Flux Power(US:FLUX)2023-11-10 03:50Financial Data and Key Metrics Changes - Revenue for Q1 2024 decreased by 17% to $14.8 million compared to $17.8 million in Q1 2023, attributed to fewer units of lithium-ion packs sold due to shipment deferrals and seasonal reductions in orders [17][56] - Gross profit increased by 9% to $4.3 million, with gross margin improving to 29% from 22% in the prior year, reflecting better operational efficiencies and lower cost of sales [30][51] - Net loss remained stable at $2.1 million, similar to Q1 2023, with increased gross profit offset by higher operating expenses [31] Business Line Data and Key Metrics Changes - The customer order backlog declined from $28.5 million to $21.8 million as of September 30, 2023, but increased to $31 million by November 2, 2023, indicating a recovery in order placements [26][29] - Selling and administrative expenses rose slightly to $4.7 million from $4.5 million year-over-year, while R&D expenses increased to $1.3 million from $1.2 million [57] Market Data and Key Metrics Changes - The company is experiencing a growing demand for lithium-ion solutions, with a noted double-digit growth rate in adoption within the forklift market, despite historical single-digit growth rates [20][55] - The company added two new customers in the quarter, contributing to a total of six new customers year-to-date in 2023, indicating a strong pipeline of potential orders [20][50] Company Strategy and Development Direction - The long-term strategy focuses on building scale to sell products to large fleets, with initiatives including the introduction of new heavy-duty models and a private label program [18][19] - The company aims to achieve cash flow breakeven and profitability during the current fiscal year, supported by gross margin improvements and operational efficiencies [52][60] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the trajectory towards sustainable profitability, highlighting ongoing gross margin improvements and a strong customer base [33][60] - The company is exploring partnerships for fast charging technology and international sales opportunities, indicating a proactive approach to market demands [52][60] Other Important Information - The company secured a new $15 million credit facility to support working capital needs, with provisions to expand to $20 million if necessary [32][34] - The current production facility is expected to support annual revenues up to $150 million, reflecting the potential for significant growth [34] Q&A Session Summary Question: What is the outlook for orders going into the next quarter? - Management indicated a positive outlook, noting underlying demand and the impact of new product lines expected to influence orders in the spring [66] Question: Can you elaborate on the new private label program? - The private label program has been successful in the Class 3 space, targeting large Fortune 500 fleets that prefer diverse product lines [67] Question: What is the status of the fast charging partnership? - The partnership is driven by demand from existing customers, with large clients becoming comfortable with lithium technology and seeking to convert their fleets [71] Question: How is the telematics integration progressing? - The telematics integration is seen as a value-add to enhance repeat business, with potential for recurring revenue opportunities [72]