Thank you for standing by and welcome to Ultralife Corporation's second quarter 2026 earnings conference call. Currently, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. To remove yourself from the queue, you may press star 11 again. I would now like to hand the call All over to Jody Berfening. Please, go ahead.

Thank you, Lateef, and good morning, everyone. Thank you for joining us for Ultralife Corporation's earnings conference call for the second quarter of fiscal 2026. With us on today's call are Mike Manna, Ultralife's president and CEO, and Phil Fain, Ultralife's chief financial officer. The earnings press release was issued earlier this morning, and if anyone has not yet received a copy, I invite you to visit the company's website, www.ultralifecore.com, where you'll find the release under Investor News in the Investor Relations section. Before turning the call over to management, I would like to remind everyone that some statements made during this conference call contain forward-looking statements based on current expectations. Actual results were different materially from those projected as a result of various risks and uncertainties. The potential risks and uncertainties that could cause actual results to differ materially include uncertain global economic conditions, reductions in revenues from key customers, delays or reductions in U.S. and foreign military spending, acceptance of new products on a global basis, and disruptions or delays in supply of raw materials and components due to business conditions, global conflicts, weather or other factors not under the company's control. The company cautions investors not to place undue reliance on forward-looking statements which reflect the company's analysis only as of today's date. The company undertakes no obligation to publicly update forward-looking statements to reflect subsequent events or circumstances. Further information on these factors and other factors that could affect Ultralife's financial results is included in the company's filings with the Securities and Exchange Commission, including the latest quarterly report on Form 10-Q. In addition, on today's call, management will refer to certain non-GAAP financial measures that management considers to be useful and differ from GAAP. These non-GAAP measures should be considered supplemental to corresponding GAAP figures. With that, I would now like to turn the call over to Mike. Good morning, Mike.

Good morning. Welcome to Ultralife's Q2 2026 earnings call. Earlier today, we announced Q2 revenue of $47.9 million with operating profit of $3.4 million, which resulted in an EPS of $0.15 per share. We made positive progress on several fronts during the second quarter. We continue to build a strong and growing backlog, supported by an expanding product portfolio as recent product developments transition from development into commercialization. In addition, our new plant leaders in Newark and Random are continuing to gain experience and drive operational improvements. Their teams are executing key gross margin initiatives, which have begun to deliver measurable benefits and are expected to contribute further improvements as these efforts gain traction. Our communication systems business is gaining momentum, supported by multiple new product releases, a growing opportunity funnel, and active development programs focused on expanding revenue and improving business stability. We remain confident in the long-term upside of this business and are continuing to invest in product development, customer engagement, and projects that position us to pursue large sustained revenue opportunities. With dispensed spending continuing to emphasize forced modernization and advanced network capabilities, our product portfolio remains closely aligned with emerging program requirements. We believe this favorable spending environment will support incremental program awards and long-term growth opportunities. We exited the quarter with a record backlog of $117.5 million, with over $14 million of the backlog from products released within the last year, including the conformal wearable battery, an updated man-packed radio battery for a NATO partner, new amplifiers, new speakers, and new battery packs for medical and safety customers. We expect our brand realignment to complete over the back half of the year, consolidating under the Ultralife Master brand, which will bring clear, concise messaging to our customers that we design and deliver critical RF and portable power products. I will now turn it over to Phil to talk through the detailed numbers.

Thank you, Mike, and good morning, everyone. Earlier this morning, we released our second quarter results for the quarter ended June 30, 2026. We have also updated our investor presentation in the Investor Relations section of our website, and our Form 10-Q was filed with the SEC earlier this morning. Consolidated revenues totaled $47.9 million, compared to $48.6 million for the second quarter of 2025. Overall, government defense sales increased 5%, while commercial sales decreased 4.7%. Revenues from our battery and energy product segment were $44.2 million, compared to $45.9 million last year, a 3.7% decrease. The year-over-year decrease reflects a 4.7% decline in commercial sales, primarily attributable to lower oil and gas sales, reflecting geopolitical factors, offsetting a 7.2% increase in medical battery sales. Government defense sales declined 1.4% due to the shipment of a very large order for an allied country last year. The sales split between commercial and government defense for our battery business was $68.32, identical to that reported for the 2025 quarter, and the domestic to international split was $59.41, compared to $73.27 for the 2025 period, reflecting the heightened global demand for our products. Revenues from our communication system segment of $3.8 million increased 39.3% from the $2.7 million we reported last year, due primarily to the timing of orders. On a consolidated basis, the commercial to government defense sales split was $62.38 compared to 65-35 for the 2025 second quarter. Our total backlog exiting the second quarter was $117.5 million, the highest level in the company's history, and representing a $33 million, or 39% increase, over the comparable 2025 period. The backlog remains diverse in nature across our commercial and government defense customer base, and the replenishment rate remains high, representing 63% of trailing 12-month sales. Our consolidated gross profit was $13.9 million, an increase of 19.5% over the 2025 period. As a percentage of total revenues, consolidated gross margin was 28.9%, a 500 basis point increase from the 23.9% reported for last year's second quarter. The increase resulted from favorable sales product mix for both business segments and the net refund of IEEPA tariffs, which had been recognized as costs in previous periods. The net tariff refund in the second quarter of 2026 was $1.1 million and accounted for 230 basis points of the year-over-year increase in gross margin. Gross profit for our battery and energy products business was $12.5 million compared to $10.8 million last year, an increase of 15.4%. Gross margin was 28.3%, a 470 basis point increase over 23.6% last year due to sales mix in the tariff net refund, with this refund accounting for 250 basis points of the year-over-year increase. Accordingly, gross margin, excluding the net tariff refund, was 25.8%. For our communication system segment, gross profit was $1.4 million compared to $0.8 million for the year earlier period. Gross margin was 36.3% compared to 28.4% last year, primarily due to favorable sales mix. Operating expenses were $10.4 million, an increase of $1.1 million, or 10.6% from the year earlier quarter. New product development costs increased 39.1% related to the continued investment in our product offering and vertical integration opportunities within our portfolio. In addition, we incurred one-time costs of $0.9 million relating to litigation expenses for our cyber insurance claim and the completion of certain consulting fees to help expedite gross margin improvement at our two largest manufacturing facilities. As a percentage of revenues, operating expenses were 21.8% compared to 19.8% for last year's second quarter. Operating income was $3.4 million compared to $2.3 million last year, reflecting the overall increase in gross margin to 26.6% when excluding the tariff refund. Operating margin increased to 7.2 percent compared to 4.7 percent for the 2025 second quarter. Other expense reported below operating income was 0.5 million for the quarter, primarily comprised of interest expense from the financing of our electric acquisition, partially offset by the second quarter estimated portion of a refundable tax credit for certain qualifying battery cells and packs we manufacture under the 45X Advanced Manufacturing Production tax credit. This tax credit, established by the Inflation Reduction Act, runs through 2032. Other expense for the year earlier period was $1.1 million, reflecting the acquisition financing. Our tax provision for the second quarter was $0.5 million compared to $0.2 million for the 2025 quarter, computed on a GAAP basis at statutory rates. Net income was $2.5 million, or $0.15 per share, on a GAAP fully diluted basis. This compares to net income of $0.9 million, or $0.05 per share, for the 2025 quarter. Adjusted EBITDA, defined as EBITDA including non-cash stock-based compensation expense and one-time cost not reflective of our ongoing operations, was $6.1 million or 12.8% of sales compared to $4.1 million or 8.5% for the prior year quarter. Adjusted EBITDA on a TTM basis is $17.1 million, or 9.1% of sales. Turning to our balance sheet, we ended the second quarter with working capital of $69.8 million in a current ratio of $2.9, compared to $68.5 million and $2.8 for 2025 year-end. Looking beyond our second quarter results, our backlog, the sheer number of our growth initiatives, our continued focus on gross margin improvement, progress with our vertical integration opportunities, and the transition of our various sub-brands to the Ultralife master brand keep us positioned to realize the leverage of our business model. I will now turn it back to Mike.

Thank you Phil for the detailed review of the Q2 2026 results. For 2026 we have four distinct priorities well underway. Our first priority was accelerate the revenue capture in the communication systems business. We have several new products now moving through commercial capture phase including products that already received initial orders with additional product releases planned later this year. During Q2 we showcased our new StrikeHub product line at Special Operations Week and HPE Discover. Strike Hub provides vehicle mounting, network switching, power, and UPS to support edge compute solutions targeting Special Operations Forces, U.S. Air Force Joint Fires Network, and U.S. Army Next Gen Command and Control Applications. We're actively working with multiple partners on longer-term opportunities that we believe can attain profitable baseline revenue in the business over the next year. The second priority is in improving gross margin within our battery and energy business, with our Newark operation serving as the initial focus. As discussed on the last earnings call, we successfully addressed a significant scrapped issue associated with our largest margin-impacting product line and began realizing positive P&L benefits as we ended the second quarter. We have also corrected the second largest contributor to margin inefficiencies, and updates are currently being implemented through the supply chain, with benefits expected to begin materializing mid-Q3. These two initiatives alone are expected to generate annual savings of approximately $600,000 to $800,000 to the battery and energy gross margin. We have several lean manufacturing and automation projects underway at our Raynum facility, aimed at increasing throughput, improving quality, and enhancing operational efficiency. These investments are particularly important as we anticipate more than 30% growth in customer demand and cell consumption, over the next year. Third, we continue to expand the vertical integration opportunities resulting from the ElectriChem acquisition, enabling us to incorporate ElectriChem cells into our existing battery pack assemblies and increase the amount of content we provide to customers. This strategy not only enhances our competitive position, but also broadens our addressable market for battery pack solutions. In addition to our enhanced marketing efforts, we are experiencing growing demand in support of both large and small water-based drone platforms utilizing electric themselves these opportunities are progressing well and we expect them to contribute meaningful incremental revenue beginning in the fourth quarter and continuing over the next several years lastly on priority four we are well underway in our company branding realignment under the ultralife master brand which will be completed this year clarifying our customer messaging and market positioning as a market leader in battery and RF products. Switching to development projects, we continue investing in products on both sides of the business to drive revenue and opportunities for organic growth. Within communication systems, we continued focus remains on multiple new product development projects with 2026 launch dates. We're expanding our ruggedized computing portfolio by integrating new HPE server products and and configurations tailored for tactical and mission-critical environments. We have already received several initial orders and continue to pursue additional program awards with expected 2026 deliveries. Our new 21 amplifier is under evaluation with multiple global customers for potential adoption and key modernization programs, while we continue to receive orders from international partners with deliveries expected this year. We remain engaged with radio manufacturers to pair our amplifiers with OEM platforms and drive pull-through sales opportunities. We will introduce the advanced variant of the 20W amplifier in 2026, supporting the newest high-speed single-channel and frequency-hopping Minet waveforms in a compact body-warm form factor. We are also releasing new vehicle radio mounts in 2026 that integrate our entire amplifier portfolio with multiple handheld radio platforms providing customers with a cost-effective universal mounting solution for both legacy vehicle fleets and new vehicle programs our crescent small form factor wearable edge compute solution which provides portable high-end compute capability and manned vehicle and drone applications is in the final design stages we have an established strong partner ecosystem to support hardware development system integration and software tool development while incorporating voice-of-customer feedback to refine requirements, with the first prototypes available later this year. On the battery and energy side of the business, our primary focus remains driving new business growth through transformational programs and strategic OEM partnerships. We currently have multiple OEM development programs underway, aimed at bringing new customer-specific products to market over the next several years. In addition, we are collaborating with existing customers and several initiatives to enhance the performance of current products and refresh product designs to meet evolving market requirements. With respect to our conformal battery, which powers dismounted soldier systems, I'm pleased to say we have shipped more than $2 million in orders during 2026. Current backlog exceeds $7 million and expected to fully ship before year end. We have secured several cell and battery pack development program supporting water-based defense drone applications. Design and prototype funding is in place for 2026 with production expected to begin in early 2027. This represents an exciting and expanding segment of our business where we have an established leadership position as a supplier of advanced underwater battery solutions in both rechargeable and non rechargeable configurations. We are nearing completion of product development activities with an OEM partner for a rechargeable power pack powering a remote surveillance system. This development and product certifications are scheduled to be completed in the Q4 with product deliveries beginning in early 2027. We've established initial production capabilities for our thin cell technology platform to support customers in the medical wearables and asset tracking markets. Our sales pipeline continues to gain momentum with several opportunities advancing through qualification processes. These ultra-thin battery designs enable smaller, more discrete wearable sensors than those typically available today, improving user comfort while delivering longer device operating life. Continued investment in new product development remains a key component of our long-term growth strategy. Expanding and diversifying our product portfolio not only creates new revenue opportunities, but also reinforces our legacy of delivering mission-critical power solutions. Our strategic priorities remain unchanged, converting long-term development programs into recurring revenue, advancing vertical integration where it creates value, and maintaining a disciplined focus on operational excellence and efficiency improvements. During 2026, we've made meaningful progress on gross margin improvement initiatives within the battery business. Looking ahead, we have multiple new communication system products scheduled for launch this year in support of next-gen command and control programs. At the same time, we continue to streamline our operations and strengthen our market recognition through our consolidation of our business under the Ultralife Master brand. With a healthy backlog exceeding $117 million as we enter the second quarter and a robust development pipeline across both business segments, we are well positioned for revenue growth. Several custom battery programs serving medical safety and drone markets are expected to transition to new production later this year and into 2027. In addition, new amplification and man-wearable computing products are slated for release in our communication systems business, further supporting our growth outlook and expanding our market opportunities. I will now pass it back to the operator for questions.

Thank you. As a reminder, to ask a question, you will need to press star 11 on your telephone. To remove yourself from the queue, you may press star 1-1 again. Again, that's star 1-1 on your touchtone telephone to ask a question. Please stand by while we compile the Q&A roster. Our first question comes from the line of Will Lauber of Visionary Wealth Advisors. Your line is open-willed.

I guess my question was, I saw last month that L3 Harris had won the NGC2 award for their Falcon Man Packs, and I'm assuming that you guys will get some or most of that business. So I guess my question is, what has happened to the backlog since the end of the quarter, or how much has been added in July?

Well, in July, we've had a lot of order pulled through to our backlog. I mean, we're almost at $130 million as we sit today.

And with the Falcon Man Pack order, would it be interesting that that was just like one division and it would roll out to all the divisions, or do you have any insight into that?

We do not directly have the insight as to which divisions it's going to at this point. We may in the future, but right now we don't.

And then with the Hewlett-Packard Enterprise servers for the NGC2, I noticed that the Army had conducted some tests in some pretty extreme conditions last month. Is there any kind of report as to how the Hewlett-Packard servers held up in that heat?

Well, from what we hear, everything made it through the testing. We don't really get a lot of detail other than that.

But accompanying the Hewlett-Packard Enterprise's servers is our state-of-the-art cooling system. So when you're dealing with some extreme heat, let's say in a California, Fort Irwin in California, they're designed to withstand that heat.

Okay, that's good, because I saw on some of the press mentions that there was some of the equipment that didn't handle the heat as well.

Okay, that's all I have for right now. Thank you, Will. To ask a question, please press star 11 on your telephone. Again, that's star 11 on your telephone to ask a question. I would now like to turn the conference back to McManagh for closing remarks.

All right, thanks, everyone. for listening to today's call. We look forward to talking to you next time during a Q3 2026 earnings call. Bye now.

This concludes today's conference call. Thank you for participating. You may now disconnect.