulting impact on the demand for downhole drilling; the unique risks associated with our China operations; possible future declines in demand for the products that use our batteries or communications systems; safety risks, including the risk of fire inherent in the manufacture, use and transportation of Lithium batteries; variability in our quarterly and annual results and the price of our common stock; purchases by our customers of product quantities not meeting the volume expectations in our supply agreements; rising interest rates increasing the cost of our variable borrowings; our inability to comply with changes to the regulations for the shipment of our products; our entrance into new end-markets which could lead to additional financial exposure; litigation or claims resulting in negative optics in the markets we serve and increased costs; the potential of future pandemics that may arise, causing delays in the manufacture and delivery of our mission critical products to end customers; potential costs attributable to the warranties we supply with our products and services; negative publicity concerning Lithium-ion batteries; rules and procedures regarding contracting with the U.S. and foreign governments; our exposure to foreign currency fluctuations; our ability to utilize our net operating loss carryforwards; the risk that we are unable to protect our proprietary and intellectual property; our ability to comply with government regulations including the use of “conflict minerals”; possible impairments of our goodwill and other intangible assets; known and unknown environmental matters; possible audits of our contracts by the U.S. and foreign governments and their respective defense agencies; exposure to possible violations of the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act or other anti-corruption laws; and other risks and uncertainties, certain of which are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may differ materially from those forward-looking statements described herein. When used in this report, the words “anticipate,” “believe,” “estimate,” “expect,” “seek,” “project,” “intend,” “plan,” “may,” “will,” “should,” “foresee,” “could,” “likely,” or words of similar import are intended to identify forward-looking statements. For further discussion of certain of the matters described above and other risks and uncertainties, see Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025.
Although we base these forward-looking statements on assumptions that we believe are reasonable when made, we caution you that forward-looking statements do not guarantee future performance and that our actual results of operations, financial condition and liquidity and developments in the industries in which we operate may differ materially from those made in or suggested by the forward-looking statements contained herein. In addition, even if our results of operations, financial condition and liquidity and the development of the industries in which we operate are consistent with the forward-looking statements contained in this document, those results or developments may not be indicative of results or developments in subsequent periods. Given these risks and uncertainties, you are cautioned not to place undue reliance on these forward-looking statements. Any forward-looking statements that we make herein speak only as of the date of those statements, and we undertake no obligation to update those statements or to publicly announce the results of any revisions to any of those statements to reflect future events or developments. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.
Undue reliance should not be placed on our forward-looking statements. Except as required by law, we disclaim any obligation to update any risk factors or to publicly announce the results of any revisions to any of the forward-looking statements to reflect new information or risks, future events or other developments.
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the consolidated financial statements and notes thereto in Part I, Item 1 of this Form 10-Q, and the consolidated financial statements and notes thereto and risk factors in our Annual Report on Form 10-K for the year ended December 31, 2025.
The financial information in this MD&A is presented in thousands of dollars, except for share and per share amounts, unless otherwise specified.
General
We offer products and services ranging from power solutions to communications and electronics systems to customers across the globe in the government, defense and commercial sectors. With an emphasis on strong engineering and a collaborative approach to problem solving, we design and manufacture power and communications systems including rechargeable and non-rechargeable batteries, charging systems, communications and electronics systems and accessories, and custom engineered systems related to those product lines. We continually evaluate ways to grow, including the design, development and sale of new products, expansion of our sales force to penetrate new markets and territories, and seeking opportunities to expand through acquisitions.
We sell our products worldwide through a variety of trade channels, including original equipment manufacturers (“OEMs”), industrial and defense supply distributors, and directly to U.S. and foreign defense departments. Historically, we utilized the following brands, tradenames and trademarks (“sub-brands”) to promote our products in the markets we serve: Ultralife®, Ultralife Thin Cell®, Ultralife HiRate®, Ultralife & design®, LithiumPower®, LithiumPower & Design®, SMART CIRCUIT®, SMARTCIRCUIT®, SMART CIRCUIT & design®, SODIUMPOWER®, SODIUMPOWER (design)®, WE. ARE. POWER®, AMTI®, ABLE™, ACCUTRONICS™, ACCUPRO™, ENTELLION™, McDowell Research®, SWE DRILL-DATA®, SWE SEASAFE (& DESIGN)®, SWE SEASAFE DIRECT®, SWE SOUTHWEST ELECTRONIC ENERGY CORP®, SWE Southwest Electronic Energy Group®, Excell Battery Group™ and Criterion Gauge™, POW-R BMS®, POW-R TOTE® and Electrochem®. As explained below, our rebranding initiative will eliminate or de-emphasize our reference to the sub-brands going forward. We have sales, operations and product development facilities in North America, Europe and Asia.
As part of our strategic evolution, in October 2025, Ultralife decided to undergo a comprehensive rebranding initiative that consolidates all sub-brands under a singular, unified master brand – Ultralife. This move reflects our commitment to clarity, consistency and amplified brand equity across all markets. By streamlining our global identity, we aim to strengthen customer recognition, enhance operational efficiency and better align to our customers’ needs with a singular, powerful brand narrative. To this end, the Accutronics, Southwest Electronic Energy, Excell Battery, McDowell Research and AMTI brands will no longer be emphasized. The Electrochem brand will remain, but as a product brand on select primary cells. We believe this transformation will position Ultralife for ongoing growth and stronger market impact as we continue to lead in mission critical battery and RF power solutions. This rebranding initiative had a non-cash impact of $12,181 reduction in the value of our tradename and trademark intangible assets recorded during our 2025 fourth quarter.
We report our results in two operating segments: Battery & Energy Products and Communications Systems. The Battery & Energy Products segment includes Lithium 9-volt, cylindrical, thin cell and other non-rechargeable batteries, in addition to rechargeable batteries, uninterruptable power supplies, charging systems and accessories. The Communications Systems segment includes RF amplifiers, power supplies, cable and connector assemblies, amplified speakers, equipment mounts, case equipment, man-portable systems, integrated communication systems for fixed or vehicle applications and communications and electronics systems design. We believe that segment contribution, defined as gross profit less direct selling, general and administrative (“SG&A”) and research and development expenses, is the best indicator of segment performance. As such, we report segment results at the segment contribution level. (See Note 10 in the notes to consolidated financial statements contained in Item 1 of this Form 10-Q.)
Our website address is www.ultralifecorporation.com. We make available free of charge via a hyperlink on our website (see Investors link on the website) our annual reports on Form 10-K, proxy statements, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports and statements as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission (“SEC”). We will provide copies of these reports upon written request to the attention of Philip A. Fain, CFO, Treasurer and Secretary, Ultralife Corporation, 2000 Technology Parkway, Newark, New York, 14513. Our filings with the SEC are also available through the SEC website at www.sec.gov or at the SEC Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549 or by calling 1-800-SEC-0330.
Overview
Consolidated revenues of $48,271 for the three-month period ended September 30, 2026, increased by $4,900 or 11.3%, over $43,371 for the three-month period ended September 30, 2025, reflecting an increase in government/defense sales of 42.5%, partially offset by a decrease in commercial sales of 5.8%.
Gross profit was $13,293, or 27.5% of revenue, for the three-month period ending September 30, 2026, compared to $9,619, or 22.2% of revenue, for the same quarter a year ago. The 530-basis point increase primarily resulted from progress in improving manufacturing efficiencies and vertical integration of our thionyl-chloride cells as well as favorable product mix.
Operating expenses were $10,107 for the three-month period ending September 30, 2026, compared to $10,570 for the three-month period ended September 30, 2025. The $463 or 4.4% reduction reflects a decrease in one-time, non-recurring costs primarily related to the closing of our Calgary facility and certain consulting costs to help expedite our gross margin improvement in the year-earlier period, partially offset by an increase in new product development costs related to continued investment in our product offering. Operating expenses for the 2026 three-month period were 20.9% of revenue compared to 24.4% of revenue for the year-earlier three-month period.
Operating income (loss) for the three-month period ended September 30, 2026, was $3,186, or 6.6% of revenues, compared to ($951), or (2.2%) of revenues, for the year-earlier period. The $4,137 improvement resulted from the sales growth of 11.3%, gross margin improvement of 530 basis points and leveraged spending by 350 basis points.
Other expense for the third quarter of 2026 was $441 compared to $800 for the year-earlier quarter. The decrease for the 2026 period primarily reflects lower interest expense for the financing of our Electrochem acquisition and the current period estimated portion of a refundable tax credit for certain qualifying battery cells and packs we manufacture under the 45X Advanced Manufacturing Production Tax Credit, established by the Inflation Reduction Act and running through 2032.
Net income (loss) attributable to Ultralife Corporation was $2,368, or $0.14 per share – basic and diluted, for the three-month period ended September 30, 2026, compared to ($1,220), or ($0.07) per share – basic and diluted, for the three-month period ended September 30, 2025.
Adjusted EBITDA, defined as net income attributable to Ultralife Corporation before net interest expense, provision (benefit) for income taxes, depreciation and amortization, and stock-based compensation expense, plus/minus expenses/income that we do not consider reflective of our ongoing operations, amounted to $5,636, or 11.7% of revenues, for the third quarter of 2026, compared to $2,048, or 4.7% of revenues, for the third quarter of 2025. See the section “Adjusted EBITDA” on page 29 for a reconciliation of adjusted EBITDA to net income attributable to Ultralife Corporation.
On October 27, 2026, Ultralife announced that it has agreed to be acquired by EnerSys (NYSE: ENS) in an all-cash transaction valued at approximately $320 million, including the assumption of net debt. The transaction is expected to close in the first quarter of 2027.
Proposed Acquisition of the Company
On October 27, 2026, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with EnerSys (“Parent”) and EnerSys Merger Sub (“Merger Sub”), a wholly owned subsidiary of Parent. Pursuant to the Merger Agreement, Merger Sub agreed to commence a tender offer (the “Offer”) to acquire all of the outstanding shares of the Company’s common stock, par value $.10 per share (the “Shares”), for $16.00 per Share in cash, without interest and subject to any applicable withholding taxes (the “Offer Price”). Following the successful completion of the Offer, Merger Sub will merge with and into the Company (the “Merger”), with the Company continuing as the surviving corporation and a wholly owned subsidiary of Parent. The Merger is expected to be effected pursuant to Section 251(h) of the Delaware General Corporation Law (the “DGCL”), without a vote of the Company’s stockholders, subject to the satisfaction or waiver of the applicable conditions set forth in the Merger Agreement.
The Offer Price represents a premium of approximately 166% over the closing price of the Shares of $6.01 on October 26, 2026, the last full trading day prior to the announcement of the Merger Agreement. The transaction is subject to the satisfaction or waiver of the conditions specified in the Merger Agreement, including the Minimum Condition, the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and satisfaction of the applicable condition under the United Kingdom National Security and Investment Act 2021 (the “NSIA”).
The Company’s Board of Directors unanimously determined that the Merger Agreement, the Offer, the Merger and the other transactions contemplated thereby were advisable and fair to, and in the best interests of, the Company and its stockholders, approved the Merger Agreement and the transactions contemplated thereby, and recommended that the Company’s stockholders accept the Offer and tender their Shares to Merger Sub.
Concurrently with the execution of the Merger Agreement, certain stockholders of the Company, including Bradford T. Whitmore, the Chair of the Company’s Board of Directors, and certain entities and trusts affiliated with him (collectively, the “Supporting Stockholders”), entered into a Tender and Support Agreement with Parent and Merger Sub (the “Support Agreement”). As of the date of the Merger Agreement, the Supporting Stockholders collectively beneficially owned 6,708,835 Shares, representing approximately 40.3% of the outstanding Shares. Pursuant to the Support Agreement, the Supporting Stockholders agreed, subject to specified exceptions and conditions, to tender and not withdraw their Shares in the Offer and to comply with certain voting, transfer and other restrictions. The Shares subject to the Support Agreement do not, without the tender of additional Shares by other stockholders, satisfy the Minimum Condition.
As of the date of this Quarterly Report on Form 10-Q, the Offer and the Merger have not been consummated. The Company cannot assure that the conditions to the Offer and the Merger will be satisfied or waived or that the transactions will be completed within the anticipated timeframe or at all. The transaction remains subject to the terms and conditions of the Merger Agreement, including applicable regulatory requirements.
Expected Effects of the Transaction on the Company
Upon consummation of the Offer and the Merger, the Company will become a wholly owned subsidiary of Parent, and the holders of Shares immediately prior to the Effective Time will generally be entitled to receive $16.00 in cash for each Share held, other than Shares subject to specified exceptions under the Merger Agreement. Shares not tendered in the Offer will generally be converted into the right to receive the same cash consideration upon consummation of the Merger, subject to the terms of the Merger Agreement.
Following the Effective Time, the Company’s Shares are expected to be delisted from the Nasdaq Stock Market and deregistered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as practicable and, in any event, within 10 days after the Closing Date. Accordingly, upon completion of the transaction, the Company’s Shares will no longer be publicly traded, and the Company will no longer have the same access to the public equity markets as an independent, publicly traded company.
The transaction is expected to result in a change in the Company’s ownership and governance structure. The extent to which the transaction will affect the Company’s operations, business strategy, capital allocation, financing arrangements and future financial performance will depend on Parent’s plans following the Closing Date. The Company cannot predict the extent or timing of any such changes at this time.
Treatment of Company Equity Awards
Under the Merger Agreement, each outstanding stock option to purchase Shares (a “Company Stock Option”) with an exercise price below the Offer Price will automatically vest in full immediately prior to the Effective Time and be canceled in exchange for a cash payment equal to the excess of the Offer Price over the applicable exercise price, multiplied by the number of Shares subject to the option, subject to applicable withholding taxes. Such payments will be made reasonably promptly following the Effective Time and, in any event, no later than thirty (30) business days after the Effective Time.
Each outstanding Company Stock Option with an exercise price equal to or greater than the Offer Price will be canceled for no consideration, whether vested or unvested. Based on the Company’s records, no outstanding Company Stock Option has an exercise price equal to or greater than $16.00 per Share.
Each outstanding share of restricted stock, whether vested or unvested, will automatically vest in full immediately prior to the Effective Time and be canceled in exchange for a cash payment equal to the Offer Price, subject to applicable withholding taxes. Such payments will be made at or reasonably promptly following the Effective Time and, in any event, no later than thirty (30) business days after the Effective Time.
Parent will not assume any Company equity award or substitute any similar award representing Parent equity. Each of the Company’s equity compensation plans will terminate effective no later than immediately prior to the Effective Time.
The Company expects to recognize incremental stock based compensation expense in connection with the acceleration and settlement of outstanding equity awards, subject to the final determination of the applicable accounting treatment and the timing of the consummation of the transaction. The amount and timing of any such expense will depend on the outstanding awards at the Effective Time, the applicable exercise prices, the remaining unrecognized compensation cost and the accounting requirements applicable to the transaction.
Employee Benefits and Executive Compensation
Under the Merger Agreement, Parent has agreed, subject to the terms of the Merger Agreement and any applicable written agreements, to maintain during the period beginning on the Closing Date and ending on the first anniversary of the Closing Date (or, if earlier, the applicable employee’s termination of employment) base salaries or hourly wages and employee benefits for employees of the Company and its subsidiaries who are employed at the Effective Time that are, in the aggregate, substantially comparable to those provided immediately prior to the Effective Time. These commitments exclude certain benefits and compensation arrangements, including equity-based compensation, transaction-related bonuses, nonqualified deferred compensation, severance, defined benefit pension and retiree medical benefits.
Parent has also agreed to recognize prior service with the Company for specified eligibility, vesting, vacation and severance purposes, subject to customary exceptions, and to honor certain existing change-in-control, retention, transaction bonus and other transaction-related payment obligations to the extent triggered and payable following the Effective Time. In addition, subject to the terms of the Merger Agreement, Covered Employees whose employment is involuntarily terminated without cause during the applicable continuation period will be entitled to severance payments and benefits on terms no less favorable than those under the Company’s existing severance policies immediately prior to the Effective Time.
The Merger Agreement also provides for the indemnification of current and former directors and officers of the Company and its subsidiaries for specified matters arising from events occurring at or prior to the Effective Time, the continuation of certain indemnification and exculpation provisions in the organizational documents of the surviving corporation and its subsidiaries, and the maintenance of directors’ and officers’ liability insurance coverage for a period of six years following the Closing Date, subject to specified limitations.
Transaction Expenses
In connection with the proposed transaction, the Company expects to incur transaction-related expenses, including legal, financial advisory, accounting and other professional fees. The amount and timing of these expenses will depend on the progress and ultimate consummation of the transaction and the services provided by the Company’s advisors.
The recognition of transaction-related expenses will depend on the nature of the services received and the applicable accounting requirements. The Company will continue to evaluate the appropriate classification and timing of such expenses as additional information becomes available.
Liquidity and Capital Resources
The Company is evaluating the potential effects of the proposed transaction on its liquidity and capital resources. The transaction consideration payable to the Company’s stockholders will be funded in accordance with the terms of the Merger Agreement and the arrangements made by Parent and Merger Sub. The Merger Agreement does not contain a financing condition to the Offer.
The Company’s obligations in connection with the transaction include certain transaction-related expenses and, in specified circumstances, a termination fee. Under the Merger Agreement, the Company may be required to pay Parent a termination fee of $10.3 million in certain circumstances, including in connection with a qualifying alternative acquisition proposal and the termination of the Merger Agreement under specified conditions. In addition, Parent may be required to pay the Company a reverse termination fee of $10.3 million in specified antitrust-related circumstances.
The payment of either termination fee is contingent upon the occurrence of the applicable circumstances described in the Merger Agreement. As of the filing of this Form 10Q, no termination fee was payable.
The Company’s liquidity and capital resources prior to the consummation of the transaction will continue to be affected by its operating results, working capital requirements, capital expenditures, debt obligations and other ordinary-course business activities, as well as transaction-related expenses. The Merger Agreement also contains customary interim operating covenants that restrict the Company’s ability to take certain actions before the Effective Time without Parent’s consent, subject to specified exceptions. These restrictions may limit the Company’s flexibility to pursue certain business opportunities, make investments or undertake certain financing or other corporate actions before the transaction is completed.
The Company will continue to monitor its liquidity and capital requirements throughout the pendency of the transaction. The Company cannot assure that the transaction will be consummated or that the transaction will be completed within the anticipated timeframe.
Regulatory Approvals and Conditions to Closing
The Offer and the Merger are subject to certain regulatory approvals and other closing conditions. Under the HSR Act, the Offer may not be consummated until the expiration or early termination of the applicable waiting period following the filing of the required notification and report forms with the Antitrust Division of the U.S. Department of Justice and the Federal Trade Commission. The Merger Agreement requires the Company and Parent to make the required HSR Act filings within ten (10) business days after the date of the Merger Agreement and to use reasonable best efforts to obtain required regulatory approvals and clearances, subject to the limitations set forth in the Merger Agreement.
The transaction is also subject to the applicable condition under the NSIA. The parties have agreed to use reasonable best efforts to obtain the required clearance, subject to the limitations set forth in the Merger Agreement. There can be no assurance that the required regulatory clearances will be obtained on a timely basis or at all, or that any required clearance will not be subject to conditions that are unacceptable to Parent.
Although Parent and Merger Sub are required to use reasonable best efforts to obtain required regulatory approvals, they are not required under the Merger Agreement to agree to divestitures, licenses, hold-separate arrangements, behavioral remedies or other specified remedies or restrictions in order to obtain such approvals. Accordingly, the timing and outcome of the regulatory review remain uncertain.
The completion of the Offer and the Merger is also subject to the satisfaction or waiver of the other conditions set forth in the Merger Agreement, including the Minimum Condition and the absence of certain legal restraints. Failure to satisfy or waive the applicable conditions could delay or prevent the consummation of the transaction.
Risks and Uncertainties Associated with the Proposed Transaction
The proposed transaction presents certain risks and uncertainties that could affect the Company’s business, operating results and financial condition during the period before completion and, if the transaction is not consummated, thereafter. These risks include, among others, the following:
• Completion risk. There can be no assurance that the Offer and the Merger will be completed, that the conditions to completion will be satisfied or waived, or that the transaction will be completed within the anticipated timeframe. If the transaction is not consummated, the Company may incur substantial transaction expenses without realizing the anticipated benefits of the transaction.
• Regulatory risk. The Offer and the Merger are subject to regulatory requirements, including the HSR Act and the NSIA. Delays in obtaining the required clearances, the imposition of unacceptable conditions or the failure to obtain the required clearances could delay or prevent completion of the transaction.
• Business disruption. The pendency of the transaction may divert management’s attention from the Company’s day-to-day operations and create uncertainty among employees, customers, suppliers and other business partners. These factors could adversely affect the Company’s operating performance and business relationships.
• Operating restrictions. The interim operating covenants in the Merger Agreement restrict the Company’s ability to take certain actions without Parent’s consent. These restrictions may limit the Company’s flexibility to respond to changing business conditions or pursue certain opportunities before the transaction is completed.
• Transaction costs. The Company expects to incur additional legal, financial advisory and other professional fees in connection with the transaction. If the transaction is delayed or not consummated, certain of these expenses may not be recoverable.
• Termination risk. The Merger Agreement may be terminated under specified circumstances. Depending on the circumstances, termination may require the Company or Parent to pay a termination fee or reverse termination fee, respectively, and could adversely affect the Company’s financial condition and stock price.
• Uncertainty regarding future operations. The Company’s future operating strategy, capital allocation and business plans following completion of the transaction will be determined in light of Parent’s plans and the circumstances existing at that time. The Company cannot predict the full extent of the changes that may result from the transaction.
If the transaction is consummated, the Company’s stockholders will receive the applicable cash consideration and will no longer participate in the future earnings, growth or other benefits of owning equity in the Company. If the transaction is not consummated, the Company will continue to operate as an independent company, subject to the risks associated with its business, financial condition and operating environment, as well as the potential effects of the failed transaction.
The Company will continue to evaluate the transaction and its potential effects on the Company’s financial position, results of operations and liquidity as the transaction progresses. Additional information regarding the Merger Agreement, the Offer, the Merger and the associated risks is included in the Company’s filings with the Securities and Exchange Commission, including the Company’s Schedule 14D-9 and Current Reports on Form 8-K, as applicable.
Results of Operations
Three-Month Periods Ended September 30, 2026, and September 30, 2025
Revenues. Consolidated revenues for the three-month period ending September 30, 2026 were $48,271, an increase of $4,900, or 11.3%, over $43,371 for the three-month period ended September 30, 2025. Overall, government/defense sales increased 42.5% and commercial sales decreased 5.8%.
Battery & Energy Products revenues increased $5,142, or 12.9%, from $39,946 for the three-month period ended September 30, 2025 to $45,088 for the three-month period ended September 30, 2026. The year-over-year increase reflects 56.7% growth in government/defense sales due primarily to a large order for conformal wearable batteries, partially offset by 5.8% decrease in commercial sales primarily resulting from softness in the global oil & gas market resulting in a 10.1% decline for that market.
Communications Systems sales decreased $242, or 7.1%, from $3,425 for the three-month period ended September 30, 2025 to $3,183 for the three-month period ended September 30, 2026 due to the timing of orders.
Our total backlog, which consists of unfilled orders or contracts for shipments in future periods, exiting the third quarter of 2026 was $136.0 million, the highest level in the Company’s history, compared to $117.5 million exiting the second quarter of 2026 and $90.3 million exiting the third quarter of 2025.
Cost of Products Sold / Gross Profit. Cost of products sold totaled $34,978 for the quarter ended September 30, 2026, an increase of $1,226, or 3.6%, from the $33,752 reported for the same three-month period a year ago. Consolidated cost of products sold as a percentage of total revenue decreased from 77.8% for the three-month period ended September 30, 2025 to 72.5% for the three-month period ended September 30, 2026. Correspondingly, consolidated gross margin increased from 22.2% for the three-month period ended September 30, 2025, to 27.5% for the three-month period ended September 30, 2026, primarily reflecting improved manufacturing efficiencies, increased vertical integration of thionyl chloride cells for our oil & gas business and favorable sales product mix.
For our Battery & Energy Products segment, gross profit for the third quarter of 2026 was $12,016, an increase of $3,196 or 36.2% from gross profit of $8,820 for the third quarter of 2025. Battery & Energy Products’ gross margin of 26.7% increased by 460-basis points from the 22.1% gross margin for the year-earlier period, primarily due to sales mix reflecting the 56.7% increase in government/defense sales driven by shipments of conformal wearable batteries and, an almost ten-fold increase in the vertical integration of thionyl chloride cells for our oil & gas business.
For our Communications Systems segment, gross profit for the third quarter of 2026 was $1,277 or 40.1% of revenues, compared to gross profit of $799 or 23.3% of revenues for the third quarter of 2025. The 1,680-basis point increase primarily resulted from favorable sales mix and lower warranty costs.
Operating Expenses. Operating expenses for the three-month period ended September 30, 2026 were $10,107, a decrease of $463 or 4.4% from the $10,570 for the three-month period ended September 30, 2025. The decrease is primarily attributable to lower one-time, non-recurring costs related to the closing of our Calgary facility and certain consulting costs to help expedite our gross margin improvement in the year-earlier period.
Overall, operating expenses were 20.9% of revenue for the quarter ending September 30, 2026 compared to 24.4% of revenue for the quarter ended September 30, 2025. Amortization expense associated with intangible assets related to our acquisitions was $267 for the third quarter of 2026 ($262 in selling, general and administrative expenses and $5 in research and development costs), compared with $411 for the third quarter of 2025 ($380 in selling, general, and administrative expenses and $31 in research and development costs). The year-over-year decline in amortization expenses resulted from our decision in the 2025 fourth quarter to undergo a comprehensive rebranding initiative that consolidates all sub-brands under a singular, unified master brand – Ultralife, and the ensuing write-down of tradenames and trademarks associated with our sub-brands during that period. Research and development costs were $3,189 for the three-month period ended September 30, 2026, an increase of $334 or 11.7%, from $2,855 for the three-month period ended September 30, 2025. The increase is attributable to higher new product development costs related to continued investment in our product offering as we aggressively pursue both government/defense and commercial opportunities. Excluding one-time non-recurring costs, selling, general, and administrative expenses were $6,390 for the three-month period ended September 30, 2026, a decrease of $240 or 3.6% from $6,630 for the third quarter of 2025. The period-over-period decrease was primarily attributable to lower discretionary spending.
Other Expense. Other expense totaled $441 for the three-month period ended September 30, 2026 compared to $800 for the three-month period ended September 30, 2025. Interest and financing expense decreased $71 or 7.2%, from $992 for the third quarter of 2025 to $921 for the comparable period in 2026, resulting from the continued paydown of the term loan financing of the Electrochem acquisition on October 31, 2024. Miscellaneous (income) expense amounted to ($480) for the third quarter of 2026 compared to ($192) for the third quarter of 2025, primarily attributable to refundable tax credits for certain qualifying battery cells and packs we manufacture under the 45X Advanced Manufacturing Production Credit, established by the Inflation Reduction Act which runs through 2032, and foreign exchange gains and losses due to fluctuations in foreign currency exchange rates.
Income Taxes. For the three-month period ended September 30, 2026, Ultralife recognized an income tax provision of $362, comprised of a current tax provision of $67 and a deferred tax provision of $295 which primarily represents non-cash charges for U.S. taxes which we expect will be fully offset by net operating loss carryforwards and other tax credits for the foreseeable future. This compares to a tax benefit of ($504) comprised of a current tax benefit of ($19) and a deferred tax benefit of ($485) for the three-month period ended September 30, 2025. Our effective tax rate was 13.2% for the third quarter of 2026 as compared to 28.8% for the third quarter of 2025, primarily attributable to the geographic mix of our operating results and other income recognized on the nontaxable refundable tax credits under the 45X Advanced Manufacturing Production Credit, established by the Inflation Reduction Act. See Note 6 to the consolidated financial statements in Item 1 of Part I of this Form 10-Q for additional information regarding our income taxes.
Net Income Attributable to Ultralife Corporation. Net income attributable to Ultralife Corporation was $2,368, or $0.14 per share – basic and diluted, for the three-month period ended September 30, 2026, compared to net (loss) of ($1,220), or ($0.07) per share – basic and diluted, for the three-month period ended September 30, 2025.
Weighted average shares outstanding used to compute diluted earnings per share increased from 16,646,336 for the third quarter of 2025 to 16,697,232 for the third quarter of 2026. The increase is attributable to stock option exercises since the third quarter of 2025 as well as the loss incurred in the 2025 period resulting in the use of weighted average basic share outstanding for that period. For the third quarter of 2026, dilutive shares of 33,430 were added to basic weighted average shares.
Nine-Month Periods Ended September 30, 2026, and September 30, 2025
Revenues. Consolidated revenues for the nine-month period ended September 30, 2026 were $143,659 an increase of $981, or 0.7%, over $142,678 for the nine-month period ended September 30, 2025. Overall, government/defense sales increased $2,454 or 4.6% and commercial sales decreased $1,473 or 1.7%.
Battery & Energy Products revenues increased $1,299, or 1.0%, from $132,134 for the nine-month period ended September 30, 2025 to $133,433 for the nine-month period ended September 30, 2026. The increase is attributable to a $2,772 or 6.4% increase in government/defense sales primarily reflecting shipments of our conformal wearable batteries to an allied country, partially offset by a $1,473 or 1.7% decline in commercial sales. The commercial sales decline resulted from a $3,500 decline in oil & gas sales due to the impact of geopolitical factors on the market, partially offset by an increase of $1,483 in industrial and an increase of $544 in medical sales. Commercial sales were impacted in 2026 by lost production days due to the failure of the substation providing power to our Newark, NY facility and winter blizzards and a prolonged shutdown to conduct a comprehensive physical inventory at our Raynham, MA facility during the first quarter of 2026.
Communications Systems revenues decreased $318 or 3.0%, from $10,544 for the nine-month period ended September 30, 2025 to $10,226 for the nine-month period ended September 30, 2026. The decrease was primarily attributable to shipments in the prior year to a major international defense contractor and the timing of expected orders in the current period.
Cost of Products Sold / Gross Profit. Cost of products sold totaled $106,390 for the nine-month period ended September 30, 2026, a decrease of $2,323, or 2.1%, from the $108,713 reported for the same nine-month period a year ago. Consolidated cost of products sold as a percentage of total revenue decreased from 76.2% for the nine-month period ended September 30, 2025 to 74.1% for the nine-month period ended September 30, 2026. Correspondingly, consolidated gross margin increased from 23.8% for the nine-month period ended September 30, 2025, to 25.9% for the nine-month period ended September 30, 2026, primarily reflecting favorable sales product mix, increased vertical integration in the production of thionyl chloride cells for our oil & gas business and the net refund of IEEPA tariffs of $1,102 in the second quarter which had been recognized as net costs in previous periods.
For our Battery & Energy Products segment, gross profit for the first nine months of 2026 was $33,879, an increase of $2,784 or 9.0% from gross profit of $31,095 for the first nine months of 2025. Battery & Energy Products’ gross margin of 25.4% increased by 190-basis points from the 23.5% gross margin for the year-earlier period, primarily due to sales mix, greater vertical integration of thionyl chloride cells and the net refund of IEEPA tariffs.
For our Communications Systems segment, gross profit for the first nine months of 2026 was $3,390 or 33.2% of revenues, compared to gross profit of $2,870 or 27.2% of revenues for the first nine months of 2025. The 600-basis point increase in gross margin was primarily due to favorable sales mix and lower warranty costs.
Operating Expenses. Operating expenses for the nine-month period ended September 30, 2026 were $30,861, an increase of $1,600 or 5.5% from the $29,261 for the nine-month period ended September 30, 2025. The increase is primarily attributable to a 23.0% increase in new product development costs related to continued investment in our product offerings and certain one-time, non-recurring expenses of $2,184, compared to $1,604 for the year-earlier quarter, primarily related to litigation expenses incurred for our cyber-insurance claim, certain consulting costs to help expedite gross margin improvement at our two largest manufacturing facilities and other non-recurring costs causing losses in production days. Both periods reflected continued tight control over discretionary spending.
Overall, operating expenses as a percentage of revenues were 21.5% for the nine-month period ended September 30, 2026 compared to 20.5% for the nine-month period ended September 30, 2025. Amortization expense associated with intangible assets related to our acquisitions was $802 for the first nine months of 2026 ($787 in selling, general and administrative expenses and $15 in research and development costs), compared with $1,226 for the first nine months of 2025 ($1,134 in selling, general, and administrative expenses and $92 in research and development costs). The year-over-year decline in amortization expenses resulted from our decision in the 2025 fourth quarter to undergo a comprehensive rebranding initiative that consolidates all sub-brands under a singular, unified master brand – Ultralife, and the ensuing write-down of tradenames and trademarks associated with out sub-brands during that period. Research and development costs were $9,375 for the nine-month period ended September 30, 2026, an increase of $1,798 or 23.7%, from $7,577 for the nine months ended September 30, 2025. Selling, general, and administrative expenses decreased $198, or 0.9%, from $21,684 for the first nine months of 2025 to $21,486 for the first nine months of 2026. The period-over-period decrease was primarily attributable to reduced discretionary spending.
Other Expense. Other expense totaled $1,340 for the nine-month period ended September 30, 2026 compared to $2,896 for the nine-month period ended September 30, 2025. Interest and financing expense decreased $388, or 12.9%, from $3,016 for the first nine months of 2025 to $2,628 for the comparable period in 2026 resulting from the continued paydown of the term loan financing of the Electrochem acquisition on October 31, 2024. Miscellaneous (income) expense amounted to ($1,288) for the first nine months of 2026 compared to ($120) for the first nine months of 2025, primarily attributable to refundable tax credits for certain qualifying battery cells and packs we manufacture under the 45X Advanced Manufacturing Production Credit, established by the Inflation Reduction Act which runs through 2032. In addition, both periods reflect foreign exchange gains and losses due to fluctuations in foreign currency exchange rates.
Income Taxes. The income tax provision for the 2026 nine-month period was $638 compared to $306 for the 2025 nine-month period. Our effective tax rate decreased to 12.6% from 16.9% for the 2026 period, primarily due to the geographic mix of our operating results and other income recognized on the nontaxable refundable tax credits under the 45X Advanced Manufacturing Production Credit. The income tax provision for the first nine months of 2026 is comprised of a $148 current provision for taxes expected to be paid on income primarily in foreign jurisdictions and a $490 deferred tax provision which primarily represents non-cash charges for U.S. income taxes that we expect will be fully offset by net operating loss carryforwards and other tax credits for the foreseeable future. For the comparable 2025 period, the income tax provision was comprised of a $182 current provision for taxes expected to be paid on income primarily in foreign jurisdictions and a $124 deferred tax provision which primarily represents non-cash charges for U.S. taxes that we expect will be fully offset by net operating loss carryforwards and other tax credits for the foreseeable future. See Note 6 to the consolidated financial statements in Item 1 of Part I of this Form 10-Q for additional information regarding our income taxes.
Net Income Attributable to Ultralife. Net income attributable to Ultralife was $4,460, or $0.27 per share – basic and diluted for the nine-month period ended September 30, 2026, compared to $1,524, or $0.09 per share – basic and diluted, for the nine-month period ended September 30, 2025.
Weighted average shares outstanding used to compute diluted earnings per share increased from 16,698,915 for the first nine months of 2025 to 16,702,390 for the first nine months of 2026. The increase is attributable to stock option exercises since the third quarter of 2025, offset by a decrease in the average stock price used to compute diluted shares from $6.77 for the nine-month period ended September 30, 2025 to $6.33 for the nine-month period ended September 30, 2026. Accordingly diluted shares of 42,619 were added to basic weighted average shares in 2026 compared to 60,915 in 2025.
Adjusted EBITDA
In evaluating our business, we consider and use adjusted EBITDA, a non-GAAP financial measure, as a supplemental measure of our operating performance. We define adjusted EBITDA as net income (loss) attributable to Ultralife Corporation before interest expense, provision for income taxes, depreciation and amortization, and stock-based compensation expense, plus/minus expense/income that we do not consider reflective of our ongoing continuing operations. We also use adjusted EBITDA as a supplemental measure to review and assess our operating performance and to enhance comparability between periods. We believe the use of adjusted EBITDA facilitates investors’ understanding of operating performance from period to period by backing out potential differences caused by variations in such items as capital structures (affecting relative interest expense and stock-based compensation expense), the amortization of intangible assets acquired through our business acquisitions (affecting relative amortization expense and provision (benefit) for income taxes), the age and book value of facilities and equipment (affecting relative depreciation expense) and one-time charges/benefits relating to income taxes. Adjusted EBITDA should not be considered in isolation, as a substitute for, or superior to net income, operating income, cash flows from operating activities or any other measure of financial performance, including specifically, but not exclusively, as a measure of liquidity, prepared in accordance with GAAP. We also present adjusted EBITDA from operations because we believe it is frequently used by securities analysts, investors and other interested parties as a measure of financial performance. We reconcile adjusted EBITDA to net income (loss) attributable to Ultralife Corporation, the most comparable financial measure under GAAP.
We use adjusted EBITDA in our decision-making processes relating to the operation of our business together with GAAP financial measures such as operating (loss) income. We believe that adjusted EBITDA permits a comparative assessment of our operating performance, relative to our performance based on our GAAP results, while eliminating the effects of depreciation and amortization, which may vary from period to period without any correlation to underlying operating performance, and of stock-based compensation, which is a non-cash expense that varies widely among companies. We believe that by presenting adjusted EBITDA, we assist investors in gaining a better understanding of our business on a going forward basis. We provide information relating to our adjusted EBITDA so that securities analysts, investors and other interested parties have the same data that we employ in assessing our overall operations. We believe that trends in our adjusted EBITDA are a valuable indicator of our operating performance on a consolidated basis and of our ability to produce operating cash flows to fund working capital needs, to service debt obligations and to fund capital expenditures.
The term adjusted EBITDA is not defined under GAAP and is not a measure of operating (loss) income, operating performance or liquidity presented in accordance with GAAP. Our adjusted EBITDA has limitations as an analytical tool, and when assessing our operating performance, adjusted EBITDA should not be considered in isolation or as a substitute for net income attributable to Ultralife Corporation or other consolidated statement of operations data prepared in accordance with GAAP. Some of these limitations include, but are not limited to, the following:
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Adjusted EBITDA does not reflect (1) our cash expenditures or future requirements for capital expenditures or contractual commitments; (2) changes in, or cash requirements for, our working capital needs; (3) the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt; (4) income taxes or the cash requirements for any tax payments; and (5) all of the costs associated with operating our business; |
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Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future, and adjusted EBITDA from continuing operations does not reflect any cash requirements for such replacements; |
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While stock-based compensation is a component of cost of products sold and operating expenses, the impact on our consolidated financial statements compared to other companies can vary significantly due to such factors as assumed life of the stock-based awards and assumed volatility of our common stock; and |
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Other companies may calculate adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure. |
We compensate for these limitations by relying primarily on our GAAP results and using adjusted EBITDA only on a supplemental basis. Neither current nor potential investors in our securities should rely on adjusted EBITDA as a substitute for any GAAP measures and we encourage investors to review the following reconciliation of adjusted EBITDA to net income attributable to Ultralife Corporation.
Adjusted EBITDA is calculated as follows for the periods presented:
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Three-Month Period Ended |
Nine-Month Period Ended |
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September 30, |
September 30, |
September 30, |
September 30, |
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2026 |
2025 |
2026 |
2025 |
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Net income (loss) attributable to Ultralife Corporation |
$ | 2,368 | $ | (1,220 | ) | $ | 4,460 | $ | 1,524 | |||||||
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Adjustments: |
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Interest expense |
921 | 992 | 2,628 | 3,016 | ||||||||||||
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Income tax provision |
362 | (504 | ) | 638 | 306 | |||||||||||
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Depreciation expense |
1,098 | 1,008 | 3,208 | 2,966 | ||||||||||||
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Amortization expense |
267 | 411 | 802 | 1,226 | ||||||||||||
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Stock-based compensation expense |
92 | 236 | 181 | 698 | ||||||||||||
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Other non-recurring costs |
278 | 594 | 2,009 | 1,112 | ||||||||||||
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One-time events impacting production |
250 | - | 1,067 | - | ||||||||||||
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Severance cost for plant closure |
- | 491 | - | 641 | ||||||||||||
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Non-cash purchase accounting adjustments |
- | 40 | - | 120 | ||||||||||||
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Adjusted EBITDA |
$ | 5,636 | $ | 2,048 | $ | 14,993 | $ | 11,609 | ||||||||
Liquidity and Capital Resources
As of September 30, 2026, cash totaled $8,628, as compared to $9,345 at December 31, 2025.
For the nine-month period ended September 30, 2026, cash generated from operations was $224, as compared to $9,501 generated for the nine-month period ended September 30, 2025. For the 2026 period, cash generated from operations was comprised of net income of $4,430 plus non-cash items totaling $4,879 for depreciation, amortization, stock-based compensation, and deferred taxes, offset by decrease of $9,085 attributable to working capital driven primarily by an increase in inventory to service our customer backlog.
Cash used in investing activities for the nine months ended September 30, 2026, was $1,587 for capital expenditures, primarily reflecting investments in equipment for new products transitioning to higher-volume manufacturing.
Cash provided by financing activities for the nine months ended September 30, 2026, was $792, representing a $9,500 borrowing on the credit facilities offset by an $8,750 reduction in our outstanding debt. Additionally, $42 of cash was generated from employee stock option exercise proceeds during the period.
We continue to have significant U.S. net operating loss carryforwards available to utilize as an offset to future taxable income. See Note 6 to the consolidated financial statements in Item 1 of Part 1 of this Form 10-Q for additional information.
Going forward, we expect positive operating cash flow and the availability of borrowings under our Revolving Credit Facility will be sufficient to meet our general funding requirements for the foreseeable future.
To provide flexibility in accessing the capital markets, on March 30, 2021, the Company filed a shelf registration statement on Form S-3 (File No. 333-254846) (the “Prior Registration Statement”) registering securities in an aggregate amount of $100,000,000. None of the $100,000,000 of registered securities were sold under the Prior Registration Statement (the “Unsold Securities”). Under the rules of the Securities and Exchange Commission (the “SEC”) the Prior Registration Statement was set to expire on April 2, 2024. Therefore, on March 29, 2024, the Company filed a new shelf registration statement on Form S-3 (File No. 333-278360) (the “New Registration Statement”) to replace the Prior Registration Statement. The New Registration Statement includes all $100,000,000 of the Unsold Securities registered on the Prior Registration Statement. The SEC declared the New Registration Statement effective May 7, 2024. Pursuant to Rule 415(a)(6) under Securities Act of 1933, as amended (the “Securities Act”), the offering of the Unsold Securities under the Prior Registration Statement was deemed terminated as of the date of effectiveness of the New Registration Statement. Upon the filing of an appropriate prospectus supplement or supplements under the New Registration Statement, we may offer and sell our securities from time to time in one or more offerings, at our discretion. We intend to use the net proceeds resulting from any sales of these securities for general corporate purposes which may include, but are not limited to, potential acquisitions of complementary businesses or technologies, strategic capital expenditures to expand and protect our competitive position, and investments in the development of transformational, competitively differentiated products for attractive growth markets.
Commitments
As of September 30, 2026, the Company had $45,125 outstanding on the Term Loan and $5,875 outstanding on the Revolving Credit Facility. The Company was in full compliance with its debt covenants under the Revolving Credit Facility and Term Loan as of September 30, 2026.
As of September 30, 2026, we have made commitments to purchase approximately $734 of production machinery and equipment.
Critical Accounting Policies
Management exercises judgment in making important decisions pertaining to choosing and applying accounting policies and methodologies in many areas. Not only are these decisions necessary to comply with GAAP, but they also reflect management’s view of the most appropriate manner in which to record and report our overall financial performance. All accounting policies are important, and all policies described in Note 1 to the consolidated financial statements in our 2025 Annual Report on Form 10-K should be reviewed for a greater understanding of how our financial performance is recorded and reported.
During the first nine months of 2026, there were no significant changes in the manner in which our significant accounting policies were applied or in which related assumptions and estimates were developed.
Item 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Management, under the supervision and with the participation of our President and Chief Executive Officer (principal executive officer) and our Chief Financial Officer and Treasurer (principal financial officer), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of the end of the period covered by this quarterly report. Management has concluded that our disclosure control and procedures were not effective as of September 30, 2026, because of the existing material weakness in our internal control over financial reporting as described below.
Notwithstanding the material weakness identified, management believes that the Consolidated Financial Statements included in this Quarterly Report on Form 10-Q are fairly stated in all material respects in accordance with U.S. generally accepted accounting principles for each of the periods presented.
Material Weakness in Internal Control over Financial Reporting
Management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2025, using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control - Integrated Framework (2013). Based on our evaluation, management concluded that there is a material weakness in our internal control over financial reporting. As a result of the material weakness identified, management has concluded that our internal control over financial reporting was not effective as of December 31, 2025. The material weakness was not yet fully remediated as of September 30, 2026.
A material weakness is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis.
A material weakness has been identified because remediation efforts initiated during the year ended December 31, 2025, relating to the material weakness identified during the year ended December 31, 2024, attributable to the need for additional personnel to provide a full complement of accounting and reporting expertise had not been in place and adequately documented for a sufficient period of time to allow management to conclude that the related controls were operating effectively. In addition, information technology general controls (ITGC) were not operating effectively to ensure that (i) access to applications and data, including the ability to make changes, was appropriately restricted to authorized personnel, and (ii) the activities of individuals with such access were adequately monitored. As a result, business process controls (automated and manual) that are dependent on the affected ITGCs were also deemed ineffective because they could have been adversely impacted.
Remediation Efforts to Address Material Weakness
Over the course of 2025, management implemented a remediation plan designed to address the material weakness identified during the year ended December 31, 2024, attributable to the need for additional personnel to provide a full complement of accounting and reporting expertise commensurate with the growth of the Company. The Company has significantly strengthened its finance and accounting team by adding a new oversight role and hiring additional highly experienced personnel including certified public accountants. The personnel actions taken include the naming of a Chief Accounting Officer with a backfill to the Corporate Controller role and filling the following positions: Director – Internal Audit & SOX Compliance, Manager – Corporate Accounting, Manager – Corporate Reporting & Consolidations, Controller – Electrochem, and Senior Management Accountant – Electrochem. Significant improvements in the design, execution and documentation of business process controls were implemented across our locations pursuant to our remediation plan during the second half of 2025 once the additional oversight was in place and additional personnel were hired; however, it was determined that certain business process controls were not in place and adequately documented for a sufficient period of time to allow management to conclude that the previously identified material weakness was fully remediated as of December 31, 2025.
During the first nine months of 2026 and through the date of this Quarterly Report on Form 10-Q, management continues to develop and is actively implementing corrective actions to remediate the identified ITGC deficiencies. The Company is conducting a comprehensive risk-based evaluation of user access to our key IT applications to ensure that access is appropriately administered. Access will be restricted to the extent possible, and monitoring or other mitigating controls will be implemented to address instances, if any, where system-level segregation may not be feasible. Steps have been taken to restrict certain user access and to evaluate activity logs through the period that such access was deemed to have not been appropriately restricted. Additionally, we are in the process of formalizing our user access reviews and requiring that they are performed on a more frequent and timely basis.
Remediation will be deemed complete once all corrective actions are fully implemented and in place for a sufficient period of time and further evaluation is performed, including testing, to conclude that our internal control over financial reporting is effective.
Changes in Internal Control Over Financial Reporting
Other than the remedial actions described above, there were no changes in our internal control over financial reporting (as defined in Securities Exchange Act Rule 13a-15(f)) that occurred during the fiscal quarter covered by this quarterly report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Limitations of Effectiveness of Controls
Management, including our Chief Executive Officer and Chief Financial Officer, does not expect that the Company’s disclosure controls and procedures or its internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that its objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Furthermore, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons or by the collusion of two or more persons. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
PART II.
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Item 6. |
Exhibits |
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Exhibit Index |
Exhibit Description |
Incorporated by Reference from |
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| 2.1 | Agreement and Plan of Merger, dated as of October 27, 2026, by and among EnerSys, EnerSys Mergersub Inc. and Ultralife Corporation | Exhibit 2.1 of the Form 8-K filed on October 28, 2026 | ||
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31.1 |
Rule 13a-14(a) / 15d-14(a) CEO Certifications |
Filed herewith |
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31.2 |
Rule 13a-14(a) / 15d-14(a) CFO Certifications |
Filed herewith |
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32 |
Section 1350 Certifications |
Furnished herewith |
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101.INS |
Inline XBRL Instance Document |
Filed herewith |
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101.SCH |
Inline XBRL Taxonomy Extension Schema Document |
Filed herewith |
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101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
Filed herewith |
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101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document |
Filed herewith |
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101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
Filed herewith |
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101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
Filed herewith |
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104 |
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
Filed herewith |
Attached as Exhibit 101 to this report are the following formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of September 30, 2026 and December 31, 2025, (ii) Consolidated Statements of Income and Comprehensive Income for the three and nine months ended September 30, 2026 and 2025, (iii) Consolidated Statements of Cash Flows for the nine months ended September 30, 2026 and 2025, (iv) Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2026 and 2025, and (v) Notes to Consolidated Financial Statements.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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ULTRALIFE CORPORATION |
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(Registrant) |
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Date: November 5, 2026 |
By: |
/s/ Michael E. Manna |
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Michael E. Manna |
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President and Chief Executive Officer |
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| (Principal Executive Officer) | |||
| Date: November 5, 2026 | By: | /s/ Philip A. Fain | |
| Philip A. Fain | |||
| Chief Financial Officer and Treasurer | |||
| (Principal Financial Officer and | |||
| Principal Accounting Officer) |