DFLI - Earnings call 3 2023 | Dragonfly Energy Holdings Corp.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon, my name is and I will be your operator today for Dragonfly Energy's Third Quarter Earnings Call. This call can be accessed along with the earnings press release and SEC filings on the Investor section of the Dragonfly Energy's website found at www.dragonenergy.com.

As a reminder, this conference call is being webcast and recorded. [Operator Instructions]

During this call, the company will be making forward-looking statements based on current expectations. due periodic noted SEC differ release the may in and filings. results to in factors press Actual Management will reference non-GAAP financial measures. Reconciliations could be the corresponding GAAP today's nearest on company's to release website. found the in measures turn now to the I will over Dr. call Denis Phares.

Denis Phares

everyone Thank us today. joining you, you thank and to

results, highlight providing progress Before financial to an efforts important our markets, over our update our we in third call spend revenue have and to the cell our John to on wanted handing our milestones that domestic a and diversification review manufacturing the to quarter I few minutes achieved operation. core battery

As The industry's dependent over on vehicle few shipments of our just unit discretionary industry, market, their on RVs many place through revenue challenges face the recreational process. aftermarket the through down they the quarters or to during sales RV the from is of below consumer you expectations either significant well OEMs know, which continues spending, solutions with ago. today a storage XX% majority when year-over-year, comes manufacturing our

informed storage driver primary our loss our this the that revenue of year-over-year the and OEM our have overall our is As in as The steeper-than-expected feature. weakness quarter returned the particularly solutions decline was revenue. third equipment installing a industry case on as has standard decline solutions call, they combined be optional to offering revenue. an our behind had the would with RV this in no during last negative who This July earnings customer impact discussed us RV in our largest longer with

products. in is continue to does our note to despite important be are weaker to expect demand stabilizing, this While in market the competitor it moving weakness appear not near customers that sales, to and RV we the term,

to and new market customers. share In wins with continue fact, models both new programs customer we with existing gain and

growth market in an will So we company. RV the recover expect important return driver as the for industry as XXXX, begins the to

increase continued in largely market driven and in-house is innovation. by share our quality This production, product

first Dragonfly just new not have a these assembly traceability OEM we the featuring batteries our having of customers. shipped batteries required line example, the assembly and full to of For construction trivial the process. throughout new The production was of IntelLigence

onto battery has a of that determination system, cells It believe battery unique management individual are battery. Each which storage new components firmware This is larger we standard loaded charge is our state first, stationary with also industry inside in for the to platform data an state of general. installations, along it battery of and the and in and the and sets monitoring remote storage for health batteries becomes accurate critical. specific

grow. transportation, the in and front, to to we pilot continue On diversification where engagement make revenue continues particularly our pipeline programs customer of progress,

than our prototype APU our expanded costs auxiliary active launched and same We for of potentially more have new fuel uptime paid include while for comprehensive a regulations, increases solution programs This power compliance reducing blue-chip with harmful at anti-idling pilot that time, operators idle new increasing capacity all-electric fleet saving to periods. emissions in XX the customers. while and load And billions truck and dollars during market. we the and enables heavy-duty is unit October,

trucking new XX% of this Along with pilot North roughly the programs the secured launch we market. with representing of heavy-duty fleets product, have American

are solutions experience lead market where engineer opportunities replacement acid the all expertise the with our differentiated. in system provided has and that requirements, these of full proven encompass large Importantly, unique transportation to RV us

set and excited additional believe are about growth in this and momentum the opportunities XXXX for the in our new We growing of business beyond. area stage these

cell we completed manufacturing to battery using manufacturing we for domestic cell deposition with technology. dry announced pilot continue In Finally, July, patented make patented dry our electrode that process. we line progress our our

have make inbound electric center process The to conventional we the consumer type itself deposited backup electronics, chemistry is large additional lithium at vehicle and of We data agnostic, interest can LFP from in meaning begun scale. we markets. anodes any receive have customers cathodes graphite battery since and cell, and even

We are cells manufacturing that EV potential overstated. innovation is on a are solution producing deliver partners. to accomplishments host and also and testing prospective we deposition with deploying attractive to remain on increasingly and in track these soil The processes. associated proposition to dry cell environmental for cannot customers American importance is particular, fact to as be of sample a by customers issues year-end. looking prospective in-house an The cells of increasingly current American The industry, becoming

a Let over provide review results our to detailed well of outlook call the me of the fourth as financial quarter now XXXX. quarter a to third for more John as turn

John Warren Marchetti

down noted. Thank otherwise market unless in note quarter saw the you, XXXX, Denis. DTC all of and Please generated to are we and from $XX.X XXXX quarter third in million guidance due that our of third $XX.X OEM Dragonfly weakness. GAAP the of declines million of year-over-year low both at our end sales as in RV the figures range net businesses

products of as previously to OEM by to our storage decision need returned revenue as has in $X.X $X.X million compared the result solutions due is its to it largest third ago, OEM by customer the on offering to focus the a standard same consumers. for dealers but to as costs, declined a demand RV solutions primarily and instead quarter an option reducing quarter installing our year weaker disclosed longer equipment, and million that no of their our

not is limiting remainder had customer and our XXXX. effect the quarter, has adverse have material this OEM the sales in competitor, this decision expect a to to reiterate, revenue third a its a change expected, impact on material moving but or as of on solution through we continue different to our a To

third with expectations to of is or customer direct-to-consumer, demand, a was line such decreased compared third in given ongoing higher inflation. the of as The was revenue XXXX. $X.X interest rates result the Our quarter DTC, down and XXXX, macroeconomic factors, our decrease of and million million $XX.X quarter in

of expect in year see due in in and market XX.X% profit larger stability, the lower million we unit included decrease the overall same profit, to Despite to ago of this approximately signs to we that While the improve of higher-margin gross contribution gross sales. lower quarter compared materially in XX.X% quarter to a sales due was to $X.X to DTC gross through from profit a improved the quarter sales from third not margin mix the a million volumes. was do gross remainder segment XXXX. $X.X the Dragonfly's XXXX. continue of The

negative costs the $XX.X guidance largely end decreased at flat in range were XXXX quarter research compared the expenses of The and million or the diluted third of higher essentially company the administrative loss diluted share third Operating posted a a general lower sales of by and $X.XX a per per or share in quarter marketing development XXXX. of $X.XX quarter and million in as offset $XX net expenses. $X.X and million of were to net year-over-year loss a our negative

lower and quarter the higher compared was interest larger a by driven The ago loss lower profit sales, year same gross to expense. net

negative million $X.X value million compared of of fair a negative quarter third same the ago. $X.X a stock-based in XXXX and warrants, the negative EBITDA, excluding compared changes to in million Adjusted quarter quarter our was negative XXXX. market a million in the quarter compensation EBITDA Third to in third was a a $X.X the year $X.X

equity in For million the a reconciliation And resources have cash. of quarter $XX.X access our of our line refer we with EBITDA the EBITDA, Dragonfly release. plans. execute to with on operational please largely to believe approximately needed $XXX to ended to credit, million our adjusted earnings untapped press we combined

the quarter our of XXXX. Now expectations our for I'd like fourth to to turn attention

market, weaker revenue with the While to demand negatively ahead exciting a of RV we us, we diversification term OEM have number in near the in of be impacted customers. opportunities particularly continue by

We quarter $XX.X to fourth in of million. million expect be $XX.X to the range revenue

quarter range to the million the of million, expenses margin the expected $X.X XX% be expect in XX%. we an million. to million $XX $X are expense to of to range quarter expense expect of to be income to range We the gross and fourth the in other Operating $X.X be in December and in in

net report negative in loss a negative range million $X.XX per negative or to based million $X XX a shares $XX.X the fourth a of million negative quarter share share approximately to in the on to expect We per outstanding. $X.XX

Let turning Q&A. to comments me over Denis over now the to back to turn summary call the some provide call before

Denis Phares

you, Thank John.

rapidly just have to conventional of cost entirely expanded despite usage deployed patented emphasize Despite vertical cell I an to downstream continue RV process reduces a larger to footprint want new take contraction, headwinds. to stated moving milestones, achieve an and and the industry we energy manufacturing moment developed, have our We cell manufacturing. into questions, execute markets. that that market and Before we

line XXXX the will base back market who the profitability. the to manufacturing, the the the of questions. and as that, growth for expansion new segments technology customer We can and IntelLigence convergence turn the expected are beyond and return extremely operator, sets excited for over and open of new about an stage With Dragonfly I cell to call the

Operator

comes question Your George Instructions] Canaccord [Operator from from Gianarikas first Genuity.

George Gianarikas

balance bit. to little and the sheet like the cash focus a I'd on burn

You ended last think, The million quarter cash. about around $XX in I with million. the quarter, $XX

guided think, I quarter. double for your you was burn, believe, cash So I essentially, last what

what happened and how can the there of So burden of manage year? balance the just about you end and between the you talk to sheet now and kind expect

John Warren Marchetti

It's George. Thanks, Sure. John.

and big, think pilot behind finish at as of anode made raise Just Denis line cells, that -- go and -- by position calendar a the back and I was those year. right, start end capital highlighted, the driver a mean, and I the material when big to we to look in that sample up the did, we the the deliver cathode getting be

ongoing some something intensity So we particular, down that that bit into capital a from to don't there. demand, repeat the to some levels an we're revenue the operations standpoint, was for is ongoing went of part. expect able looking capital terms effort, weaker From little that an things fair existing I bit I at inventory working think of spending with necessarily think, that pull, need of basis there in from we're from and being the on a that a in most

over continue short that certainly inventory So levels, we continue those to expect here. down term the we and would work

here loss us, least. right I got think, and balance ultimately, to certainly a today, or to at we line at along sheet we're comfortable year. net net the But to mentioned, in next which sitting as have improve with through be those quarters we've that resources a we we've what X be used to not and a bringing next now between income like we're things to credit, feel calendar the and expect lines, really cells need But on still the cash continue perspective, from access got feel understanding which equity for of to on and these I hopefully that we much for should go then position where execute we access plan we as the all, having market

George Gianarikas

regard with because I it credit, fair, just the like seems so And it's equity available, that of used why the you yet? line $XXX And ask not million it's book to what's may been haven't why the in stumbling

John Warren Marchetti

looking So we're year did of were were George, SPAC equity out coming then as of to statements, were, a process. in the We had -- part result were restrictive and where the of that the capital, the up beginning we do to June. we locked we raise a with registration of fairly in lot that as it we raise as we

those So with restrictions not-too-distant future. the now be expect here eligible to SX off, we in

active think basis. a go-forward with intent that I be that our certainly more is So to on

George Gianarikas

And in do happen distant the would that when the expect next weeks, you I or... not assume too few in to or,

John Warren Marchetti

I think that's accurate. George.

Operator

comes Vincent Stifel. question from from next Anderson Your

Vincent Anderson

or, showed decline shipments -- I the guess, the So the slowing in wholesale data third RVIA of quarter. kind

I was down it think XX% year-over-year. about

but orders to? the fell well of to Your committed to year. that, Can first been the the of of speak running you were the much that OEM just or less the maybe half of ahead more had revenues half disproportionate we're first how in year market

offered now by major we're management? kind inventory being seeing or are issued whether units just maybe option? sellers spec-ed what as battery of kind by on of deselection they And in of regardless an Or customer is there reflects that of the some options the

John Warren Marchetti

peak particularly in back of short answer July, go in I that XXXX, revenue the for our that If really question third of really to lack quarter quarter beginning third the quarter, Keystone The Vince. was gone mean revenue. the and actually year-over-year is program was peak the with Keystone to our basis. year contribution that standard model Sure, a had on Keystone. your quarter the on we

the you in that, whatever put point tough a rather the gone call, than on last effort out, begin units unit us a to as it's an compare we as So has are earnings bringing costs with, cut off of with option declines, those they rightly indicated but lines. to as top on as Keystone on and standard an

bit with very of and on we were little that which all So that the in we on of working we guidance inventory the from overall XQ is -- them removed earnings a through books them the had why little still as Keystone the third when quarter at expected, have that, kind call. of revenue they

Vincent Anderson

Okay.

development if your there thinking ties technology out. joint an like Obviously, over inquiries isn't to of but your a for point you makes for into to I step? licensing, established partner further is just up Denis dialed begin if manufacturing curious cell kind kind in to was knowledge here. a showed Switching could Yes, replicating dialed testing door of process plant were lines testing, where one that along Okay. the That that sense. the lead could your agreement and that training at efficiently done, transfer in?

Denis Phares

rest thing nice be in is deposition of cathode. the front and changing Yes. terms of The the pretty that The the we're anode identical. can line the end of

scale the if to to hard process, pretty I So lot coating their to get sell, there. if really because lines existing early companies it's have to have in a invested a go you profitability guess, with slurry

But interested end, came technique to the we're applying yes, someone ready said, yes, in be front and to to demonstrate. if we'd us this then

Vincent Anderson

seen their that. wanted sure engineering capacity they've spin with not maybe the think, think expansions, commitment Got to made of quite I that bit what about front you. I'm I particularly mean few a I a if ask on getting cell little they more is of have maybe going specifically we plan, different. because on But time level nice end something to

X units. like in large itself? economics a of to service to I about curious sense look commitment auxiliary Class power like particularly get out how a having that, I'm over switching could guess the visualize me you the of help of on the if what simple versus of a of retrofit in on announcement just terms we're vehicles thinking battery would the kind supply

Denis Phares

is itself installation The pretty easy.

so they're it's a used or to road So so what drop when we interest have those have trucks in there of we've are off making terms that having from fact indicative less developed the there a many these pilots product not that are the conventional revenue is to in changeovers. more in of you APU. trucks But during out the take the because

comply use in good anti-idling and with So we've to to this it now to money a out on ability that to got there, and diesel very in, we've some very save got data bodes well lot fuel of coming save their terms regulations.

a you This the this oh, because cost-saving batteries fleet, for a you for lithium things can it's is well. new excited longer and here about and it's So couldn't have no truly luxury, market resonating the before. we're do prospects quite measure

Vincent Anderson

I would Excellent. there's you a believe trucking indication quite cycle like first likely have of their And long retrofit precedent how this industry, ton test about but last? in received don't any the

Denis Phares

X to up out tests for months. had there We've

affect soon it So if as to working of they bearing-type of that as they definitely over, But want the changeover -- are will where want say fleets, with to others these some we try try winters. summers, will change standard as well. I

Vincent Anderson

system, kind quickly, supply how the suppliers with your last necessary? around BMS components that then the are the that scale comfortable have that, point. one could you and for that And of now The chain on you broader Excellent. if

Denis Phares

We're very comfortable.

Operator

Your Brian from Chardan. comes Dobson next from question

Brian Dobson

the in So contacts from guess, the you RV recovery? in drive potential you what that market. you the mentioned your for what recovery would seeing industry? hearing XXXX a I that And RV are are

Denis Phares

are that stand Part of Brian, things the up those levels forecast back to of for data giving as today. inventory the RVIA and the lines, like of and things the at terms looking both well dealers where the is some some Sure. of as that what industry in obviously OEMs along

still late is of the that early 'XX, recovery slope healthy it may there looks how about a good think what start in like and I pretty and actually may debate or occur. and to

We have the year-over-year shrink. shipments some of declines unit seen in start to

industry of the talked back more make there challenges, elsewhere. of level expecting achieve. have it's comment weakness, normalcy was have to So despite share some to but that I win industry are, things -- about overall largest getting of continue think, certainly with OEM we only And guess is some least, that we at I would I the our customer, we the the we specific other to and the even of

does good. So will that it it come that I do more share expect went side very Yes, of still recovery we than place, into. the start out as other with on this of to take

Brian Dobson

then trucking key color follow-up the to industry. significant benefit times. call give cost for been of just another there conversations it, you on bit like some It idle us a lithium-ion? opportunity these to to reduce on little to Could a you've And speak players? maybe with And having maybe to ask transition question those the truckers of there's seems the,

Denis Phares

APU electric on whole to analysis they're it. of obviously, as billions a idling. is fuel Well, line over been option dollars they how of eliminate positive, that's very idling. this given time move much industry The really if have so industry. the save conversations an and their to basically during especially can it burning quickly, the willingness And the of And switch

some so that the to that is conditioner basically is you're and from the power when energy in of happens your air truck you you're your overnight. some there, driving when charging is is devices, and of can other battery mode, appliances what all the going as of the standby So alternator including off that basically

definitely pretty regulations anymore increasing quickly. it are regulations it's regulations, pays is off places. there type not fuel air burning a to of in something where payoff, addition So And in lot just allowed the that, quality idling

Brian Dobson

then final as one And question. excellent. Yes, just

I you very, Do still had us been indications of you you've think of can tell just you know are In coming which indications sectors receiving the dry of that of economy from? those it's the terms electrolyte, very early. mentioned

Denis Phares

Yes. and backup sector. vehicle consumer electronics from center The sector the the come sector, data interest the has

we've of These So customers. interest. the quite not suppliers, rather cell users a last bit users pack gotten relation end to cell end here. are or interest are that question, expressed In but these have end

Operator

comes next Your Global Jeff from question Partners. from Alliance Graham

Unknown Analyst

I IntelLigence. have the a question Dragonfly on

the I think the have you could just you recently. that manufacture what capacity you with first set? proportion curious those? feature kind overall batteries easiest way to mentioned of it's for prepared your overall to if of if demand of in that shipped kind that's you And it? at I'm remarks capacity, guys the look batteries there Maybe a characterize

Denis Phares

good a that's question. Well,

replicated line to In these IntelLigence batteries feature. with produce terms that basically of we've able that is capacity, a

we feature. will we're with basically production the double now can addition now of we IntelLigence So be that what produce half what basically can to we're so producing in producing and

looks marine like market. where in the of a terms actual we In of the And market it the very there, one well. couple is first areas bodes think what there's

of reluctant of actually Consortium been to should the issues. market address look set out ensure incorporation a been marine Boat has try A this systems try to The lithium the standardize to have with American the lithium lithium-ion to to Yacht with boats batteries. and issue, And like. what standards insurers hindrance came of in lot insurance

the the that. things And -- is we've that we've that's addressed system with what of IntelLigence one

to marine probably in is similar bigger a billions The market RV, the So marine enormous. aftermarket little bit dollars. in the itself is of

see a lot So potential there. we of

that is We traction well. addition that state hope that, us data is don't important, to In the much market where monitoring accelerate charge this there of in stationary accurate important. have help to storage remote and as market feature health, determination now, we will where

Unknown Analyst

there guide in some margin Is gross lower Just to side. factor rights sequential from like And deterioration reversion the looks the strong away QX. revenue just mix are the volume projecting my some margins follow-up maybe to you on you driving wondering main It for. the kind or relative guys a DTC? forces the of that Great. with had guys sequential

John Warren Marchetti

that Sure. expected. Yes. are of I of the we're into mean, trying there. folded overall but volumes much items There's is couple very as part that the it's to lower unit think, volumes just get of a will because lower primarily that account I well, that, that for year-end inventory

Operator

Instructions] time. are this no questions There remarks. [Operator Phares, your Denis proceed at with further please closing

Denis Phares

everyone of forward joining us for Have with all the details sharing to you look great additional coming today. in We Thank quarters. you a day.

Operator

conference Thank today's call. for concludes this gentlemen, and you joining. Ladies

You may now disconnect.

Dragonfly Energy (DFLI) 13 Nov 232023 Q3 Earnings call transcript