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Good day, and thank you for standing by. Welcome to the Ultralife Corporation first quarter 2026 results call. At this time, all participants are in listen-only mode. After the speaker's presentation, there'll be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear a recorded message advising you when it's raised. To withdraw your question, please press star one again. Please be advised that today's conference is being recorded. I would like to hand the conference over to your first speaker today, Jody Burfening. Please go ahead.

Thank you, Marvin. Good morning, everyone. Thank you for joining us this morning for Ultralife Corporation's earnings conference call for the first 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, ultralifecorp.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 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 conditions, 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 cause or affect Ultralife's financial results is included in the company's filings with the Securities and Exchange Commission, including the latest annual report on Form 10-K.

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 Q1 2026 earnings call. Earlier today, we announced Q1 revenue of $47.4 million, with an operating profit loss of $0.2 million, which resulted in a loss of $0.03 per share. We had a challenging start to the year on both sides of the business due to several factors, including order shipment timing, shipment delays to our Middle East customers, plant shutdowns for reorganization and weather events, and consultation fees. We have a growing backlog and product portfolio due to new product releases that we need to support this year, so we have added and trained direct labor resources in our Raynham and Newark facilities to staff lines for the increased demand expected in 2026. This expense comes pre-revenue, is critical given the nature of our products to ensure product quality.

We now have new experienced plant leadership in both of those locations to drive manufacturing efficiencies and gross margin initiatives. Our Communications Systems business, which I acknowledge had another underwhelming quarter, has multiple new products and projects underway to grow the baseline revenue and stabilize the business. We believe in the upside of this business and continue to invest in product development to capture large, sustained revenue opportunities. A large part of the communications business continues to be government-related, with long development and procurement cycles for the products we sell. We exited the quarter with a record backlog of $115.1 million, with over $12 million of backlog from products released within the last one year. Often we incur training and ramp costs prior to revenue capture.

We continue our brand realignment under the Ultralife brand, which will bring clear, concise messaging to our customers that we design and deliver critical RF and portable power products. I will turn it over to Phil to talk through the detailed numbers.

Thank you, Mike, and good morning, everyone. Earlier this morning, we released our first quarter results for the quarter ended March 31st, 2026. We have also filed our Form 10-Q with the SEC. Consolidated revenues totaled $47.4 million, compared to $50.7 million for the first quarter of 2025. Revenues from our Battery & Energy Products segment were $44.2 million, compared to $46.3 million last year, a 4.7% decrease. The year-over-year decrease reflects a 5.5% decline in commercial sales attributable to oil and gas customers and a 2.7% decline in government defense sales relative to the shipment of a very large order for an allied country last year. Medical sales increased 5.9% for the 2026 quarter.

The sales split between commercial and government defense for our battery business was 69/31, compared to 64/36 reported for the 2025 quarter, and the domestic to international split was 66/34, compared to 78/22 for the 2025 period, reflecting the global demand for our products. Revenues from our Communications Systems segment of $3.3 million declined 25.7% from the $4.4 million we reported last year, resulting from the timing of expected orders. On a consolidated basis, the commercial to government defense sales split was 64/36, compared to 58/42 for the 2026 and 2025 quarters respectively. Our total backlog exiting the first quarter was $115.1 million, the highest level in the company's history and representing a $20.1 million or a 21.1% 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 61% of trailing 12-month sales. Our consolidated gross profit was $10.1 million, down 20.7% from the 2025 period. As a percentage of total revenues, consolidated gross margin was 21.3%, a 380 basis point decline from the 25.1% reported for last year's first quarter. Gross profit for our Battery & Energy Products segment was $9.4 million compared to $11.4 million last year, a decrease of 18.2%. Gross margin was 21.2% compared to 24.7% last year.

The year-over-year reduction primarily resulted from non-recurring events, resulting in lost production days in the 2026 period, negatively impacting gross margin by approximately $0.8 million. This included 3+ days due to the failure of the substation that provides power to our Newark facility, and 16 days equivalent to over 25% of the total Q1 production days for our Raynham facility for multiple reasons, including the preparation, execution, and reconciliation of our initial wall-to-wall physical inventory with full integration into the new ERP system, the disposal of fully reserved obsolete inventory, and overall realignment to minimize our use of costly outside warehousing, all of which was further compounded by severe weather. In addition to the aforementioned, also impacting gross margin were higher energy costs experienced in our Northeast facility and our sales mix, which resulted in higher net tariff costs.

For our Communications Systems segment, gross profit was $0.8 million compared to $1.3 million for the year earlier period. Gross margin was 21.2% compared to 29.5% last year, primarily due to lower factory volume and product mix. Operating expenses were $10.3 million, an increase of $1 million or 10.5% from the year earlier quarter. The majority of the year-over-year increase is comprised of one-time costs exceeding $0.8 million related to certain consulting fees to help expedite our gross margin improvement in our two largest manufacturing facilities, litigation expenses incurred for our cybersecurity claim, and the final costs for our Raynham systems transition. In addition, new product development costs increased 23.3% related to the continued investment in our product offering and vertical integration opportunities within our portfolio.

As a percentage of revenues, operating expenses were 21.8% compared to 18.4% for last year's first quarter. We incurred an operating loss of $0.2 million compared to income of $3.4 million last year, primarily reflecting the lost production days and one-time costs in our Battery & Energy Products segment and the 25.7% decline in Communications Systems sales. Other expense reported below operating income was $0.4 million for the quarter, primarily comprised of interest expense from the financing of our Electrochem acquisition, partially offset by the first 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 was established by the Inflation Reduction Act and runs through 2032.

This compares to expense of $1 million for the year earlier period, reflecting the acquisition financing. Our resulting tax benefit for the first quarter was $0.2 million compared to a provision of $0.6 million computed on a GAAP basis at statutory rates. Net loss was $0.5 million or $0.03 per share compared to income of $1.9 million or $0.11 per share on a GAAP basis. Adjusted EBITDA, defined as EBITDA, including non-cash stock-based compensation expense in one-time acquisition and other non-recurring costs, not reflective of our ongoing operations, was $3.2 million or 6.8% of sales, compared to $5.4 million or 10.7% for the prior year quarter. Adjusted EBITDA on a TTM basis is $15 million or 8% of sales.

Turning to our balance sheet, we ended the first quarter with working capital of $67.1 million and a current ratio of 2.6. Compared to $68.5 million and 2.8 for 2025 year end. Looking beyond our first quarter results, our backlog, the sheer number of our growth op initiatives, including our conformal wearable battery order now in hand, upgraded leadership in our two largest manufacturing facilities focused 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 Q1 2026 results. For 2026, we have four distinct priorities underway. Our first priority is to improve the revenue capture of the Communications Systems business. We have several new products in the commercial capture phase with initial orders received and multiple new products slated for release this year. We're actively working with multiple partners on long-term programs of record and long-term projects that we believe will bring recurring baseline revenue back into the business over the next year. The second priority, which is in our Battery & Energy Products business, is improved gross margin, with the initial target being our Newark operation. We have identified a corrective action for the largest contributor of scrap, which has been implemented and will start eliminating the issue mid-year as we work through existing parts supply.

With ongoing efforts to identify root cause and corrective actions on other major scrap contributors, we continue to work lean in process improvements at all facilities to existing lines and on new product lines as added in the facilities. We continue to add, expand vertical integration opportunities enabled by the acquisition of Electrochem, allowing us to incorporate Electrochem cells into existing pack assemblies and broaden our adjustable pack assembly market. We have combined the like entities into a single subdivision within the Battery and Energy Products business, now internally known as the Telemetry Power Systems business. We expect to more than double the use of our own cells internal packs this year as customer qualifications are completed. Lastly, we are focused on the company-wide branding alignment, which is well underway and will be completed this year, clarifying our customer messaging and market positioning.

Switching to development projects, we continue to invest in products on both sides of the business to drive revenue and opportunities for organic growth. Our communication systems business continues to expand our global military vehicle business, highlighted by a recent $4 million multi-year award from an international partner for our Universal Vehicle Adapter, a handheld radio charger supporting legacy and current radios. We're integrating multiple HPE server products and configurations to expand opportunity in the ruggedized computing market. We received several smaller orders and are pursuing additional program awards with expected Q2 deliveries, while continuing customer engagements to capture voice-of-customer feedback and improve the performance and adaptation of these kits. We received funding from a special operations organization to develop and field initial prototypes of a vehicle-based tactical network hub, StrikeHub, integrating HPE servers, switches, and power management.

StrikeHub is a potential solution for the emerging Next Generation Command and Control NGC2 tactical network requirements initiative. Our new 20 W amplifier has received multiple orders, with deliveries expected in Q2 and Q3 2026. We are engaging radio manufacturers to pair the amplifier with OEM radios to drive pull-through sales. Later this year, we plan to introduce an advanced variant, a 20 W amplifier that supports the newest high-speed single-channel and frequency-hopping MANET waveforms in a compact body-worn form factor. We are developing new radio mounts to integrate our amplifiers with various handheld radios, providing a cost-effective adaptable vehicle mounting solution, which is planned for availability later in 2026. Our Crescent small form factor wearable AI compute solution continues to advance. We've assembled a strong partner team supporting hardware development, integration, and software tools to capture voice-of-customer requirements and accelerate the progress toward initial prototypes expected in 2026.

On the battery and energy side of the business, we're focused on new business growth through our transformational projects and OEM partnerships. We have multiple OEM projects ongoing to bring new customer bespoke products to market over the coming years, and with existing customers to revise existing products to increase performance and/or refresh designs. On the conformal wearable battery used to power dismounted soldier systems, I am pleased to say we shipped our first order in full and have current backlog in excess of $8 million. This backlog is expected to ship in 2026, and we have quoted multiple large volume opportunities, mainly for international customers. This is the first larger transformational project revenue stream and shows the potential that all of our development projects have.

Our 19 amp hour thionyl cell has passed all performance validation testing requirements, and we're now waiting on our customer's device certification and initial production planning to complete. We've begun new product development activities with an OEM powering a remote surveillance system with a rechargeable power pack. This development is anticipated to complete in Q3 with anticipated production deliveries beginning late year. As mentioned in the last call, we received production orders for a battery pack to provide power backup for a new pump application for a major medical OEM. This project started with them over seven years ago, and their product is now finally launching. These orders are scheduled to start shipping in mid 2026 concurrently as our customer ramps their device manufacturing. We've 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 projects now in the qualification phase. These smaller, thinner designs will enable a more discreet wearable sensor than typically available in today's marketplace, allowing better patient experience and longer device life. Investing in new product development is essential to continuing to diversify and strengthen our product portfolio, driving future growth, and building on our legacy of delivering critical power products. Our priorities remain converting long-term development efforts into revenue, advancing vertical integration where possible, and maintaining a strong focus on operational efficiency initiatives. With a hefty backlog, including over $12 million of new products as we exit Q1, I believe we are well positioned for future revenue growth.

Our focus remains on increasing product offering and sales engagement for our Communications Systems business, increased gross margin and revenue on our Battery Energy business, along with vertical integration opportunities in our Telemetry Power Systems business. I will now pass it back to the operator for questions.

Thank you. At this time, we'll conduct a question and answer session. As a reminder to ask the question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Again, as a reminder to ask a question, you will need to press star one one on your telephone. I'm showing no questions at this time. I'll now turn it back to Mike Manna for closing remarks.

All right. Thanks for listening today's call, everyone. We look forward to talking to you next time during the Q2 2026 earnings call. Bye now.

Thank you for your participation in today's conference. This concludes the program. You may now disconnect.

Thank you for standing by. Welcome to the Ultralife Corporation Q4 2025 results call. At this time, 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'll need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to Jody Burfening. Please go ahead.

Thank you, Liz, and good morning, everyone. Thank you for joining us this morning for Ultralife Corporation's earnings conference call for the Q4 of fiscal 2025. 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.ultralifecorporation.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 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 US and foreign military spending, acceptance of new products on a global basis, and disruptions or delays in our supply of raw materials and components due to business conditions, 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 Securities and Exchange Commission.

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 Q4 and full year 2025 results call. Earlier today, we announced Q4 revenue of $48.5 million, an increase of 10.6% year-over-year, with an operating loss of $10.6 million after a one-time non-cash impairment, which results in a loss of $0.45 EPS. We finished the year 2025 with revenue of $191.2 million, with over $30 million from new products less than five years old, which is a growth of 16.2% year-over-year, which after the non-cash write-down, resulted in a full year operating loss of $5.9 million, which equates to a full year loss of $0.35 EPS. During 2025, we completed the ERP transition and various operational initiatives to reduce ongoing costs.

I am excited to see our backlog grow to $110 million exiting the year, diversified across several markets and applications, with over $6 million of it driven from new products released in 2025. In 2026, I expect the Communications Systems business to rebound as new product sales begin and long delayed programs start selling through. With the battery and energy business improving gross margin and revenue from new product launches. Our improved brand promotion and collaboration of worldwide resources will drive organic growth and new customer opportunities. I will turn over to Phil to talk through the detailed numbers.

Thank you, Mike, and good morning, everyone. Earlier this morning, we released our Q4 results for the quarter ended 31 December 2025. We have also updated our investor presentation in the investor relations section of our website and plan to file our Form 10-K with the SEC in the near future. Turning to our financial results for the Q4. Consolidated revenues totaled $48.5 million compared to $43.9 million for the Q4 of 2024, driven by strong performance for our battery and energy product segment. Revenues for this segment were $45.9 million compared to $39.9 million last year, a 15.1% increase. Excluding third-party sales for Electrochem, acquired on October 31, 2024 from both periods, sales for the segment increased 9.5% year-over-year.

This organic growth was driven by a 39.6% increase in medical, a 20.4% increase in industrial and other commercial, and a 1.2% increase in government defense, partially offset by a 3.6% decrease in oil and gas market sales. The sales split between commercial and government defense for our battery business was 73-27 compared to 70-30 reported for the 2024 quarter, and the domestic to international split was 71-29 compared to 62-38 for the 2024 period, primarily reflecting our acquisition of Electrochem. Revenues from our Communications Systems segment of $2.6 million declined 35.2% from the $4 million we reported last year.

Primarily attributable to timing of expected orders, which were delayed by the US government shutdown. On a consolidated basis, the commercial to government defense sales split was 66-34 compared to 62-38 for the 2025 and 2024 full years respectively. Our total backlog exiting the Q4 was $110.2 million, an increase of $20 million or 22.1% from the $90.3 million exiting the Q3, and remains diverse in nature across our commercial and government defense customer base. The replenishment rate remains high, and the backlog represents a very healthy 58% of TTM sales. Virtually all of the backlog is expected to ship in 2026. Our consolidated gross profit was $12.1 million, up 13.7% from the 2024 period.

As a percentage of total revenues, consolidated gross margin was 24.9%, a 70 basis point improvement from the 24.2% reported for last year's Q4. Gross profit for our battery and energy products business was $11.5 million compared to $9.5 million last year, an increase of 23.7%. Gross margin was 25.1%, a 170 basis point increase from the 23.4% reported for last year's quarter, primarily due to product mix and higher factory cost absorption. For our Communications Systems segment, gross profit was $0.5 million compared to $1.3 million for the year earlier period. Gross margin was 19.9% compared to 31.9% last year, primarily due to lower factory volume.

Operating expenses were essentially flat year-over-year when excluding the $12.2 million non-cash intangible asset impairment charge as we transition from numerous sub-brands reflecting the names of our acquisitions to the Ultralife master brand, and the one-time cost of completing the transition of Electrochem to Ultralife Systems, legal fees associated with our cyber insurance claim, and certain consulting costs to help expedite our gross margin improvement and upgrade our operations leadership. Operating loss was $10.6 million, reflecting the intangible asset impairment charge and the one-time cost compared to operating income of $1.5 million last year.

Other income was $0.4 million for the Q4 of 2025, as the interest expense from the financing of our Electrochem acquisition was more than offset by our expected $1.4 million 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 of 2022, which runs through 2032. This compares to other expense of $1 million for the year-earlier period, primarily reflecting the acquisition financing. Our resulting tax benefit for the Q4 was $2.8 million, compared to a provision of $0.3 million last year, computed on a GAAP basis at statutory rates. The benefit primarily reflects the reversal of deferred tax liabilities associated with the impairment charge.

Net loss was $7.4 million or $0.45 per share on a GAAP basis, which includes $0.57 for the intangible asset impairment charge net of the related tax benefits. This compares to net income of $0.2 million or $0.01 per share for the 2024 quarter. Adjusted EBITDA, defined as EBITDA, including non-cash stock-based compensation expense in one-time acquisition and other costs not reflective of our ongoing operations, was $5.7 million or 11.7% of sales, compared to $3.9 million or 8.9% for the prior year quarter. Adjusted EBITDA on a TTM basis is $17.3 million or 9% of sales.

Turning to our balance sheet, we ended the Q4 with working capital of $68.5 million and a current ratio of 2.8, compared to $67.9 million and 3.3 for 2024 year-end. Our liquidity remains solid. During 2025, we reduced our acquisition debt principal by $4.8 million, which exceeds the $2.8 million amortization required for the full year under our debt agreement.

Going forward, the increase in our backlog, the sheer number of our growth initiatives, consulting expertise in our largest facilities to expedite the execution of our gross margin improvement plans and help transition our new upgraded plant leadership, the transition of various sub-brands to the Ultralife master brand, and the realignment of our oil and gas downhole operations into a unified business under a single leader position us well 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 Q4 and full year 2025 results. As mentioned in the last call, we closed out a year with a lot of momentum and focus on preparation for future growth expectations. During 2025, we transitioned our largest acquisition to date, Electrochem, out of their parent systems and into Ultralife systems for ERP, MRP, networking, mail, and office. We closed two of our smaller manufacturing facilities in North America, which decreased our North American locations from 7 to 5. We began systems consolidation at our Houston facilities, brought in external lean and operational support for our Newark facility, and launched global rebranding efforts to eliminate customer confusion and better align sales and marketing resources worldwide. As we transition into 2026, we have 4 distinct priorities underway. We need our communication systems business to be profitable and growing.

We have several new products in the commercial capture phase, with initial orders received, and multiple new products slated for release in 2026. We are actively working with multiple partners on large programs of record and long-term projects that we believe will bring recurring baseline revenue back into the business. The second priority, which is in the battery and energy side of the business, is improved gross margin, with the initial target being our Newark operation. We have several recurring yield issues and inefficiencies that we continue to address with the help of external consultants in conjunction with the new leadership team that recently joined. We have revised pricing in several product areas and have cost down projects ongoing with multiple customers.

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 pack assembly market in areas such as pipeline inspection, seismic telemetry, and sonobuoys. Internally, we decided as part of our strategic planning process to align several of our battery and energy facilities under single leadership to drive these transitions and maximize the synergies. The facilities that will encompass the newly formed Telemetry Power Systems division are the US locations of Houston and Raynham, our Surrey location in Canada, and our wholly-owned facility in Shenzhen, China. This reorganization is expected to be completed in Q1. Lastly, we'll focus on the company-wide branding alignment. We had a complex and confusing number of brands and trade names for a company of our size.

This effort will reduce the redundant costs of supporting and justifying multiple brands and trade names, shorten messaging both internally and externally to customers that we are a global critical power provider of energy and RF products. Switching to development projects, we continue to invest in products on both sides of the business to drive revenue and opportunities for organic growth. The Communications Systems business continues to focus on the market expansion of ruggedized server cases through new programs and multiple server variants, providing greater opportunity to increase the market share in ruggedized computing environments. Several military programs are reviewing this OCP solution now for possible fielding as components of the broader readiness upgrades. We have a roadmap to enhance our current DC power supply, supporting a forward vehicular and DC power applications to the Open Compute Standard.

Being OCP compliant opens the business aperture for our power supply to support other communication computer manufacturer hardware in forward field environments. Our new 20-watt A2303 amplifier has completed testing with multiple customers, and initial orders received with deliveries expected in Q2 2026. We are currently engaged with multiple radio manufacturers to pair a new amplifier solution with radios globally. Our Crescent man-wearable compute solution continues to evolve as we hold meetings with multiple agencies refining the voice of customer requirements. This critical feedback enables us to accelerate progress and ensure form, fit, and function for our initial prototypes expected in 2026. On the battery and energy side of the business, we are focused on new business growth through transformational projects and OEM partnerships.

I will start with the Conformal Wearable Battery used to power dismounted soldier systems, where we've now begun shipping production quantities and shipped our first order in full. We have orders in backlog that will ship in the first half of 2026 and have quoted multiple large volume opportunities, mainly for international customers with expected awards for 2026 deliveries. We will continue to refine the production process as we receive and ship additional orders. Our 19 amp-hour Thin Cell has passed all performance validation testing requirements, and we're now waiting for our customer's device certifications and initial production planning to complete. We have begun new product development activities with an OEM powering a remote surveillance system with a rechargeable power pack. This development is anticipated to be completed in Q3, with production and deliveries beginning in Q4.

On a project we have not mentioned due to its long development cycle, now just over seven years, we have received production orders for a battery pack to provide power backup for a new pump application for a major medical OEM. These orders are scheduled to start shipping in mid-2026 concurrently as our customer ramps their device manufacturing. As mentioned earlier, we have established initial production capabilities for our Thin Cell technology to support customers in the medical wearable sector in various item tracking applications. The sales pipeline continues to strengthen with several new projects now in the qualification phase. We are investing additional development effort in the product line with unique cell designs that further reduce the thickness of the product while reducing manufacturing complexity with an eye on large scale automation, as we expect thin wearable sensors will continue to proliferate.

These smaller, thinner designs will enable a more discreet wearable sensor than typically available in today's marketplace, allowing for better patient experience and longer device life. Growing our medical cart power options, we released the X5-SuperLite, a USB-C hot swappable power system, which has now completed all certifications and is in production. We have received initial production orders for shipment in 2026. This product will be on display at the HIMSS show in Las Vegas this week. Investing in new product development is essential to continuing to diversify and strengthen 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 where possible, and maintaining a strong focus on operational efficiency initiatives.

As I continue to focus on the strategic projects and future of the business, we entered 2026 with the Electrochem transition completed, the largest number of new products for sale ever in our Communications Systems business, multiple large opportunities for both sides of the businesses, a reduced North American facility count, a unified back-office systems across most of North America, and a strong brand architecture evolution underway. With a healthy backlog, including over $6 million of new products to begin the year, I believe we are well positioned for future growth with the overall reduced operating costs throughout 2026. I'll now pass it back to the operator for questions.

As a reminder, if you'd like to ask a question at this time, please press star one one on your touchtone phone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. We have a question from Gregory Weaver with Invicta Capital Management.

Hi. Good morning, gentlemen. Thanks for the opportunity here. Sounds like there's a lot of good growth as well as margin expansion opportunities. Would you care to help us frame that a little bit and kind of what your, you know, goals are in terms of organic growth rate or kind of where you wanna get that 9% EBITDA margin?

Yeah, I mean, overall, we started a roadmap a few years ago, really to get our new product pipeline on both sides of our business really humming and delivering organic growth. You know, as much as we'd like to have it just happen immediately, there's time. You know, it's not. We're often, you know, part of someone else's solution. We're very seldom selling an end solution to the marketplace. So it's not only us developing our stuff, it's, you know, our customers getting their things through all their quals and certifications into market. You know, overall, we're targeting to be, you know, 2x GDP, you know, as a minimum in our organic growth side. You know, we'd love to be, you know, greater than 10% EBITDA to start short-term. You know, long-term, we'd love it to be higher.

You know, in long term, you know, we continue to look for, you know, other ways we can grow the business. As we pay down the debt on this last acquisition, you know, we'll be looking for what's next.

All right. Thanks for the color there. I appreciate that. On the comm systems business, I mean, when I was involved with the company years, probably 20 years ago, you'd had a huge order in that business, and you were riding that, and now it's extremely low levels here, I guess. You said you wanted to get it back to a baseline revenue. I guess kind of what's your definition of baseline revenue for that business?

Baseline is $25 million. That's where we need to be with the potential for breakaway large orders. Maybe not to the extent of what we experienced years ago with SATCOM, but there are some very, very large opportunities out there, starting with Joint Fires that, you know, received a lot of publicity. It's through the R&D stage and into the solicitation stage. You know, I think we're aligned with the right parties to be in a position to execute on what we see going forward for the business.

Okay. Appreciate that, Phil. I guess just last one. You mentioned offhand, Mike, about listening to some old calls here about this medical order. As I remember, if it's the same one, it was kind of a topic for quite a while, and then I guess the customer would kept dragging their feet. I guess, what's the ramp look like there, and is that a sizable opportunity?

Well, the new medical order. You know, we don't often talk about a lot of the medical projects just because the history has been that, you know, they drag on for an extended period of time. You know, no one wants to hear about something that's five years out, typically. You know, we still have some of that in the Thin Cell area, where we have some medical projects with Thin Cell that, you know, we expected to see revenue by now, and we're still kinda waiting for these POs. On the order that we have, it's an OEM that we've been working with for a number of years, obviously. We already have a pretty good relationship with the customer, and we have a good revenue stream already.

You know, this will be a, you know, a six-figure plus opportunity per year, and, you know, it's just beginning to be a product launch, so, you know, we expect this to be a good little pop to the business.

Okay, maybe it was the thin film one that I was thinking of beforehand that, you two have been waiting for. All right.

Yeah. The one we're still waiting for.

Yeah. Okay. Sorry. I guess I mixed those up. I appreciate the opportunity and good quarter. Thank you.

Thanks.

As a reminder, to ask a question, please press star one one. I'm showing no further questions at this time. I'd like to turn the call back to Mike Manna for closing remarks.

All right. Thanks, everyone. We look forward to talking to you at the next call for the Q1 2026 earnings. Have a great day. Bye now.

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