KULR Third Quarter 2026 Earnings Call

Stuart Smith:

All right. Once again, I want to thank you for joining us today for the KULR Technology Group third quarter 2026 earnings call. My name is Stuart Smith and I will be the moderator for today’s call.

In just a moment, I’ll be joined by Michael Mo, the chief executive officer for KULR Technology Group, and Mike Kimel, the chief financial officer for the company. Before we begin today’s call, please listen to the following statements covering today’s call. This call contains certain forward-looking statements based on the company’s current expectations, intentions, and assumptions that involve risks and uncertainties. Forward-looking statements made on this call are based on information available to the company as of the date hereof. KULR Technology Group’s actual results may differ materially from those stated or implied in such forward-looking statements due to risks and uncertainties associated with their business, which include the risk factors disclosed in their Form 10-K filed with the Securities and Exchange Commission on March 31st, 2026, as may be amended or supplemented by other reports the company files with the Securities and Exchange Commission from time to time.

Forward-looking statements include statements regarding the company’s expectations, beliefs, intentions, or strategies regarding the future, and can be identified by forward-looking words such as anticipate, believe, could, estimate, expect, intend, may, should, and would, or similar words. All such forward-looking statements that are provided by management on this call are based on the information available at this time, and management expects that internal expectations may change over time. These statements are not guarantees of future performance and are subject to known and unknown risks and uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Except as otherwise required by applicable law, the company assumes no obligation to update the information included on this call, whether as a result of new information, future events, or otherwise.

With that, I will now turn the call over to the CEO of KULR Technology Group, Michael Mo. Michael, the call is yours.

Michael Mo:

Thank you, Stuart. Good morning, everyone. Thank you for joining. We measured 2026 on three things. Product revenue growth, gross margin improvement, and cost discipline. In the third quarter, all three move in the right direction. In third quarter, revenue was $7.4 million, up 197% from the same quarter last year, and more than three times the second quarter. Product sales were 6.5 million up, about 300% year over year, and product is now 88% of our revenue. We shipped to 22 product customers in a quarter, up from 18 a year ago. Gross margin returned to positive territory after a gross loss we reported in second quarter. And SG&A came down from both a year ago, and the second quarter, on a revenue base three times larger. We also finished simplifying our business. We completed our exit from Bitcoin, repaid our Coinbase loan, and ended the quarter with $54.5 million in cash, no debt, and no digital assets. Our ATM program remains paused through the end of the year.

Let me be clear about what this quarter is, and what it’s not. It’s not the finish line. Our margin is not where the business needs to run, our costs are too high, and our losses have to come down. I’ll walk you through what we’re doing about it, and Mike Kimel will take you through the plan behind it, but the third quarter did give us a solid foundation. It’s the inflection point we will build fourth quarter on, and the base from which that we intend to accelerate growth in 2027.Our plan going forward has four parts. Focus our execution, align the organization, bring up capacity, and secure the supply chain. Here’s where we stand on each one.

On execution focus. We have concentrated the company on fewer programs and a set of strategic customer accounts, the customers whose needs match the technology and products that we’re best at, so that every program we take on gets the speed and quality our customers expect. We also exited custom programs that did not meet our standards of economics.

On alignment, our leadership team is in place, and we have aligned our resources with our strategic and operational goals. That includes a reduction in force, which we’ll cover in more detail later. A company-wide operational management is now running on KiOS, our KULR intelligent operating system, which is one standard set of data and real operational visibility across the company. Mike Kimel will take you through how it’s changing the way we operate.

Our production capacity, our new Texas facility, Forge-2 or F-2, came online in the third quarter as planned, and is producing for our customers, including battery systems for customers participating in the Drone Dominance Program. Design, prototyping, testing, certification, manufacturing, battery management and electronics, the full stack is now working under one roof.

On supply chain, the shipments that delayed by long lead times in second quarter are starting to go out in the third quarter. Product revenue nearly quadrupled year over year. We’re also building ahead of demand. We ended the quarter with 4.4 million of inventory, and about $1.1 million of supplier deposits positioned against fourth quarter shipments. There’s still a lot of work to be done here. The industry and regulatory environment around battery supply chain is very dynamic. Sourcing rules, trade policies, and cell availability are all moving fast, and our job is to build a supply chain that stays ahead of those changes and keep our options open as evolve.

Each one of those four pieces contribute to this quarter, and together, they’re the base that we’re building on. Focusing on customer engagements has also sharpened our strategy. KULR ONE is a platform that serves three markets. KULR ONE Air for autonomous systems, KULR ONE MAX for power infrastructure, and KULR ONE Space, our heritage line for new space economy. Product revenue growth this quarter came from across that platform.

In autonomous systems, we serve two applications, drones and uncrewed underwater vehicles. The American drone market continued to convert from policy to purchase orders. In September, the Department of War named the top performers of the second Drone Dominance gauntlet program, and said it plans to buy about 60,000 drones from that group, all the way to more than 200,000 drones across the program by 2027. Customer in this market are preparing for the NDAA’s domestic sourcing rules for batteries, including the restrictions on cells and components from foreign entities of concern. Those requirements are coming into effect over the next few years, and our customers are designing for them now. So this year we made a deliberate investment to be ready ahead of them, with a complete compliance supply chain. We established partnerships with battery cell manufacturers for compliant battery cells. We build our own battery management system and our own chargers, so the electronics in the KULR ONE battery are designed and sourced under our control. And we perform final assembly, testing, and certification ourselves.

That stack is what our 2026 investment pay for, and it’s what the 2027 ramp runs on. We see 2027 is a big year of ramp for NDAA-compliant battery solutions for autonomous system customers. KULR ONE MAX is our high capacity battery platform, and its battery energy storage configuration is focused on the Japanese market. Japan has one of the most advanced open power markets in the world. Generation, wholesale trading, retail supply, and the balancing and capacity markets are all open to independent private participants, and that has created a fast-growing market for distributed battery storage, delivered as a power- as-a-service. And these are storage units placed at private customer sites and operate as a fleet. In the third quarter, KULR ONE MAX shipments for those deployments were a major contributor for our product growth.

Why is this a KULR market? Because a fleet of lithium ion storage units at the customer sites depend on two things, battery safety and battery monitoring. Our safety technology is what gets the customer’s confidence for deployment. Our monitoring technology turns a fleet into managed assets from state of health, state of safety, uptime, and warranty data on every pack. We believe this is a tremendous growth opportunity for KULR ONE MAX product line in 2027 and beyond. What makes this opportunity particularly attractive is that the demand for distributed energy storage in Japan is being driven by broader electricity market needs, including grid stability, renewable energy integration, and increasing demand for reliable power. We believe KULR ONE MAX is well positioned to participate in the market as we scale production and deepen relationships with our strategic customers.

KULR ONE Space is where our battery business started. Battery systems build on human space flight safety standards with a NASA heritage. That heritage now serves three growing markets, private space exploration where Texas Space Commission awarded funds, cold temperature lithium-ion battery development for the next generation of lunar missions, satellite constellation, which we saw huge opportunity that needs standardized, certified power at the production volume, and space AI data centers.

Next, let me talk about the two engines that will help power the future growth of our business with a smaller and leaner operational team. The first is KULR ONE Studio Designer Pro. It’s our internally developed AI-driven design and engineering platform. It’s trained on our own intellectual property that includes more than 900 battery pack designs and categorization data on battery cell types from about a dozen vendors. A KULR engineer prompts the battery pack performance requirements. An AI agent produced the full design and build package with UN, UL and IEC standards checked as design rules. A complete battery pack design and verification can now take as little as a couple of hours, down from a couple of weeks before. Since October, we’ve been shipping KULR ONE Air packs designed by Designer Pro to customers.

Second is KULR Intelligent Operating System, KiOS, which is our internally built AI agent-based enterprise operating system that we’re now running our business on. This is a platform that brings together program management, product life cycle management, AS9100 certified quality manufacturing, purchasing, and shipping, as well as sales, budgeting and HR into one system. So that every part that goes into a battery pack build, and every document is traced from design through shipment. For our customers, that means superfast turnaround and traceability. These platforms are designed to let us develop products faster, serve more customers, and scale production with sustainably greater operating efficiency without rebuilding the cost structure we carried in the past.

Next, let me discuss some of the financial and operational items. Gross margin was about 4% in the quarter. That’s better than the gross loss we reported in second quarter, and it’s not where this business needs to run. Three things weigh on the margin. First, the initial production build of new KULR ONE MAX priced to win long-term accounts, and they carry lower margins.

Second, we had gross losses on several custom battery assembly programs that were direct labor, and production costs ran above the contract value. These are the kind of programs that we have now exited.

Third, we incur transition of facility cost rate to the Caban acquisition, and those do not reoccur once the transition is complete.

R&D was approximately $5 million in the quarter, up from 2.3 million a year ago. About $700,000 of that work is under our Texas Space Commission Award, which is reimbursed, and shows up as grant revenue. The rest was deliberate investment in three areas. New battery programs for the autonomous platform, our own NDAA-compliant chargers and BMS products, and bringing up of the production lines at Forge-2. Those investments are the foundation of our future growth.

We expect R&D to decrease beginning the first quarter and further in 2027, as the production lines and the new pack programs complete in the fourth quarter, and BMS and charger programs to complete in early 2027.

SG&A was $5.9 million, down 3% from a year ago, and 6% from the second quarter. Advertising and marketing fell by more than half. Professional fees came down as corporate development activities from 2025 went down.

In the quarter, we also made the decision to concentrate the company on fewer programs in our strategic customer accounts, a company that runs fewer core programs need a smaller team. We have implemented a reduction in force, and together with other cost saving actions, we expect those changes to deliver approximately $4 million in annualized cost savings beginning in 2027. People who are affected by the RIF have contributed to KULR, and we have handled the process with the respect that they deserve. And because of Designer Pro and KiOS, we expect to scale the business without returning to our previous headcount.

So here’s where the third quarter leaves us. For the fourth quarter, F-2 is producing, inventory is built against the fourth quarter shipments, R&D expenses is expected to come down, and our cost bases are being reset. For 2027, three focus markets for one platform, the NDAA-compliant ramp in autonomous systems, power-as-a-service energy storage in Japan, and the new space economy. With supply chain and production capacity, and the design tools already built, to scale the business. We expect to ramp the product revenue business by reducing our cost.

One quarter does not complete a turnaround, and we’re not declaring one, but the third quarter is a solid foundation. It is an inflection point we’ll build on, and we’ll keep measuring ourselves on the same three things: product revenue growth, gross margin improvement, and cost discipline. The mission has not changed. The market is arriving, and our job is to execute, to build more batteries, sell more batteries, and to earn more on every battery that we sell.

With that, let me turn the call over to Mike Kimel to take you through the financials and the operational plan behind them. Focus, revenue growth, and cost reduction.

Mike Kimel:

Thanks, Mike. Before I became CFO of KULR, our CEO, Michael Mo, and I had several conversations about where the company was headed. Michael was very direct with me. KULR was losing money at a rate that simply wasn’t sustainable, and something had to change. We agreed on that, but we also agreed that we needed to be thoughtful about how we made those changes. We didn’t want to solve the problem by simply shrinking the company. We wanted to put KULR on a path where it could grow, become more efficient, and ultimately become profitable. So we worked out a plan built around three pillars, focus on activities in which KULR is world-class, increase revenues, and reduce costs. We’ve already begun making progress on all three. Before I walk through each one, let me cover the third quarter numbers.

All figures are from continuing operations. Our former Bitcoin mining business is reported as discontinued operations.

Revenue was 7.4 million, up 197% from 2.5 million a year ago, and product sales were 6.5 million. Gross margin was close to 4%, compared with 17% a year ago. Operating expenses were 11.3 million, including 5 million of R&D, 5.9 million of SG&A, and a $0.3 million provision for credit losses, and our loss from operations was 11 million compared with 8.7 million a year ago.

We reported net income of 4.5 million or 10 cents per share. That result came from a $15.8 million increase in the value of our Bitcoin, between June 30th and the dates we sold it, not from our operations. We ended the quarter with $54.5 million in cash, no debt, no digital assets, and a working capital of 64.4 million.

Going back to the three pillars, the first pillar is focus. We’ve been taking a hard look at our customers and projects. One thing I’ve learned over the years is that not all revenue is good revenue. A project can bring in money and still be a poor use of resources. It might tie up engineers, consume management time, or require investments unlikely to generate an adequate return. So we’ve decided to walk away from certain projects that don’t make the best use of KULR’s capabilities. That’s not easy when you’re trying to grow revenue, but we believe it’s right for the long-term health of the business. We want to concentrate on what we do best, batteries for drones and other autonomous systems, energy storage systems, and space.

As part of our focus on fewer programs, we have implemented a reduction in force. These are difficult decisions, particularly when they affect people who have contributed to building the company, but our existing cost structure was simply too large for the business as it stands today. We approached these reductions carefully, with the goal of preserving the engineering and manufacturing capabilities that differentiate KULR. We believe we can emerge as a leaner company, but one that remains just as able to serve our customers and pursue opportunities for growth.

The second pillar is revenue growth, and we’re starting to see some encouraging results. Revenues increased substantially this quarter, driven by growth across the KULR ONE platform, including our KULR ONE MAX energy storage systems. We believe these sales demonstrate that our systems are well suited to the needs of this market, and that our engineering and manufacturing investments are translating into meaningful commercial business.

Across KULR ONE Air, KULR ONE Space, and KULR ONE MAX, our focus is increasingly on manufacturing and delivering products. We want more production, more customer deliveries, and repeat business.

I also want to address gross margins. Relative to last quarter, our gross margins this quarter recovered to positive territory, but we’re still too low for our liking. The main factors were low margins on the initial KULR ONE MAX energy storage module orders, and losses on several custom battery assembly programs, where labor and production costs exceeded contract value. That’s exactly the kind of work we’re walking away from. We also incurred transition and facility costs related to the Caban acquisition.

Revenue growth alone is not enough. We need to improve production efficiency, control costs, and focus on business with better long-term economics. And that brings me to the third pillar, which is cost. Speaking frankly, there are easy ways to cut costs, and hard ways. We could go through the budget, identify large expenses, and start cutting. Sometimes that’s necessary, but if we’re not careful, we can save money in the short term while cutting the capabilities that make KULR valuable. We want to take a more deliberate approach, not just spend less, but change how KULR operates so we can do more with less.

Over recent quarters, we’ve invested heavily in developing customer relationships, opening a new production facility, and building our own internal systems, including KiOS and KULR ONE Studio Designer Pro. KiOS is already handling a growing number of our day-to-day activities. It helps train new employees, monitors and coordinates certain manufacturing activities, and reduces the manual work needed to keep things running. These may not sound like dramatic changes individually, but together they make a meaningful difference in how efficiently we operate.

Designer Pro is another tool I’m excited about. Over the years, KULR has accumulated an enormous amount of testing and production data, along with specialized engineering and manufacturing knowledge. Designer Pro brings that together with artificial intelligence to give our engineers what amounts to a design partner. That is knowledge we’ve already paid to develop, and now we can put it to work more effectively. It doesn’t replace engineering judgment or experience. It helps engineers work more productively, and we’ve already seen it accelerate battery design, manufacturing, and shipment.

Traditionally, when a manufacturing company grows, its costs tend to grow along with it. More orders means more engineers, production personnel, administrative support, and people coordinating all of those activities. We want to break that relationship, so that a larger business doesn’t automatically require a proportionately larger organization. With KiOS and Designer Pro, we believe we can grow without returning to our previous headcount, because we’re automating routine work and making our engineers more productive.

Together with the reduction in force and other cost actions, we expect those changes to deliver about $4 million in annual direct cost reductions beginning in 2027. We expect to achieve those savings while continuing to invest in the technology central to KULR’s future.

We’re also reviewing major expense categories, including professional services, engineering, facilities, and administrative costs for additional opportunities to operate more efficiently.

And I want to be clear that these changes won’t happen overnight. Some opportunities are straightforward, others depend on finishing new systems and processes before we can eliminate the cost of the old ways of doing business. We intend to be careful about those transitions, but I don’t want anyone to mistake that for a lack of urgency. We understand that our losses have to come down, and we’re working on all three pillars at the same time.

Ultimately, we want KULR to grow without constantly needing more capital to support that growth. That means reducing fixed costs, getting more from investments we’ve already made, and being disciplined about how we use cash and finance growth. We have a responsibility to protect shareholder capital.

There’s still a lot of work to do. We know shareholders expect results. So do we. We’ll measure our progress not just by the orders we announce, but by revenue, margins, expenses, and the financial performance we deliver. That’s the standard we intend to hold ourselves to.

Stuart Smith:

Thank you for that, Mike, and I want to thank Michael Mo, CEO of KULR Technology Group, and Mike Kimel, CFO of KULR Technology Group, for their comments today regarding the earnings. And that concludes our call.