Ultralife Corporation (NASDAQ:ULBI) Q2 2025 Earnings Call Transcript August 8, 2025
Operator: Welcome to the Ultralife Corporation Second Quarter 2025 Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your first speaker today, Alex Villalta of — excuse me line, please go ahead.
Alex Villalta: Thank you, operator. and good afternoon, everyone. Thank you for joining us for Ultralife Corporation’s Earnings Conference Call for the Second Quarter of 2025. With us on today’s call are Mr. Mike Manna, Ultralife’s CEO; and Mr. Phil Fain. Ultralife’s Chief Financial Officer. The earnings press release was issued earlier today, and if anyone has not received a copy, I invite you to visit the company’s website at ultralifecorporation.com, where you will find the release in the Investor Relations section. Before turning the call over to management, I’d like to remind everyone that some statements made during this conference call contain forward-looking statements based on current expectations. Actual results could differ 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 our new products on a global basis and disruptions or delays in our supply of raw materials and components due to business conflicts, global conflicts, weather or other factors not under our 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 SEC included in the latest quarterly form on Form 10-Q.
In addition, on today’s call, management will refer to 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 Ultralife’s CEO, Mike Manna. Please go ahead, Mike.
Michael E. Manna: Good afternoon. Welcome to our call on Ultralife’s Q2 operating results. Earlier this morning, we reported Q2 sales of $48.6 million with an operating income of $2.3 million including a onetime adjustment of $0.3 million. Net profit was $0.9 million, which resulted in $0.05 EPS on a GAAP basis and $0.07 on an adjusted basis. In Q2, we faced direct headwinds from tariffs, unfavorable product mix shifts across the business, softness in our oil and gas business as customers were hesitant to commit to capital projects. and anticipated order timing challenges, particularly in our Communication Systems segment, which negatively affected gross margin. Despite these pressures, we maintained our focus on growth continuing to invest in new product development with several offerings advancing into validation and production.
This is the second full quarter reporting with the Electrochem results, and as planned, we successfully transitioned their ERP and office systems to Ultralife systems in Q2. With the Ultralife back office now in place, several manufacturing support systems related to execution and quality will finalize transition in Q3. Our overall strategy of continued diversification through M&A and new product development is key to stabilizing and increasing the profitability of the business. But it is important to note that we are still often a component of an accessory to a customer product, and therefore, we have limited ability to control order flow timing and mix. On the consolidation front, we completed the closure of our Mississauga operation and incurred some onetime costs associated with that effort, which will not repeat going forward.
With that said, we continue to generate cash, and I’m pleased to report that we’re ahead of schedule in paying down our debt from the Electrochem acquisition, with over $0.7 million repaid in Q2. I will now turn it over to Phil to talk through the detailed numbers.
Philip A. Fain: Thank you, Mike, and good afternoon, everyone. This morning, we released our second quarter results for the quarter ended June 30, 2025. We have also updated our investor presentation in the Investor Relations section of our website and will file our Form 10-Q with the SEC shortly. Consolidated revenues totaled $48.6 million compared to $43 million for the second quarter of 2024. Revenues from our Battery & Energy Products segment were $45.9 million compared to $36.7 million last year. Excluding third-party sales for Electrochem, which we acquired on October 31, 2024, sales for the segment were essentially flat year-over-year. Government defense sales for the 2025 quarter increased 61.1% reflecting strong demand from the U.S.-based global prime.
This growth was offset by a 20.4% decrease in commercial sales resulting from declines in medical battery sales of 39% due to the timing of orders and in oil and gas sales of 23.1% due to macroeconomic and geopolitical factors. The sales split between commercial and government defense for our battery business was 68-32 compared to 75-25 reported for the 2024 quarter, and the domestic to international split was 73-27 compared to 53-47 for the 2024 period, representing the heightened domestic shipments of our government defense products. Revenues from our Communications Systems segment of $2.7 million declined 57.2% from the $6.3 million we reported last year, primarily attributable to large shipments in the prior year of integrated systems of amplifiers and radio vehicle mounts to a major international defense contractor, magnified by delays in the timing of purchase orders during the 2025 second quarter of approximately $2.7 million, which have been pushed out to the second half by the respective customers.
On a consolidated basis, the commercial to government defense sales split was 65-35, almost identical to 64-36 for the 2024 second quarter, highlighting our acquisition of Electrochem and lower Communication System sales. Our total backlog with high confidence orders exiting the second quarter was $89 million and remains diverse in nature across our commercial and government defense customer base. The replenishment rate remains solid, especially after almost $100 million of sales in the first half of 2025. Our consolidated gross profit was $11.6 million, essentially flat with the 2024 period. As a percentage of total revenues, consolidated gross margin was 23.9%, a 300 basis point decline from the 26.9% reported for last year’s second quarter.
primarily related to product mix, tariffs and lower factory throughput at some of our operations. Gross profit for our Battery & Energy Products business was $10.8 million compared to $10 million last year, an increase of 8.9%. Gross margin was 23.6% compared to 27.1% last year. The year-over-year reduction resulted from sales mix, reflecting the declines in generally higher margin, medical and oil and gas sales, higher tariff costs due to the need to purchase components at inopportune times to fulfill certain orders and the onetime write-off of some discrepant materials. For our Communications Systems segment, gross profit was $0.8 million, compared to $1.6 million for the year earlier period. Gross margin was 28.4% compared to 25.6% last year, primarily due to favorable sales mix although negatively impacted by the lower factory volume.
Operating expenses were $9.3 million, an increase of $1.7 million or 22.2% from the year earlier quarter. The year-over-year increase is comprised of $0.7 million related to the inclusion of Electrochem, a 25.3% increase in new product development costs related to continued investments in our product offering and certain onetime nonrecurring expenses, which include costs related to our acquisition and integration of Electrochem. As a percentage of revenues, operating expenses were 19.2% compared to 17.8% for last year’s second quarter. Operating income was $2.3 million compared to $3.9 million last year, reflecting the 57.2% decline in Communication Systems sales, the decline in Battery & Energy products gross margin and the onetime nonrecurring costs totaling $0.3 million.
Accordingly, the operating margin decreased to 4.6% for the second quarter compared to 9.1% for the 2024 second quarter. Other expense reported below operating income was $1.2 million for the quarter compared to $0.1 million for the year earlier period, primarily resulting from the increase in interest expense and the acquisition debt and the impact of foreign currency fluctuations. The 2024 period benefited from the receipt of $0.2 million from our insurance carrier related to the ransomware cyberattack experienced by the company in the first quarter of 2023. Our tax provision for the second quarter was $0.2 million compared to $0.9 million for the 2024 quarter, computed on a GAAP basis at statutory rates. Net income was $0.9 million or $0.05 per share on a GAAP fully diluted basis.
This compares to net income of $2.7 million or $0.18 per share for the 2024 quarter. Excluding the provision for noncash U.S. taxes expected to be fully offset by our net operating loss carryforwards and other tax credits, adjusted fully diluted EPS was $0.07 per share for the second quarter of 2025 compared to $0.22 for the 2024 period. Adjusted EBITDA, defined as EBITDA, including noncash stock-based compensation expense and onetime acquisition and other costs as well as noncash purchase accounting adjustments, not reflective of our ongoing operations was $4.1 million or 8.5% of sales compared to $5.4 million or 12.6% for the prior year quarter. Adjusted EBITDA on a TTM basis is $15.4 million or 8.6% of sales. Turning to our balance sheet.
We ended the second quarter with working capital of $69.1 million in a current ratio of 3.3 compared to $67.9 million and $3.3 million for 2024 year-end. Our liquidity remains solid. I am happy to report that in the second quarter, we received $1.8 million from our employee retention credit, including interest, which we filed under the Coronavirus Aid Relief and Economic Security Act in June of 2023. These funds in their entirety were used to reduce our acquisition debt during the quarter. In the first half of 2025 we have reduced our debt principal by $3.4 million, which already exceeds the $2.8 million amortization required for the full year under our debt agreement. While we do not have any draws on the $30 million revolver portion of our debt agreement and no plans to do so, our balance sheet provides the borrowing base capacity for this amount.
Looking forward, our increasing sales funnel diversified government defense, medical and oil and gas end markets, the sheer volume and pending traction of our growth initiatives and the further actions we will be taking to improve our gross margins, including the vertical integration opportunities associated with our acquisition of Electrochem position us well to recognize the leverage of our business model. I will now turn it back to Mike.
Michael E. Manna: Thank you, Phil, for the detailed review of the Q2 2025 results. As mentioned in the last call, our priorities remain clear for 2025. First, we completed the main system transition of the Electrochem acquisition into Ultralife back office, successfully migrating e- mail office and ERP systems as planned in Q2. We are transitioning the balance of manufacturing support systems in Q3, which will conclude the onetime costs associated with these activities. We continue to expand vertical integration opportunities enabled by the acquisition of Electrochem, allowing us to incorporate Electrochem cells into existing pack assemblies and broaden our addressable market in areas such as pipeline inspection, seismic telemetry and sonobuoys.
We are qualifying cells with several oil and gas customers to enable transition of their battery packs to utilize Electrochem cells and expect to see benefit of these efforts in 2026. Secondly, we are committed to improving our sales opportunity pipeline to support growth throughout 2025, while continuing to focus on strategically diversifying our business and customer base. We have made a concerted effort to improve our marketing through search engine optimization, targeted ads and contact engagement within specific customers initially focused on our transformational projects. I’m happy with the quality of leads, and the opportunity sizes are increasing as our funnel grows across a variety of end markets. Third, we are focused on improving and stabilizing gross margin through pricing, material cost deflation and lean productivity projects in both the Battery & Energy and Communications businesses.
We experienced headwinds in both product mix and order flow in Q2 and that muted some of these efforts. We continued multiple initiatives across our facilities, including a major lean project completed in Q2 at our Electrochem site. This effort eliminated the need to hire 30 additional employees to support increased cell sales, including a new purchase order from a major defense contractor scheduled for delivery this year and increased sale volumes expected from the vertical integration of our oil and gas battery packs. Switching to the organic growth projects and new product development underway for the businesses, there is positive momentum on several fronts. The Communications Systems business is expanding the ruggedizer server case portfolio to service new programs and server brands which will provide greater opportunity to expand market share in ruggedized computing environments.
Our newest 3U portable server case is complete and now available for orders. Our recently launched DC power supply supporting various server platforms where no AC power is available, most notably tactical vehicles, is now undergoing tests with multiple customers prior to expected contract awards. The newly developed 20-Watt amplifier, which provides radio agnostic functionality to support international markets is in the hands of multiple partners for evaluation and systems tests with initial orders expected later this year. We developed this radio agnostic amplifier to further support the needs of the war fighter with what we believe is the smallest, lightest and most power-efficient 20-watt manned portable amplifier in the marketplace. We believe our total addressable market for this amplifier starts at $5 million per year.
So happy to see this out in customer testing. Meanwhile, we are finalizing the design of our next high-performance amplifier targeting advanced radio platforms with the latest high-speed wave forms utilized by U.S. and Allied forces. This amplifier continues our heritage of small radio agnostic high- efficiency man-worn vehicular amplification products with this new variant available in late 2025 for customer testing. Both amplifiers will be showcased at our booth at the Defense and Securities Equipment International Show in London starting September 9. In a project we haven’t covered previously, we received the production purchase order for a new advanced speaker, which we developed for a prime partner with initial shipments completing in 2025.
We expect this to be a recurring revenue stream going forward, which further diversifies the business and builds on our history of having exceptional audio quality and ruggedness found in our McDowell product line of radio speakers. On the Battery & Energy side of the business, we have a great deal of activity across several new products with new business being the key focus. As mentioned earlier, we established initial production capabilities for our thin cell technology to support customers in the medical wearable sector and various item tracking application. The sales pipeline continues to strengthen with several new projects now in the qualification phase. Our main current medical patch customer continues to build their system and test their software, and we are awaiting orders for the product.
Meanwhile, we received initial purchase orders to qualify 2 thin cells for a major contract manufacturer for portable industrial tracking applications with revenue beginning in 2026 once we successfully complete validation. The 123 product line, which currently service the IoT and illumination markets is seeing growing interest and medical battery pack assemblies from both domestic and international customers. We have samples of both the manganese and carbon monofluoride cells being tested by multiple customers currently and these applications include flashlights night vision and tracking products. Meanwhile, our advanced final chloride technology metering and telemetry applications continues to progress through customer qualification and field testing with all reports to date positive.
This has been a long qualification cycle, but we anticipate multiple commercial discussions in the metering space to commence in the back half of 2025 for deliveries beginning in 2026. We continue to roll out the family of X5 medical care products with a prerelease of our latest product, the portable power bank that provides power to pull mounted equipment or any item that requires extended run time utilizing USB-C, mostly targeting tablet and portable computers. Samples are shipping now to various partners, with production volumes available later this year. The conformal wearable battery originally developed for the Integrated Visual Augmentation System, or IVAS, continues to evolve as a commercial product to our international our internal development efforts.
We have received a new PO from an initial partner in Q2, which is expected to ship this year. Lastly, on the Battery & Energy side of the business, we have several ongoing projects with existing customers to modernize legacy designs, introducing the newer technologies. As reflected in increased R&D spend in Q2. These initiatives are essential to sustaining our base business, strengthening customer relationships and ensuring our product lines are optimized for manufacturability and long-term component availability. Investing in new product development is essential to diversifying and strengthening our product portfolio, driving future growth and building on our legacy of delivering critical power solutions. Our priorities remain converting long-term development efforts into revenue, advancing vertical integration in an oil and gas segment and maintaining a strong focus on operational efficiency initiatives.
While I remain cautious due to ongoing challenges with scaling, tariff impacts and product mix, I see encouraging signals pointing to growth. So I’m optimistic about the second half of the year and into 2026. Our Communication Systems Group is expected to rebound from a tough first half. We’re beginning to see early purchase orders from long-term new product programs selling new products to new customers, a rebound from our medical and oil and gas customers and sustained growth in global defense spending and an expanding opportunity pipeline across both businesses. Now we’ll go back to the operator for questions.
Q&A Session
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Operator: [Operator Instructions] Our first question today is from John Deysher from Pinnacle.
John Eric Deysher:
Pinnacle Value Fund: Just a couple of quick questions. Do you have any feel for what the tariffs cost you this past quarter?
Philip A. Fain: Absolutely. $539,482 less $126,000 received back from customers. So bottom line hit was $400,000 and John, what hurts most about that is we were forced into a situation to purchase some components at the very peak of the China tariffs that makes you sick when you look back and you have to go through something like they have to meet certain delivery orders.
Michael E. Manna: It was bad timing of the arrival during that peak 150-plus percent period.
John Eric Deysher:
Pinnacle Value Fund: Okay. I guess that’s my second question. Based on what you know now with the current tariffs, how do you see that impacting the third quarter tariffs?
Michael E. Manna: Well, I think it’s important to note, we’ve been — I wouldn’t say we’ve been experiencing the Section 301 tariffs from the first Trump’s presidency the entire time. So the tariff rate that’s there currently is not that much higher for us than what it’s been the entire time since 5, 6, 7 years ago, except for that period of time when it really expanded to over 100%. So we don’t expect with what we know right today that it’s going to have as much impact as it did in Q2 because we don’t expect to see that really exorbinant tariffs, but we’re kind of sitting and waiting with some of that goes on every day with every day, it’s changing. So it’s definitely a very fluid situation, I would say.
Philip A. Fain: And we’re also passing a tariff surcharge on to our customers as well.
John Eric Deysher:
Pinnacle Value Fund: You are, okay.
Philip A. Fain: Yes.
John Eric Deysher:
Pinnacle Value Fund: Okay. That’s good to hear. Regarding the employee retention credit that you received and applied to the debt, which we’re happy to see, do you — is there any more of that credit that’s going to flow through in the balance of the year? Or have you captured everything?
Philip A. Fain: No, we captured every penny plus interest, very happy that, that came through.
John Eric Deysher:
Pinnacle Value Fund: Okay. Great. And I guess, finally, in terms of the insurance reimbursement for the cyber attack, I think you said it was $200,000 in the quarter. How much have you received so far from the insurance company? And how much more are you looking to receive?
Philip A. Fain: Sure. It’s $235,000 is what we have received. And as you probably know, John, that is now a lawsuit that we have commenced in the Supreme Court of Wayne County where we are located for a jury trial that’s going to happen in 2026. So right now, we’re going through all the discovery and all that. We believe our case is very, very solid and we’re looking at an amount that’s in the millions because it’s the business interruption, the business impact that happened to our business. And which we feel is covered by the policy that we had in place. So to answer your question, it’s in the millions of dollars.
John Eric Deysher:
Pinnacle Value Fund: Okay. And the trial date is sometime in 2026, you say?
Philip A. Fain: Yes. Discovery ends, It’s all public information, the discovery ends in the first quarter of 2026, with the trial planned for midyear of 2026.
John Eric Deysher:
Pinnacle Value Fund: Okay. it’s all public. So is the amount that you were actually seeking to obtain disclosed in the complaint?
Philip A. Fain: In the court documents, I don’t believe so. It’s all in the discovery documents that’s going to be coming out.
John Eric Deysher:
Pinnacle Value Fund: Okay. They’ve not been…
Philip A. Fain: Should it actually go to trial.
John Eric Deysher:
Pinnacle Value Fund: Okay. But the complaint has been filed in the Supreme Court of New York Wayne County?
Philip A. Fain: Yes, it has. Yes.
John Eric Deysher:
Pinnacle Value Fund: Okay. Without specifying the amount of damages that you’re seeking correct?
Philip A. Fain: I believe that, that is the case. If not, I will go through it, and I will personally call you and let you know if it is publicly disclosed.
John Eric Deysher:
Pinnacle Value Fund: Okay. That’s great. I appreciate the color. And good luck.
Operator: Our next question is from Jake Patterson with Talanta Investment Group.
Jake Patterson: Just a quick question on the B&E Commercial segment. I know last time we talked, it sounded like oil and gas was pretty stable. I know the macro and whatnot has probably impacted orders there. But I mean, as we sit here today and maybe have a little more certainty than we did mid-quarter. Is there anything to call out maybe on orders returning or demand? Just any updates you can provide on the 2 end markets, medical and oil and gas?
Philip A. Fain: Sure. When it comes to oil and gas, it comes down to 2 numbers. It comes down to what is the index and the WTI this morning was a tad under $65. And the Brent index is about $4, $5 over that. So the oil and gas customers. And believe me, we cover all of them. We cover all the blue chippers, international, domestic we cover the wildcatters and they’re all playing the profit games of when they’re going to order and how much they’re going to make on it. And we know over the last couple of years, these companies just didn’t sit around idly and wait for the WTI to go up. They’ve restructured. They’ve made improvements. They’ve made efficiencies. So their profit — their breakeven point is lower than what it once was, but it’s a numbers game for those, and they’ll come right out and tell us that.
Jake Patterson: Got it. Okay. And then I…
Philip A. Fain: It’s just the for orders. And I will point, Jake, that what was interesting about the comparison, Q2 of last year of 2024 was the second largest medical sales volume in the history of the company. And it’s just on the timing of the orders. And of course, we’re very, very bullish with the relationships we have with the new products that have been introduced, and it’s just a time game it all evens out.
Michael E. Manna: Yes. And what we’ve been hearing from customers is some of them are — they’re being cautious with their cash. They’re trying to manage cash. They’re paying for tariff charges on things that — when they show up. So you got to make sure that you can pay your tariffs and they’re being very careful and studious with their order flow.
Jake Patterson: Got it. Okay. And then I guess kind of just staying on that discussion, the margins, I know you guys mentioned a few drivers of the decline. Is there any way to kind of bucket like where the impacts were felt the most. I know the tariffs were what, $400,000 and then probably…
Philip A. Fain: I can break that off for you. I can do that. I look at it this way. the tariffs, the net amount of the tariffs cost us 100 basis points of margin. The mix impact caused us around — almost 200 basis points of margin. And the rest of it was throwing out some materials that we couldn’t use going forward, some overtime in labor inefficiencies and just the impact of some volumes going through some of the other facilities, which in total was probably 30 or 40 basis points. .
Jake Patterson: Okay. So I mean, I guess, visibility into those kind of higher margin markets returning is limited, but I mean if you guys get back to kind of a normalized demand environment, a reason we shouldn’t see margins kind of back into a high to mid-20s range at some point?
Michael E. Manna: Yes. In my closing remarks that I did say we are seeing a somewhat of a return on our medical and oil and gas business so far with what we have visibility to in the second half compared to Q2. So far, it’s looking up.
Philip A. Fain: And then once Comm Systems, the order flows returned to a more expected level their margins are generally higher than battery and energy products. So the mix impact on the Comm Systems — it’s worth 100 basis points when all is said and done or slightly less than that, but it does have a pretty significant impact because their margins are generally in the — approaching 30% or in some cases, higher.
Jake Patterson: Yes. No, absolutely. That’s pretty much it.
Philip A. Fain: So our focus is the officers of the company is what do we have to do, what our actions that we need to execute when the mix isn’t the ideal mix of how do we get the margins up to the levels that we expect. And we’re not just sitting around waiting for mix and waiting for orders. We’re out there early day with looking at best alternatives for execution to get the margins up on, let’s say, on a static mix.
Operator: [Operator Instructions] Our next question comes from Will Lauber with Visionary Wealth Advisors.
William Lauber: Yes. That was a pretty crappy quarter. But you did — I’ve never remember you guys highlighting so many potential kind of things for later this year and next year. Can you put any kind of quantification or kind of how certain you are on some of these opportunities materializing?
Michael E. Manna: Well, Will, and we agree, it was a crappy quarter. Let’s start there. We’re not proud of it by any means. The — there’s a lot going on. There has been a lot going on. I sit on these calls time after time saying we’re in qual, we’re in qual, we’re in qual. And I get sick of hearing my voice sometimes saying it. So I’m sure it rings hollow in some cases on these calls. But Unfortunately, we’re — like I said in the open air, we’re hostage to a lot of our customers’ success in their product launches in some cases. So it’s been a long wait, but I will say we’re starting to see some initial POs. We’re seeing some qualification activity beyond just we’re doing testing. It’s more site visits and things like that, more on the preproduction launch areas.
But I don’t have paper in hand to talk about dollars and figures and things like that. I wish I did. But we’re definitely — we have a lot of hooks in the water, as we’ve talked about on every call, and it’s been part of our diversification strategy is to really not rely on 1 growth initiative to carry us through, and we’re working hard to land multiples. And I’m hoping over the next 12 to 18 months here, we land multiple large opportunities and I’m in a much different spot talking about the revenue increases and the profit increases than the waiting for Quala complete position?
William Lauber: I mean can you kind of — maybe if you can’t quantify it qualitatively, how you guys feel about the potential opportunities now compared to historically and…
Michael E. Manna: Well, we believe in all the opportunities, and we’re doing them all because they’re what we call chunks of additional revenue to the business. Nothing’s a $1 million adder. They’re all $5 million to $20 million potential adders to the business so that if we actually hit a couple of them, it becomes a meaningful increase to the bottom line and gets us closer to our scale ambitions because we’re still subscale at this point.
Philip A. Fain: And we also want to be in the unique position where we’re a sole supplier or we’re locked in with a great relationship I guess, the testimony being we’ve been through it as partners for like 3, 4, 5 years with these companies, and they’re depending on us. We’re depending on them. And things are progressing. And that’s — the glimmer of light when you see the progress is what this is all about because we’re incredibly impatient in the roles that we do and as shareholders with the insiders owning almost 40% of the company, we’re incredibly impatient. So we’re pushing as hard as we possibly can but then again, we have a much better understanding of the process and what they’re going through. They’re playing for the Big W 2 in the markets with our products.
William Lauber: Okay. So maybe you can refresh my memory. I know you guys have obviously had some big deals over time here, but you ever had multiple I would call it a couple of million plus dollars deals hit all within like the same year, 1.5 years or 2?
Michael E. Manna: Not in recent memory. No, it would be back before probably 2010 that we really were in some of those activities.
William Lauber: And so what you’re saying is that is — the potential is there for that to happen again?
Philip A. Fain: Well, that’s the position that we’re playing for.
Michael E. Manna: Yes. I mean we’ve invested a lot of money and effort in a lot of new products across both businesses, not just to spend the money. Obviously, we’re spending the money ahead of revenue to fuel some of our growth ambitions. And some of these projects just take a lot longer than you ever would expect. I mean our biggest customer in medical — it was 6 years from when our battery was developed before the product actually launched with the medical customer. So it was a lot of hand sitting on your hands waiting, but now they’re one of our best customers and one of our bigger customers, which is fantastic, and we have a great relationship. So it takes longer than you want in some cases for sure.
Operator: Thank you. I am showing no other questions at this time. So I would now like to turn it back to Mike Manna for closing remarks.
Michael E. Manna: Thank you, everyone, for participating in today’s call. We look forward to seeing you next time on our Q3 2025 call. Have a great day. Bye now.
Operator: This does conclude the program. You may now disconnect.