DFLI - Earnings call transcript Q1 2024 | Dragonfly Energy Holdings Corp.

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Operator

Good afternoon. My name is Jenny, and I will be your operator today for Dragonfly Energy's First Quarter 2024 Earnings Call. The call can be accessed along with the earnings press release, earnings presentation and SEC filings on the Investors section of the Dragonfly Energy website found at www.dragonflyenergy.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. Actual results may differ due to factors noted in the press release and in periodic SEC filings. non-GAAP some reference will financial measures. Management the in today's to turn call nearest website.I corresponding found be the Dr. to can measure over release now GAAP will Reconciliations on company's the Dragonfly Chief Phares, Executive of Denis Energy. Officer

Denis Phares

as Thank faced and the growth. many addition Ladies There challenges you, us no doubt return bad core today our make gentlemen, headwinds throughout technology and in year. everyone theme you But joining both thank consumed strengths that and to today. capable market our is, upside us uniquely revenue is last for to markets to this a with economic to company company potential that large weather conditions. historically

And success heavy-duty trucking We downstream have to broad power effort, begun to an have the of with all-electric in markets, unit. our orders first to including our update To we industry revolutionize during ability of repeat auxiliary the are the other we quarter poised for in adjacent same our that on demonstrated RVs. market. adoption lithium take batteries XXXX,

In launched Wakespeed new system. our technology. Liftgate by in these charging our of expertise Both have leverage mobile our addition, alternator power we demonstrated

application percentage has months. CRST; van Rush as enter expand and operator, the increase Twin miles the the warmer operations deployed Double-digit the implemented summer have concept well of improvements system.The are been larger proved taking begun within Wooster, fleet in from bottling demonstrating fleets gallon tanker companies expect previously commonly Oakley; customers, the we been including beginning all-electric looking in others. we of level.Regarding announced the year, the ROI. OEM to announce in among only since as improvements The pleased in versatility per we through dry of systems S&S, the pilots, that purchase orders diverse the these observed out have fleet Ploger, Our and in those this size are the fleets fleets, system consistently pilot as for the Enterprises, a operator, Liftgate enhanced City are now demonstrating reduced we to and trucking to application we APU, idling to and

are we announce As of products final throughout these core pilot systems expect grow.Regarding fleets their summer. number fleets our in to to stages, these growth the of industry implementing pilots some the transitioning RV Moreover, to QX, revenue previous the continues of large the for quarter. latest X% annual to Industry was OEM rate Association compared million. shipments a QX the market, our In XX.X%. were report $X.X the RV RV forecasts medium up of for our

revenue market such is partnerships market. of the customers, our well of of deal this legacy XX%, increased OEM as quarter, demonstrative growth from it River rapid more growth announced $X.X year-over-year to Airstream expansion as standardization nuCamp. previously our were This with million a standard note on year drop trailer thanks our ago.Excluding year's previous Keystone, a the new to that batteries and represents Keystone important penetration RV as the is every Forest by than Although grew across

our the within entirely that resulting new from business are adjacent efforts the drivers, and addition line relationships and markets. in industrial we year line these of release especially storage downstream of near-term growth IntelLigence new the continued batteries.In throughout this of expect announce market, model poised year, enter significant We growth onset the QX in am and stationary solar our to with today to the pleased to I an

worked of oil an partners of customer our have last EPA And Success performance deployment to with integral to customer field methane over in operate we emissions as months.The and the the the equipment these a systems new during this a the deployment with leakage over respond deployments market-leading identified both the the this power year, and for fund new certifications. significant space program dedicated each are same in systems, helps their yield part the pipelines.The quietly working the Connexa for necessary been of of previously we This need is of the we and the growing industry. time, methane and be technical and legacy mitigation vicinity deliver QX, affiliate products large on summer first Over that have into At and mitigate expected the the equipment, our have agonist certified deployed fine given announced successful reduction atmosphere. achieved in packager methane power getting market to is oil gas methane project through instance power natural at leakage. defined new systems. by a equipment in throughout working that gas on we fully system integration to thousands certified these unique XX to is is to gas this next initial could a potentially mandate compressor

and application chemistry customers at efforts unit our be large other consumer automotive, aging testing. with centers.With optimizing on from we formation application our we and especially with and optimizing excited and potential market production. data manufacturing towards expanding cell are cell now in project development electrode scale, sectors the this tend pilot scalability our technologies interest electronics We focusing about domestic we quality associated of as will cell of operations has and dry such progresses.Concurrent technology, specific. to process very all our dry this of share as our The very has end-of-line and the continued new push partnership are more electrode set, manufacturing, significant details as the process These garnered

higher storage, higher Although which historically and longevity focused consumer and discharge applications electronics requires on we charge and electrode cyclability, and had propulsion mass loadings require rates.

protocols to thereby ability dry are aging process of have electrodes, step the ability electrode is and our developing our PFAS-free chemicals formation in-house.We forever This that to within becoming widespread use demonstrated using the demonstrated to regulations coming in addressing process these control critical meet the and metrics metrics, the now in we the have dry versatile electrode eliminating meet We chemicals, Union. of lithium-ion are also ubiquitous the conventional uniquely application-specific batteries. European these especially in these a of

results demonstrating products conductors, of new provided the are separators, suppliers, qualifying some for binders, presentation compliance earnings XXXX. of information the second our our our website.We a of more et as time, unless quarter data of outlook data quarterly review markets.I have the protocols a cetera, the the provide XXXX collectors, noted.Dragonfly to as this XXXX. first now in of detailed as will presented aging of PFAS-free to first well results million first note our the XXXX, We across material, generated figures that scaling sales of from our electrolyte, $XX.X in quarter quarter GAAP IRA Please as down $XX.X otherwise well carbon current active process net in are support electrode financial also, at posted quarter million following

$X.X the first of quarter the generated a revenue Keystone, install not reminder, first over last $XX consumer in DTC XXXX. XXXX in sales first would range.Our the down XXXX. was net quarters a of were first the XXXX.OEM from pressure quarter in of to continued the or million of case guidance standard flat million of discretionary with million million XXXX. million, in down XXXX the quarter included through million our Net sales quarter during of XXXX, $XX.X the segment first million sales This in in line of of the least trajectory of $X.X segment quarter has $XX spending, the first seen direct-to-consumer $XX.X the As from business quarter was which at of second several from expect despite sales $X.X quarter similar this portion and the on we for quarter

XXXX. percentage of overall of first XXXX previously million negative income million quarter the million our primarily to liability $X.X will quarter of to $XX.X the XXXX. quarter As in in per first first approximately sales $X.X in of that of $X.X of XXXX. of net of quarter market million.Net to first quarter warrants quarter million compared $XX.X was we in primarily securities, in Dragonfly's million the $X.X EBITDA XXXX.Operating million the the was first $X.XX excluding market $X.XX of the in $X.X of or increase the million loss of in million of diluted quarter compensation, reduced overall first of the $X.X costs, per was a amount of million, stock-based expense offset $X.X quarter was million the is quarter by in the expenses from XXXX, of costs decrease positive as of for other expect $XX.X debt share legal in in or expense in XXXX of related The lower first in first compensation first ended XXXX.In to quarter income other Total warrant and adjusted million first value changes change value by diluted interest was XXXX. $X.X expense OEM gross to of fair quarter of down compared XX, a million XXXX $X.X XXXX first offset compared to by share negative first stock-based the headcount, shipping profit of $X.X were the XXXX, million quarter total was the mentioned, $X.X EBITDA, negative compared in million XXXX compared the lower of quarter March continue driven in throughout lower fair revenue XXXX. costs. Other to negative our $X.X comprised

cash please million XXXX, first press expectations. I the $X.X with EBITDA of our EBITDA, to of turn take wanted to I down our in For of to to second refer the ended moment and XXXX. a earnings guidance the approximately discuss our a reconciliation to million $XX.X adjusted at from quarter Dragonfly for our release.Before cash, end position quarter

crucial cash we included critical forward. of acceleration markets.Our and its continue prudent with to $XXX who of uses we we going into credit for expand payment payments in effectively along be million unutilized, new as cell vendors as quarter equipment, of will to equity remains use the opportunistic XXXX and see about manufacturing of first partners line Our

expand us we efforts, and like cash resources XXXX. I of for our spend As to such, new the necessary we the to to markets expectations believe to and market plans would liquidity our our attention that manage turn the enter second footprint.Now our to levers have provide execute on continue our quarter our R&D

signs mentioned and into As continues RV revenue that of market trucking market traction in the we of show our entry be meaningful gaining now will the and more a is XXXX. half recovery, contributor believe heavy-duty second to earlier, the

second approximately the $XX.X to growth midpoint quarter million revenue of $XX.X the representing expect range in at million, a sequential XXXX range. We of to be XX%

range to remain XX% $X.X to quarter the the quarter of second the million shares range We million million.We second range in the $X.X loss $X.XX the we outstanding. expect expect the $X.XX in range to an second are share and quarter million negative gross of expenses or expect in $X in share and $XX margin in a per expected in the of based XXXX million of XXXX XX%. to to on a expense other in net Operating $X.X to per income to negative of XX be to expense of million, to be report million approximately $X.X

rapidly RV are and consecutive bottom River, the quarters with new of through are difficult the evidence us.Significant as opportunity and efforts batteries we business. most the expansion behind brand an and Meanwhile, supplement pack to cell of expected days such adjacent share, continued Airstream production gas, comfortably partnerships that growth of in itself. and establishing Battle Born now supply ensure Energy oil especially growth the Dragonfly our nuCamp downstream an that to that are Forest our presents act prepared and scaling through compliance opportunities our IRA provides markets chain, agnostic expected like chemistry core we X our past and battery customers are For and market when

as opportunities back to managing cash of on call the for who from of our over I effectively with can hand.With questions. eye line all that, as undrawn keen turn line the towards equity well will liquidity operator, credit are open our the We these a pursuing

Operator

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

George Gianarikas

on growing production and core opinion the your ask tariffs XXX how your your to like that may both around Section news and impact cell business today's business. I'd

Denis Phares

that. for Thanks answer to happy question, George. your Yes,

in from general, is this news. on to the be to It batteries XX%. sales like looks So I what going read, from X.X% and could tariffs are increased

For year. batteries, happens EV that this

So us that going is that affect for XXXX. batteries not happens to non-EV in

for the of do business the production in of fantastically terms So because, with combined that us that very at well. positive in prospective doesn't it cells is onshore to attractive increase continue affect more and all. the the are trying longer ultimately, But make domestic our term, customers we should immediate the attractive the is manufacturing to to makes developments certainly cell certainly it it and IRA as tariffs what

George Gianarikas

marketplace would And say in competitors your cells are you currently? that using the from most China of

Denis Phares

LFP, of yes, a is terms In absolutely factor. that

George Gianarikas

quarter. that you're balance for help And cash a in ending a as maybe just QX you inventory quarter lever hand to if understand Maybe position on see source follow-up cash you cash the talked you not I'm QX. if the can on end in quarter, second cash a if second your or you of potential Remember, to focus finish still where cash about of a expect us up. helping that at your the as last impacted sure source quarter?

Denis Phares

do continue cash inventory have were increased we using the there working expect a capital. George, the first we as uses of certainly to And of and Yes, quarter. source in

did terms cell I of do a manufacturing QX. prospective do cell all have current to that moving be with able But to up As on our We customers. ChEF. mentioned, in at has we not access relationships that expect that in to we did we on, forward, ChEF access we opportunities to and the follow execute some needed

something opportunistically. as mentioned, to have And that, at use so our is we it certainly I disposal

the I be is forward so to QX. to compared less expected And moving that think burn cash

Operator

Alfred Your next Moore question ROTH. is from from

Alfred Moore

just rest of what first Denis, optimistic you're you're back bit you've and there? a March had a comments to market, couple visibility way your about more, with than maybe QX. ask models to a of around new the any I step-up sounded in of think Can months say, just growth, guess, the of have seeing some the wanted nice you RV be sort I all, expand you'll QX the to and for year talking I the when it about I'd cadence here. about obviously, on in better gains with of But in we think got of share looking call.

Denis Phares

did that with We're direct-to-consumer and flat and have thing. is dropping hope Sure. business, Well, see recovery to we anymore, a which RV fact a the despite we there our not business, appear been flat, not we bad soon.

surprising, I RV say. would business OEM pleasantly Our was

those an trailers becoming on option. in selected. taking the that's observed Keystone little bullish been option, from it have of coaches bit some is is them, though an actually option terms here. more them more So that being why that a coaches. is on have lithium We're we're increasing as more popular standardization. even orders are We've more that it uptake And lithium lithium the We've the

year. recovery that's shipments. on the new year the and of And more have we in more we're product RV market. on be line models, then than uptake the continues it in And we in pretty That move So does and bullish of the to thing. faster of do IntelLigence of new there's why we every focus that there. to the appear are the lithium is And industry place focused to direction certainly new -- model it at lithium. is happening lithium year, the our the recovery able the getting appear solidify a RV good model least to terms -- course, of That's helps portion and

Alfred Moore

the I way was and say you I another, for could if oil opportunity maybe think heard a ask bit more very potential this I interesting. X,XXX I -- think adjacent new in market, talk it Can about these -- And gas per might you ] systems about and or what displacing something revenue piloted opportunity need you're going be like against? competitively, deployments [ and just Is long there over think or that. how to to up seat a XX months

Denis Phares

a of product in terms new It's relatively methane scrubbing.

collaboration a with it is legacy. So a

a what And expect from for potentially we the did pretty certainly thousands power coming So charging. customers and of require is XX will entire providing kilowatt their forward. technology the of is the they I customer It's associated system, deployments, of system. and moving hours new say plus and Wakespeed the inversion, that requirements about batteries large are MERP comprised which

excited So we pretty the about opportunity. are

system end like. expect little the that might deploying first first are bit towards we'll as of those more We this visibility have look the the what to And a we POs summer, summer.

Alfred Moore

I sneak on And if maybe could one one just think. I last side, in, the APU

called fleets. I You in number out traction with seeing you're a fleets of and larger the remarks think

those about particularly on just remind fleet think update should for orders, any more Just maybe timing, us. how for we year, next larger but

Denis Phares

start that the to say the able for summertime would larger this be over particularly I fleets Yes. regard, showing in movement we'll here.

progresses the we're going data say. turning final sets the of warmer able be getting I as summer -- start the over. fleets, associated summer So some these should with to larger of and The fleets some to we announce months,

Operator

Your from next question Chardan is Dobson from Brian Capital Markets.

Brian Dobson

on the bit additional on chemicals the of benefit PFAS for to little in color about a elimination these Thanks your of your the I guess wanted positive chat I business. tariffs production.

to you this how you mentioned in little in had Europe. can think you You speak gives about that that.? bit the a and competitive further a bit and States advantage little plan United advantage take delve of you Do into a both that

Denis Phares

forever around first in of pike, effects see water. more of down something more coming in important chemicals is wastewater, this benefit general, becoming is the the just chemicals the Well, we But stream not all. regulations revolves these that as potential and having in of

batteries binders well because And that that helps stick an performance it So environmentally We as much data process. batteries the the we've streamline the interestingly, it are the because -- has can put electrodes of chemicals I make as on just apply the with better see well. the benefit what as environmental electrode process a are without in we've that of more out the typical process, safe. up we they need these the apply for And dry little environmentally the -- the the good. you actually issue. are par can batteries, it of in the we saying just you and mean, of friendly, as can what actually But power, are some more the it's we environmental is and not I'm performance as but more even is necessarily that this shown can PFAS bit as turns manufacturing see. an batteries

but really as allows are the to us as that is an issue, are produce environmental that So it there. batteries batteries it just good out

Operator

[Operator from Instructions] is from Partners. Jeff Your Grampp Global next Alliance question

Jeffrey Grampp

a was to I may talking sense trucking sense perhaps patterns to curious fleet of as purchase bit normal fleets do Or to on you subset these Do as looking the cycle look the that their this you the option? little part like look insight the get are or of companies of these as forward with Or what may fleets go early front. your just just when any ultimately kind what curve kind any maybe sound adopters? those with a replacement like? you're that order of have convert closer far decide some decisions, adoption to as

Denis Phares

APU in we Sure. of that to of adoption the expect terms turnover each individual applied annually. Well, is rate the fleet. fleets But up ultimately, what their the will of be is

the is the fleet XX% of they're XX%, annually. typically, of over So turned range in

will But orders. fact a is easy to optimism would mean, and decide do that once really eventually this be quickly has to in comfortable the our our that to the expectation is it you're I they this a technology. that ROI. least direction. new with quick And up in is with relatively fleets in decision so to the that move those at be how want And cycle

Jeffrey Grampp

of kind highlighting existing the that then some And imply fact market, that number, you ex Keystone guys as guys thinking appreciate year, at really level? could revenue, the legacy the obviously, the corporate contextualize is of account the of into especially growth lapse Keystone which taking pretty kind rest in you how numbers impressive. healthy are of the you that Can I RV kind about

Denis Phares

those see I the there to monotonic expect Thanks, Jeff. year year. Sure. an is we function QX in But because as increased increase of because new anyway desire the we mentioned, a lithium is for Well, lithium step do particular coaches expect an option pretty in throughout model option. where a do the

Keystone, and QX, trailers, certainly and not in a we on pretty our So in QX saw compared I are did were -- Keystone increase the option orders to Keystone an growth you we significant in XX% those included numbers. mentioned although

Operator

the for time. to There at further this remarks. hand are no the I closing Denis Dr. now back call Phares questions will

Denis Phares

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

Operator

you disconnect gentlemen, participating you. this Ladies thank please We lines. and call. ask for Thank concludes the your you and that

Dragonfly Energy (DFLI) 14 May 242024 Q1 Earnings call transcript