Flux Power (FLUX) 2025 Earnings Call Transcript

Summary of Flux Power Holdings Fiscal First and Second Quarter 2025 Financial Results Conference Call Company Overview - Company: Flux Power Holdings - Industry: Lithium-ion energy storage solutions, focusing on ground support equipment and material handling markets Key Points and Arguments Leadership and Vision - Krishna Vanka appointed as CEO, bringing 18 years of experience in technology sectors including renewable energy and EV transition [6][7] - Emphasis on building Flux Power into a market leader in lithium-ion energy storage solutions [7] Financial Performance - Q1 2025: Revenue increased by 9% year-over-year to $16.1 million, driven by higher shipments in ground support equipment [8][24] - **Q2 2025**: Revenue decreased by 8$16.8 million but increased by 4% sequentially from Q1 [9][26] - Gross profit for Q1 2025 rose 23% to $5.2 million, with gross margin improving to 32$5.5 million, with gross margin at 33% compared to 30% in Q2 2024 [10][26] - Adjusted EBITDA loss improved to $600,000 in Q1 2025 from a loss of$1.2 million in Q1 2024, while Q2 2025 saw a loss of $1 million [9][10][22] Market Dynamics and Demand - Increased demand for lithium-ion solutions, particularly in ground support and material handling markets [11][35] - Anticipated growth in order flow, with a backlog of$21.2 million as of September 30, 2024, and $17.5 million as of December 31, 2024 [9][10] - Customers are increasingly interested in transitioning from lead-acid to lithium-ion batteries, with telemetry features enhancing product appeal [35][36] Product Development and Innovation - Introduction of new heavy-duty models to meet customer demand, particularly in aggressive operations [11][37] - Telemetry product, Sky BMS, in pilot stage for a Fortune 50 company, enhancing asset management capabilities [11][17] - Strategic partnership with a top forklift OEM to launch a private label battery program, enhancing product safety and durability [16] Operational Challenges and Strategic Initiatives - Experienced delays in orders due to revised timing of forklift deliveries and economic uncertainties [14] - Focus on expanding sales and marketing initiatives to capitalize on fleet-wide replacement trends [14][15] - No known lost customers or orders to competition, indicating strong market position [15] Financial Outlook - Q3 2025 revenues expected to align with Q2 results, with a stronger trajectory anticipated in Q4 [29][55] - Positive cash flow anticipated in Q4 2025, with revenue growth projected between 5% to 10% [30][55] - Continued focus on cost reductions and strategic supply chain improvements to enhance profitability [22][23] Customer Engagement and Market Position - Achieved deployment of over 25,000 lithium-ion packs across North America, with strong customer retention [15][18] - New accounts secured in various sectors, including medical supply and food and beverage industries [19][20] - Emphasis on proactive demand generation and solution selling to enhance market penetration [58] Software and Telemetry Revenue Potential - Potential for software revenue generation from telemetry data, with aspirations to make it a material part of the revenue mix [67][69] Additional Important Content - The company has implemented measures to rectify inventory accounting issues and is now caught up with financial filings [29] - The leadership team has been strengthened with key appointments to drive growth and innovation [12][31] This summary encapsulates the critical insights and developments discussed during the conference call, highlighting Flux Power's strategic direction, financial performance, and market opportunities.