Good day, and thank you for standing by. Welcome to the Ultralife Corporation Fourth Quarter 2024 Results. [Operator instructions] Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today, [ Alex Viala ]. Please go ahead.

Thank you, Kevin, and good morning, everyone, and thank you for joining us this morning for Ultralife Corporation's Earnings Conference Call for the Fourth Quarter of Fiscal 2024. 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, ultralife.com, where you'll find the release under Investor News 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 the 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 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 filing 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'd now like to turn the call over to Mike, our CEO. Good morning, Mike. Please go ahead.

All right. Thank you. Good morning, everyone. Welcome to our call on Ultralife's Q4 and full year 2024 operating results. Earlier this morning, we reported Q4 sales of $43.9 million with an operating income of $1.5 million, which includes a $1.1 million of onetime cost directly related to the Electrochem acquisition, which resulted in $0.01 EPS. For the full year, we reported $164.5 million in sales with an operating income of $10 million, resulting in $0.38 of EPS for the year. We continue to improve operations in key areas throughout 2024, paying down a considerable portion of our debt in the first half of the year, affording us the opportunity to complete our largest strategic acquisition to date of Electrochem Solutions. Electrochem Solutions with the high-temperature, high vibration line of [indiscernible] chloride cells was a key supplier prior to the acquisition, now adds a vertical integration capability to our oil and gas business, offers us the opportunity to expand into mission-critical adjacent markets and creates material cost synergies with our other lithium cell businesses worldwide. With added key resources in critical areas to support future growth expectations, a pipeline of new products across a variety of value markets and the expanded aperture of our sales funnel, I look forward to a strong 2025. 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 fourth quarter results for the quarter ended December 31, 2024. We have also filed our Form 10-K with the SEC and have updated our investor presentation in the Investor Relations section of our website, which includes a recap of our most recent acquisition, Electrochem. As noted in our March 7 press release, we are reporting our fourth quarter results and filing our Form 10-K with the SEC later than usual to allow for the completion of our accounting close in audit for the inclusion of Electrochem, which the company acquired on October 31, 2024. Their related accounting is presently reported to us by their former parent company under a transition services agreement. And now turning to our financial results for the fourth quarter. Consolidated revenues totaled $43.9 million compared to $44.5 million for the fourth quarter of 2023. Revenues from our Battery & Energy Products segment were $39.9 million compared to $35.7 million last year. Excluding the $6.1 million Electrochem sales for November and December, sales for the segment declined $1.9 million or 5.3% year-over-year. a 48.1% increase in government defense sales and a 1.6% increase in oil and gas sales were offset by a 47.2% decline in medical battery sales compared to last year when we recorded the highest level of medical sales in the company's history and a 4.4% decline in industrial market sales, reflecting timing of orders. The sales split between commercial and government defense for our battery business was 70-30 compared to 77-23 reported for the 2023 quarter, and the domestic to international split was 62-38 compared to 48-52 for the 2023 period, demonstrating the heightened domestic demand for our U.S. government defense products. Revenues from our Communications Systems segment of $4 million…

Thank you, Phil, for the detailed review of the Q4 and full year 2024 results. As mentioned on previous calls, we had 3 major 2024 priorities to accomplish. First, continued material cost deflation. We had several wins in this category in 2024, where we negotiated down pricing on our lithium foil, electrolytes and some printed circuit boards, all key components to our battery business. In Q4, we signed a long-term supply agreement with a major customer for both businesses, giving us enhanced coverage and visibility over a rolling 3-year time horizon, which enables us to increase supply chain efficiency and cost leverage through volume commitments. Secondly, lean productivity. We continue to work lean projects throughout the company to offset the rising cost of labor, overhead and materials and have started to plan out projects at our new Electrochem acquisition. We completed 6 major lean projects in 2024. 4 in Newark, 1 in Houston, 1 in Virginia Beach that allowed for a minimum of 30% greater throughput and efficiency through our lines, which in turn frees up labor and space for other uses. Lastly, sales funnel improvement. We modified the sales leadership in the Battery Products group and updated our sales funnel capture tools in Q4 to better drive growth and monitor progress. We have a new Chief Marketing Officer starting in the new year, bringing over 2 decades of experience to further drive and coordinate our messaging, brand strategy and customer capture activities for the entire business, accelerating future growth. Q4 saw a large effort of integration and transition begin with the Electrochem addition on October 31 where we successfully transitioned payrolls and benefits to Ultralife systems, formed working groups for materials procurement and lean activities and started working carve-out of their ERP and quality systems from their previous parent.…

[Operator Instructions] Our first question comes from Josh Sullivan with the Benchmark Company.

So if we just look at Electrochem, where are you guys ahead of schedule? And then where are the major hurdles at this point?

I missed your first piece there, Josh, if you could just repeat that first.

Yes. Sorry, it was just where are you maybe ahead of schedule with Electrochem and some of the positive adds? And then on the other side of the ledger, where are the major hurdles and time lines?

Well, right now, on the Electrochem side of the business, the ahead piece, I would say, is we are already a customer of Electrochem. We already utilize their cells in some of our packs with some customers on our oil and gas business. So it's really moving those cells into some other sales opportunities and some already sell-through business that immediately will impact the bottom line. That's where I would say we're ahead. I would say we're -- the biggest hurdles right now is really just getting total control over the business and getting it out of their previous parent. Even this call is weeks later than we expected it to be because they're working on closing their own books as well as trying to close the books for us, and we may or may not be a priority. I'm not going to go down that path. But they have things they need to do. So it was -- there's some delays there, we want to be able to control our destiny, so to speak, end.

Got it. And then as far as the comments just on the industrial sales timing, what part of that is just the push out? And then what part of that is more macro related or any industry market weakness that might be out there?

Josh, it's all push out. We don't see any economic trends. I mean we're -- if you look at the markets we operate in, I think we're in what I'd call the right markets.

Yes. I mean I think some of our customers overbought a little bit early in the year, and they're trying to manage their year-end inventories and spend and cash flow, and they pushed into 2025 where they didn't necessarily need it.

Okay. And then on the thin cell medical opportunity, as far as initial production, what do you kind of foretell as what that might look like this year? And then what might that ramp look like next year?

Well, yes, that's a great question, Josh. I mean this customer, we've been in this journey for multiple years. I wouldn't even mention how many because it has been a long time. I think since the first time we talked, it's still been a few years. So we're expecting -- we have about $1 million in our plan for this customer, and I think they'll hit that this year, maybe a little more. The follow-on years, it's a large growth trajectory, but it's really all about hospital adoption and CapEx spend as well. So we'll see how the overall macroeconomics work over the next 12 months and how quickly the adoption happens.

[Operator Instructions] And I'm not showing any further questions at this time. I'd like to turn the call back over to Mike.

All right. Well, thanks, everyone, for listening to today's call. We look forward to talking to you next time during the Q1 2025 earnings call, and we will keep you posted on time and date for that. Thanks, everyone. Bye now.

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect, and have a wonderful day.