Dragonfly Energy (DFLI) 15 May 232023 Q1 Earnings call transcript

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along with our press release on the Investors section of our company website, which can be found at www.dragonflyenergy.com.

Second, during this call, we'll be making forward-looking statements based on current expectations. Actual results may differ due to factors noted in today's release and in our periodic SEC filings.

And finally, we will reference some non-GAAP financial measures. corresponding our can website. nearest today's found the on release to GAAP be measure in Reconciliations

With over to I Denis. that, will turn the call

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

I we story. would minutes Before provide about still those information company some first to might the quarter be to like take new a review to few for who the results, the Dragonfly

range the lithium-ion span patented these consumer a industrial components comprehensive the battery and processes, the cell sell systems. storage of of is with as that full we technology into battery Dragonfly operations packs and of market these and development proprietary manufacturing well wide ancillary packs and markets. design assembly into company systems energy And and as other of integration a

manufacturing. was intellectual to an founded lithium-ion off-grid those accessible a completely energy storage XXXX consumers. focused industry on experience RVers for making revolutionize batteries facilitating mobile initial Since on in Dragonfly company the initially then, with property lithium-ion The develop focus has for to worked more cell

to relied share batteries energy off-grid the increase solar storage. marine Traditionally, the markets and has RV continues acid expanded marine to sectors. market Our RV off-grid and and on market lead include have the within for

faster acid last a and maintenance. performing batteries the over better our However, Xx Dragonfly's require lead compared remains storage customers power, to provide charge cleaner alternatives, safer, is safer, are solutions. toxic our widespread lead XXx environment. in X/X to presents problem more no a and are weight, lithium-ion battery X with When longer, environmentally and technology

batteries. to look adjacencies markets these our core into while growth rely acid growth We market to are and within our proud date, further also lead new and reach on expanding we that of forward innovations

our cycle brands. under lithium-ion X batteries We market deep

second is recreational brand, are our state Battle the battery, our Born equipment was where Born the The Dragonfly brand named of and family the THOR of our headquartered. manufacturing first retail such vehicles. Nevada, as Battle original customers serves is which which after And Energy partners, named direct-to-consumer we

branded designers and us customers. are In resellers addition our full we of making integrators system for to our accessories, also batteries,

us of with and storage for our year vehicle in And Wakespeed IntelLigence engines alternators. last integrate applications. and to of stationary Offshore quarter, battery innovations the pack allowed line stage acquisition the products to our and better sets which storage Our of systems communication led systems the first launches monitoring larger in

only experts but As portfolio. a important It result, not the a has battery as batteries, on in entire that lithium-ion storage today, systems. to patent lithium we robust recognized are also note Dragonfly is

have the forefront innovation coating with powder pilot begun we the at battery are cell We technology manufacturing nonflammable already battery for dry unique which and of focus technology production line. cell cell a of on

We United in targeting manufacturing of XXXX. are currently commencement States cell here in the

outlook for Before quarter over nonflammable of quarter highlights, well operational as of discussing the financial our John call XXXX. review second turn and results to our will other to our a our technology I some provide first the as and of operational

XXXX to our Dragonfly backdrop, I the to and our challenging the $XX.X quarter, million of generated Despite top compared $XX net results. $XX All of GAAP will the first in guidance. first otherwise the increase review quarter noted. are at million you, an Denis. Thank revenue figures now macroeconomic X% of million quarter sales unless XXXX first of

add than demand in result include the XXXX. products battery choose OEM accounted first of XX% our growth the increased our quarter units solutions The customers, the and again of largely the X% manufacturer year-over-year from the is XX% rather to by approximately business revenue was battery OEM of sales in on at driven our to for the their which the quarter to our of in by solution Total aftermarket. increased growth partners consumer compared in having

trend this expect to our sales continue OEM of believe and throughout We a will growth continue XXXX. significant to driver be

direct-to-consumer XX% overall quarter compared in negatively the demand. DTC, year-over-year as represented approximately sales DTC and XX% the interest business in inflation in accessories for ago. of by of year continue to sales quarter rising demand batteries factors, primarily macroeconomic or a declining in and expectations decline our business Our same with line and The was to with driven rates aftermarket impact

seen to XXXX. we of the of segment market signs stability, of have we expect through more recent remainder While remain the this challenging

approximately above range. first quarter was that percentage profit guidance million, the $X.X mix OEM decrease in of sales million lower the quarter XXXX. from in margin The of of million decrease Dragonfly's of expenses to first was from included and profit were due $XX.X up DTC $X.X gross revenue primarily of a larger $X.X the million, a lower change of a the end million in quarter high in in and Operating higher-margin percentage our the in the quarter sales. XXXX first gross $X.X

stock-based of We operating not expect these do expenses compensation million of due expenses higher year-end XXXX. included the higher approximately repeat of to payments. compensation $X.X First remainder to expenses quarter the in timing

$XX.X share share was per net the quarter a or diluted $X.XX income a in which the quarter of Net in in the or value income, in XXXX. market a million our quarter to of first an warrants. of million loss income diluted first fair was compared benefited $X.X $X.X Net from $X.XX negative the an per increase million other change result of in

the $X.X fair in stock-based company's compared onetime Adjusted EBITDA, a First a in year same in quarter compensation, was and warrants quarter other excluding million to EBITDA items XXXX. negative negative the XXXX ago. $X $X.X the change in negative was market of the quarter of value a million first a compared million quarter million to $X in the

to strong $XX.X million reconciliation line equity million in a Dragonfly with refer cash to quarter adjusted release. access our press the EBITDA a of For credit. and of to please including flexibility, retains $XXX EBITDA, earnings ended financial

to now XXXX. expectations second the quarter Turning for our of

interest earlier, challenges macroeconomic such discussed face our as while focused inflation. stable, consumers on continues with rising rates As DTC and business, to headwinds

on Our other provide such equipment are partnership, programs continues hand, the OEMs offering the new year-over-year storage continue solutions at announced we and OEM as win as our to to options time standard increasingly Airstream as the recently significant manufacturing. growth of for as business,

million dynamics, these second $XX Given $XX we to million. the of revenue expect in be quarter range to

Operating flat relatively gross quarter a margin million, DTC expect other income be be similar we million. mix are and quarter. sequential expect in range expect million total to million expense expected the OEM revenue $X an to and We we expense to a in June second as range basis be expenses to $XX.X the in in to $XX.X the the of $X.X to of on

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

call Let to now initiatives. some provide our turn me to on growth additional over Denis the color back

Thank you, John.

high to battery battery mentioned I propulsion, to have very focused storage toward of all energy ancillary grid other characteristics providing we on ranging the market. As components development packs Dragonfly's enabling lower cost, solutions are those packs And result, vehicle focused is on sources on Where the efforts nonflammable, we of that rapid our and ambition peers safe assembly in long-term is more put our company manufacturing focused affordable if on lithium-ion solutions, EVs, storage Dragonfly storage cell that grid. be and as is into and Many remarks, But density able of from are electric integrated not a integration lithium-ion long-lasting to charging. and directed a the battery are systems. energy vital fully energy for and design storage. processes and the renewable technology my are activities with opening comprehensive we of want

to striving in storage deployment solutions to nonflammable every a smart, business. home are we facilitate Dragonfly, adoption of through the reliable the batteries to At grid of create

dry more to are report of the on focused nonflammable pilot I'm been in XX we cell have And currently happy establishing We manufacturing cells. years nonflammable for processes than and chemistries. for line developing our deposition process

formation added forward to than adjacent cell to for from storage Dragonfly coating storage an increased deposition space. with which of our a the of unique and the as potential our protocols have have cells and in more the capability to primarily pressure discharge accelerated The in forward cell Commercialization to application that about wide sharing and we due produced to coming have products. be we rates achieved garnered you patented charge conventional variety We liquids powder in solvent-free interest hour commercially continue application. our at room no solid-state X have exceeded more to attention with resulted significant in in external have manufacturing we with applied. Moreover, cell expected the of industry-wide look quarters. And customers chemistries, extremely solid-state we of industries occur has XXXX manufacturing manufacturing sufficient process a X,XXX move is the technology a progress process the cycles no viable electrolytes encouraged exhibited already composite by our temperature, we

to variety of sources grow for as to industries energy Demand lithium continues and seeks wide for friendly applications. more society environmentally a of find

to with production lithium-boron a our Commercial producer. agreement week, for the in a lithium. longer-term planning enable and Nevada-sourced announced domestic of our investing us cell This we supply battery and manufacturing strengthen integrate U.S. chain, part of manufacturing, will As just, Agreement last Offtake Ioneer, while

on to safe, open existing penetrate innovate order new drives While our battery and storage longer-term further in development products work of still to dry adjacencies. nonflammable existing within goal we market and of micro markets our storage cells, the deposited grid our continue affordable up portfolio enabling research our

anxiety been the industry. with will we Airstream pain across multiple as long our which announcing partnership Battle RV In existing standard markets, customers models. batteries among had in has Born the of Battery provide pleasure point equipment a recently

experience. access However, with them Dragonfly, camping have Airstream solution to from allows power customers now enhance their to upgrade this a that

lead systems. These recommended stand of efforts. just and today batteries we battery standards for lithium of still the banks technology. battery systems app. grid Between Yacht of we batteries, that first which capabilities a Dragonfly telecom, trucks, connectivity, revolutionizing lot of centers, dominated would emergency to mesh mobile goal storage, and ultimate address has and are new largely product expansion Among projects and existing lithium a American made network forklifts, storage power the solar provides via vehicles, our via including this lithium-ion the markets, enabling work more acid announced development examples few are integration our product remote by the benefits from where ion are Council customer data the the benefit And IntelLigence Energy many unique lithium it entire the during reliable the development accurate Boat monitoring first directly communication on of our quarter, connectivity, which platform, for launch front, our there with

then market example, and People to to For of store off via able This off-grid able and utilize security our is one at to electricity of to the need example be new they market. storage of a using night. we bank products during being it solar want of existing fastest-growing just solar the are battery is day battery penetrate currently, wind, or live markets. the off so how

eliminating growing and manufacturing many products. help our costs custom these competitors power and in of expertise, improving performance design we unique environmental systems batteries full reliability acid their while products are relative partners we and their markets, a overall to lead can OEM as of needs, design Given position and and in operational new the to system potential the meet our of

that As And we markets of as about revolutionizing result, talking are lot still of said, there there us batteries. are by I the acid room grow before dominated for is grid. lead a a to lot start a

Dragonfly to of progress suppliers made are to So customers, investors success. we remain as opportunities the as a the take part date that vital well that about employees this very I also in to front in would thank Dragonfly the remain summary, such excited of us. we all like and of opportunity have

call line over who to Operator? questions. for With will turn that, the I the can open the operator,

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

if you start Maybe around the And and to you details can us any [indiscernible]. wondering was more any we incremental launch? pilot detail any operational on mentioned with time those that could updates line line you you the need make of launch give could before sort call. I

now lay right done George, is I pilot think of the in what say the can line terms we the is down electrodes that's equipment and required that the produce virtually cells. to

the dry can't conventional chemistry we what the of can planning building do is the without big the room. which room, we But do that a we the of in of One we out solid are issues is state that dry electrodes. have process basically something is

our So we to this prototype cells line start producing conventional are summertime. off of able

rapidly the dry that. something chemistries deploy that So are here, to we've the solutions, nonflammable it's that is for we coming need developed we solid-state pretty drive but but for room excited

this pilot cells. correct? with should and traditional regards But able the Right. show to process that polymerization that work dry deposition line Is us be to manufacturing aerosol

That's aerosol yes. correct. The electrodes, of deposition

it. Got on a as Maybe opportunity focus bit well. marine little the

the driver always cetera, talked second maybe conversations increased been give operators, and still a there adoption -- confidence being that you half that You've Is of have in year. the do something dock this growth to you that half any incremental for you're et some feel that in about of and a second working inflection the year there. being wins point potential towards

fragmented lithium-ion a half that certainly more reasons market in of manufacturers, the is of when new last of marine with end to is than something really real were just boats were them. boats. to be one we batteries comply because on the because at announce term. be the have near of we conversations that on of are business of they difficulties the The going to now their of getting bullish year. and that's the the expect is manufacturers second the the in insured to announced deployment But And able batteries line the of RV have But year our we us some boaters the market in IntelLigence allows lot a to terms standards boom in do with

be address last been something struggling So standards has that it's to first market recommended over year. with and the standards. are something those the going directly products that industry address new on the the our they with pretty It's quickly that

just can I another in. one if And maybe sneak

you just gross overall So the given you the reported, have you've time guidance XXXX? marketplace you things last that and of marketplace. Can way and the this sounds the on half gave the revenue characterize year is second RV of improvement period you with financials like and a after regard some full for you to It your expected for of of margin The guidance that's for some or the stabilized reflect year. the quarter. second weakness improvement

Sure, George. It's John here.

to to of we we last would feel no need outlook, adjust call that for change make that that year So we there But year 'XX full is outlook. guidance public. certainly If XXXX is the the calendar unchanged. the that gave the on

And your full for modestly Great. Is to year. expect up correct? you the gross year-over-year still be that margins

Correct.

through We that improvement year. continue Correct. the as expect we go to margin

Anderson Our Stifel. next question with comes Vincent from

eye industry to control for of quick, out signify things, there? to heavy markets? And real components, do progress an what of any we the So so, in ancillary kind keeping should qualifications types have hardware those specific if still you or left be order some develop just of enter to

anything think of sort Sure. specific key-ed we're Thanks, on. that there's I Vince. don't

did into we'll we mass as of marine get the have we've announced standards. products the we little the in boating for bit production into that a mentioned, and things some around further Denis year that As get some specific and

be may we things certainly say, we're adjacent some newer these to expect a side these we bear, are on of going battery itself bring to compete there's components or nothing or, some to into us system there required adjacent that markets As of effectively these as markets, that the but more should come really I full markets. into for

that that But compete we capability over there's felt like partner developing, standpoint we I market specific for got is not or with pieces may a then, us the general, worth we term that be in time, of if can factor nearer-term of component the the some an that we're for opportunity form what have them enough. or the we we've some that develop adjacencies need There where to intermediate was targeting but those accessory a OEM may great today. don't from either think, feel for we unique nothing, over and short

changes That's now, of as Okay. been from about and to modest traditional within well some helpful. lead has line I based everything acid work those is the until footprint? any any perspective, ancillary more kind form think that we from think assembly of up all just we the form be to existing perspective your factor. a there markets, reach have to going But those to markets -- capacity still Or this a factor pretty around as of And would about?

go-to-market footprint. well -- the is early And good is the even very RV within example, we battery the for existing that technology. existing market efforts, should packs really the a lead form market So even we replacements certainly, factors acid. fit we designed But the answer short it existing be RV drop-in where within created markets, for unique with have to were expected the the off

had You were GCX fit batteries. needed so be Those specific to designed encasement accessible on you the enclosures acid do maintenance been because that lead the where lead right? past the our the in put to you couldn't that batteries -- acid batteries, could take

we the now because for partners, trailers put As different them equipment work form the spaces in maintenance. we with can batteries OEM or spaces make are we there where don't the within within batteries need that factors

still factors to years looking that the not it's the using still do we've so some work. foreign the new it relies into a expect But in something something is these of It's And to And markets. doing unique past. same get that something several of us. same over development as we It's done out form lot is the cells. we next on

the a or really perspective, there's assembly not lines. of change required So a manufacturing big from perspective true

things from if then, good to line key mind, it that just some remarks nature. be commitment you you're I'd kind separator don't perspective, know. where the your to maybe around performance informs this Denis, helpful you of of you've then pilot beyond would investment. measures best or stand forward just seeing that kind know that loading, cells And like on electrolyte resistance an Got point. tested your prepared at you. your to ones prepared remarks, moving of your results in of kind of expand on the of the but love cell one, to with any I'm left where And also thinking, around internal volume polymer kind optimization targeted metrics the That's

Sure. is move to thing the that electrolyte the that impedance I cycles Well, I've the very at length X,XXX at cycling the over we have impedance significant can't obviously, forward XX% was at, we of But the electrolyte. in as one we always talk allows reported where electrolyte, the and of exceeded that over really making remaining. make possible. between electrode what cells a the about, I C/X was these performance We did interface chemistry have we of been and to the been capacity good rate. spoken improvements but the it us

coin coin and of headed. of that's very volume, we still prototype size line, to a And we're repeatable. and number we And cycle they roughly obviously, ultimately, cycled of tend cells the We In are where to electrodes we're and be terms pouch we expand lab deposit make we cell the need into But large cells, cells. doing that coin this on at scale. XXXXXs.

electrolyte chemistry. particularly as fully in the for what of main IRA recent that one in working think helpful. is of the about explore chemistries just production, with maybe demand process mature of an I kind battery I requirements credits the full then kind just solid-state probably of you're of domestic even understand here And really a completely cell realized realization between kind altogether? given electrode Okay. your advantages manufacturing on. and But only a non-lithium for U.S. of the the content U.S. cell cell and process here current or then state in more the the and solid-state That's deploy intercalation-type manufacturing is to but still traditional there certain liquid general opportunity

Absolutely. we of interest in to it the of the has getting I alluded in process, general. we industry of where which mean prepared kind been solvent-free a remarks attention great because it's are fact the that in

in actually we're do doing, it cells And absence it's of that's have the that what the so funny, conventional in since to we room, makes And well. of and now. opportunities dry exactly kind realm sense as produce

of producing and that So something anode other we trying can to absolutely and are And are chemistries apply our on conventional lithium intercalation that not around to radar centered we to variety going a you're different do metal. it be that's with cathode well. lithium, anything is cells We're right intercalation. chemistries that not of as

with Our Dobson comes next Markets. question from Brian Capital Chardan

a to and the Ioneer for believe some your you partnership company, So that maybe that competitive review think just partnership offers? you could do advantages going back moment of just you with that

when turn into break cells. have at where a made we out starting the the more a Sure. front to of make a very to has different Denis the choose think is them producing lithium, think that's and to securing expect of that sense the lot supply strategic supply formalized terms didn't is often sides, few in for certainly us gotten point we that to particularly way, particularly awful quoted years. And scale very, Nevada been a as saying relationship there. It's that an back There important. goes of now a it of with we is that of that local that about right? number And to ground of we opportunity as sure years accident, much lithium things ground lithium by long-term in own agreement both he in available to a company, that do us, be that our

the X Ioneer Project for too, well for itself. well. a state big big very and office supporter I The it's was a would Ridge both is together a the our Governor's companies getting supporting help as say, focus as big Rhyolite something government as that in

the manufacturer. it's think interest that something certainly vertically we something in and when has the cell supply need think chain be state it's interested to integrated order we're I long about we'll in certainly in, that So an term a that

And gears interest very for from that looking marquee parties Yes, to with found quality. and partner that's an Airstream, that with about guys have I your name you other good. you? talking Since guess connection in inking switching a stands increase deal,

the I think I one us strategic a remember, think, Airstream had, well a in this it's strategic to the to summer THOR is recognized. manufacturing of in and important rightly the indication, when back just another this with interest strength to to something the and go that level. think have Airstream adoption relationship there is of as at you we else of the is you'd point last if growing THOR I THOR. also know that in to trend add like is terms year of goes of, think have relationship that there's that investment that showed Denis, if we in brand out, company. the a sort I they don't industry within extremely made I you that I will, And guess, the

within Status, from that industry already within -- partnership I funny Rivet a and Airstream has We're the preferred industry well think the brand I RV industry, RV RV the not something industry. garnered that has that industry. within -- that's a garnered What's in And high-quality call us think our of achieved known as of with outside relationships supplier just they which relationship have we're we we've RV is a Airstream, means having that But us very the but for outside some RV relationships the pretty done. Five also this well. attention what

about marine niches in positioning in great marketing Great. strategy should You expect job Boat I similar existing you've ]. met out guess new good And Association market? your kind out Boat & standards Council a gears on talking And the that products. did the American American really a Yacht then Yacht by plan for It's we put the your How applications. and switching you marine do batteries & of sector? carving that (sic)[

be the fragmented. fact marine similar I so business the think it of will because primarily is that

and can't And in come manufacturers. space. the THOR-type so pull a terms out it's we is enormous like of the marine relationship just aftermarket in -- out But

for the aftermarket something it's look as we that next opportunity us. So at big

on And safety aftermarket, obviously, and road. than out when the water the compliance of, of the in about marine folks being increased their care the on the because rather necessity you're batteries

as to we position see use many for directly So we'll do into the brands this likely tools as to aftermarket, us the to the and we opportunity break ABYC-compliant an ourselves aftermarket. same RV the use that selling of

sorry comes I Pavel question Molchanov next Raymond. from The with mean about that.

Vincent have We Anderson with Stifel.

Hopefully, didn't I cut thanks me. for line humoring anybody but there, in

sort some and where the select relationship, kind at was level of important, if there a validation. competitive And areas marine that and sailing higher-end of the I notoriety size, are Airstream-type setters last provide is small, by of marine the weight-conscious, can and an OEM verticals inspired mentioned me, an of for Sorry, you even RVs of that on marine. particularly they're of good but market, provide go-to-market, kind said aftermarket the importantly, standard kind model question an very you but is it maybe, where of also occurred OEM to within

actively to Absolutely. And those. we are working land

So yes, a important. as them a expect large don't a how very Those it's to -- not expect to But systems. apply be do are as going that's good be to certainly validation provide point. but for we template those to Keystone, the we volume and

an the are the yours, point rightly the to I rest area point, Denis' really Yes. out, of set sailing the focused. some for well you And to think group. seems very particular, And that sort and in committee, is, to examples Vince, of of where as we the

Pavel Raymond with Molchanov have we next, James. And

prices any or driving some You weakness events, solar more geographies in particular robust that's are mentioned demand the or space. pretty RV climate power Are that growth driver there off-grid drivers, demand of as disasters offsetting the this recently?

demand sort lighting, The widespread like security much nature for parking in terms industrial applications, of more very things that of be in to lots, deployment seems thing.

is off-grid it solar. So

as do to that the growing is in well. larger systems aids than that The systems. are residences, off-grid typically among demand And of systems. larger fact be stationary terms us tend In those the it mobile

number that aftermarket. we industrial we've of And very in do larger in But had so we've the solar deployed large the the a area. of systems growth a see lot

it sort solution is energy would a whether that storage you're In of cases And to energy we're a as with somebody up, consumer, it just is with starting whether variety also true rising is now Pavel, it it. the to looking instances, order it in I prices. to reasons, relates independence, solar see some put of of wide have frustration for being to some some where required say,

isn't just the back wasted sell one that to So it is grid. energy trying that to

a there's lot different of reasons it. So for

it Some regulatory. is of

Some we're is seeing of But nature. the on of energy and been we're nice growing prices things with little for I business it's us, horizon. rising really by that and a frustration it, think, what encouraged

Follow-up you is update the And a state the solid no can curious how aspects of safety guys of always an that I'm Okay. intended. approaching hot kind give you solid of if pun kind on fire talked safety you state. conversation, about on earlier, efforts are of topic fire

us and doing. a flammable. lithium, the fast in lithium not which metal a removing primarily intercalation energy and lot do uniquely electrolyte you high in us ceramic-heavy is composite, of a the for very development -- that composite what that focused or And a keeping has apart. state. can with state what that's we to density. graphite, removing solid accommodate That's is actually really driving nonflammability That's on apart the the it's force not organic is on put because a envision been or in these solid with behind that We're of because the very process, electrolyte completely safety structure a to sets technology notion ceramic-heavy the And monophosphate and coating sets we motivation chemistries, think something developing for And what powder of have -- I driving it the order the anode deployed we're is is of grid. every charging

at time. Instructions] And no questions this there further [Operator are

presenters, don't I proceed. more And any see questions, please

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

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