Dragonfly Energy (DFLI) 14 Nov 242024 Q3 Earnings call transcript

Good afternoon. My name is Ynah, and I'll be your operator today for Dragonfly Energy's Third Quarter 2024 Earnings Call.

The call can be accessed along with the earnings proceeds 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]

current company the making Litigation United of based the the statements Reform call, XXXX of meaning States on this will forward-looking be within Act During expectations. Private Securities

plans, position, that trends. business for Forward-looking statements and size regarding and operations XXXX, market statements but results company's the regarding not strategy including, financial statements belief expectations limited and of of statements technological or opportunities, are planned intent, not growth include services, competitive facts historical the and products statements and all to, and company's and guidance position market

Some variations from expressions. or can cause should, use expect, these negative implied which expressed the factors could, predict, identified statements may, of them estimate, These will, by and projects, anticipate, risks, believe, materially or of could these by to of the forward-looking of similar forward-looking differ forward-looking statements those intend, uncertainties plan, including to forecast, forward-looking or subject continue, are statements. words, other targets, such be or actual results terms would

factors can may today's on some in Reconciliations due the the measures. website. non-GAAP to GAAP will in noted filings. in results Actual and financial the press reference corresponding nearest to be periodic SEC found differ measure release Management company's release

to I'll Energy now Please CEO, the call Dragonfly go turn over Dr. ahead. Denis Phares.

sectors. heavy-duty Despite and technology considerable unwavering. us and our and Dragonfly made the trucking, our Energy, expanding beyond remains pioneering headwinds, we joining lithium-ion high-impact At gas to RV today. footprint you, everyone battery welcome oil market in other Thank and commitment to we into strides innovative the have macroeconomic believe

through post sectors and technology development revenue to diversifying impacting Our to environment ourselves long-term consumer trucking. strategic broader spending research and our such focused targeted for and economic as challenges extending enhancing pressure initiatives and continues partnerships economic have positioning discretionary and investments. The streams, on growth retail

navigating these key uncertainties. However, has to been our adaptability

and innovation verticals advancing are reinforcing robust believe our we a By strategically product laying we growth. high-potential focusing partnerships, our sustained on for foundation

and our gas trucking to the in traditional leverage into shift of lead-acid oil move our is part a market. sectors RV solutions, to demonstrated and we lithium Our the experience in application transitioning strategy

in markets remain initial in potential due to these to conditions, Although significant as newer faced economic has these numerous conditions delays confident become adoption revenue drivers we improve. sectors

believe within proud continued report programs we're quarterly the third quarter, within our led first the segment. growth that in trucking revenue-generating these has Energy that, the trial The Dragonfly continued trucking significant anticipate conversion and driver to market. of as revenue our meaningful customers a to into we XXXX. the we success in trucking revenue we industry initial positioning of a pilot for it With recognized

connected of intelligent In solutions technology, the we enhance that and we storage terms of experience. forefront user are introducing efficiency at that energy believe

as also Our be will with markets. positions to which during fourth real-time XXXX, smart enhance diagnostics. direct-to-consumer and released the market advanced across deeper packs rejuvenate the We to new penetration quarter has believe for segments. Battle believe also Dragonfly and us Born This general integrated technology the new it will technology exemplifies Intelligence technology current monitoring offerings this our we approach, various this introduce offering potential battery our our public we

We technology. battery to also enhance partnerships have into our entered and develop further strategic

for or roots Automotive Equipment Battle reach of the product CIMA; off Market manufacturers with have XXXX Energy, substantial during attracted role Apex plays Specialty with showcased America. strong Born or Expo November many Stryten positive in initial showcases and diverse and been largest We kicked from of North line. of has we attention announced strides expanding The Stryten's models our XXXX. industry are manufacturing That were our existing Association, major parallel, gatherings. These The new made positive partnership for been this In a in business-to-business our audience, multiple Product in enthusiasm licensing battery prominently slated production product on These response interest one key also Aftermarket the in and was contract customers. we July our a pivotal of events, engaged including offerings. agreement agreement in Stryten as have collaborating under models. X products Stryten battery strategy battery with our automotive that developing the

through that development property portfolio. we our and continue already perspective, strengthen extensive for enhanced research advance deployment a considerations preparations to our From giga-scale intellectual design

cell manufacturing focus deploying While has remain to through manufacturing, our transformative cash management financing limited committed temporarily battery creative cell dry process this we electrode scale to ability strategy.

into is of hour constructing American private and leveraging gigawatt by our looking of manufacturing cell first Canadian One such for X.X and expansion a establishing strategy government North subsidiary funding.

to grows. to interest also continue upstream and collaborate as dry downstream cell manufacturing cells provide We electric data with partners in and

the of scalability our solutions. vertical will by to step like approval U.S.-based ensuring received resources it's Additionally, goals. is battery our project. and chain would through of Ridge government manufacturing lithium sustainability to expansion We Rhyolite Rhyolite integration, work our we I development supply and offtake enhance for recently progress as to lithium existing the lithium The a our commitment Nevada Ioneer strengthen long-term and highlight and Ioneer agreement sourced helps important to Rhyolite an of continue Ridge the towards Ridge reliable that from support this at domestic supply leveraging mine. our believe federal

to quarter specifics insights, Officer, Seaburg. Revenue I'll and it discuss now detailed over Wade revenue results, turn To operational our Chief third

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

for impacted acknowledge challenges which were negatively direct-to-consumer our factors markets, that I were in details, by macroeconomic affected dive by broader impacting discretionary the spending. we Before the our revenues to into quarter third want

by are we're this momentum outcome, by several we are disappointed across that spots While long-term bright our business. encouraged driving

equipment original be increasing with sequential sales derived of RV experienced OEM manufacturers our revenue or Starting these growth, continues and our the OEM we portion the market. to from

XXXX. in XX% battery us a we quarter product the line recovering a increase implementation the the to second trucking third in million to of from This XXXX quarter represents million $X.X that be $X.X market. increased attributable and believe of heavy-duty revenue smart penetrate OEM market, our to Our of beginning RV may the

A of revenue our significant our OEM product implemented These Battle was battery products Intelligence featuring of line introduction this partners. this smart not have been patent-pending Born by new driver this value potential experience to Intelligence adopted new communication of gain OEM, one as demonstrating energy with Dragonfly the further but have technology enhance by of capacity, the increase will expanded our Dragonfly traction customer satisfaction. We that storage believe also feature-rich its test their its design ecosystem and market the OEMs additional technology. only

RVIA will the in the market, support this RV or further unit our Association, partners and Industry forecasting range. growth is market recovery with mid-XXX,XXXs RV year recovery continued Dragonfly Energy's broader OEM benefit believe The per We overall reaching production trajectory.

a during green the several with In imposing factors the auxiliary reducing period, units without XX-hour night's operations underway how our fatigue. of power fleets experiencing more our and driver associated sleep to firsthand idling who can heavy-duty benefit fleet driver-focused rest the Expanded sustainable trucking the and restful solutions with are a electric provide market, risk premium. contribute are trials eliminate

This Intelligence health increased via visibility, managers advanced to With monitor to fleet Born in-depth and real-time as into offered truck's technology can app the battery market We've each insights gain recently performance heavy-duty diagnostics. Dragonfly drivers now product Battle introduced this well. an our integrates technology, line, into energy data while our which access seamlessly trucking system. historical

connected This but in world. connectivity lead traditional mind, ensures an superior batteries increasingly only as not of a our systems peace acid positions also to alternative

our will revenue the to are sharing believe and due with announcements to quarter approved. within increase industry, large we Additionally, trucking the liftgates these installed revenue are in more as chains. beverage look solution distribution trailer for heavy-duty in specifics We part fourth solutions forward

in and and equipment methane providers end Turning by Agnes with subsidiary, collaboration unit our customers, power lithium both to certified significant deployment gas. fleet for and demonstration Leveraging as garnered oil we've positive power a achieved reclamation feedback. with Alegacy Equipment including serving Systems, strong users a solutions, off-grid Alegacy's uniquely October, its demonstrating initial first our in milestone system

unexpected of solutions. additional benefits identify clients our our demonstrations, these During

energy currently due to For replaced instance, compressor from storage replace gas acid outdated can lead power supply level being packages and poor maintenance. battery annually are that systems our grid natural systems

X lithium we battery within to are packs this on capitalize actively other present partnerships a X gas to alternative, and compelling working certified and Division formalize now Class opportunities. the sector Our oil and

of Our revenue growth agreements they and These availability. RV of nationwide distribution XX,XXX thousands expanded subsidiary marine and with our drive increase expected Automotive, as network through has Meyer our and to a product market access dealers over are Distribution additional and LKQ to partnerships reach extend serving Keystone customers. Corporation

and economic navigating our position lies partnerships, continuing ahead with sustained for believe committed mindset and look you product for for that reach capabilities. to us sustainable expand strategic remain excited discussed solution-oriented Thank with and are We paired growth. and today, upcoming towards forward the Dragonfly Energy all a proactive We our we growth. initiatives releases journey and diversified what to we as joining challenges

financial back discuss to to Denis turn over I now quarter the third Phares call results. will our XXXX

our outlook otherwise of presented Wade. you, fourth will results review of I unless for a as Thank quarter now the figures more provide third are XXXX. a all note quarter that detailed Please as well noted. XXXX financial GAAP,

attributed We in net in believe quarter $XX.X of the of quarter XXXX, Energy can the the in sales. be down million third or direct-to-consumer to lingering sales our DTC weakness million Dragonfly of $XX.X XXXX. from decrease that generated third battery

sales XXXX XXXX, market. of $X.X third XXXX, XXXX. segment believe third some OEM $X.X in of the recovery we of $X.X of of quarter in were in the in which net $XX.X million, indicative down third DTC Our quarter the is generated third up during the quarter quarter from million RV the million of million sales from

is gross sales. higher-margin primarily Drivenfly $X.X to Energy's gross from a a million The to XXXX. The third lower OEM and was X.X% decrease sales a of was compared XXXX XX.X%. result XX.X% approximately million in lower third sales of quarter the to decrease unit the profit and profit in quarter in overall decrease lower-margin $X.X DTC gross of due in of margin higher volume

$X.X million third driven compared million the employee-related other Operating were compensation The and from expenses to down was primarily $XX.X decrease quarter quarter million the of stock-based in expense quarter was in Total year. the the XXXX in third third XXXX of XXXX. prior of XXXX. costs third $X.X in in of million lower $X.X quarter the by

primarily interest the the Other expense to change our in in expense XX, of million amount positive value of was ended offset a by $X.X securities, September related during debt of of incurred XXXX, market million. million liability quarter $X.X $X.X warrant comprised of fair

share loss $X.XX XXXX. per $X.XX or $XX in share of $X.X compared loss million the to quarter net quarter loss per or was XXXX in the of Net million loss of third third

negative was to quarter compared in million third adjusted other EBITDA million In compensation, $X.X of of quarter negative the EBITDA, the XXXX was $X.X warrants XXXX. of market negative million third and value the onetime of third in expenses, changes XXXX. third in million XXXX, of our to $X.X compared negative the quarter stock-based the $X.X quarter fair for excluding

adjusted refer For earnings please to to a EBITDA, release. reconciliation our of EBITDA press

quarter necessary believe have that the Energy million cash, liquidity from Dragonfly the provide equity approximately control resources credit, including burn, end the up of to of execute at of to us in levers $X.X our third line plans. the we ended place the We second million in operational quarter our with and cash our $X.X on XXXX.

for would I of our to attention expectations quarter your like turn the Now XXXX. to fourth

year to be to of with $XX.X at quarter our representing strongest sequential fourth the revenues approximately growth the X% in million, of million the the of midpoint the range. expect $XX.X range We

lower new expect our release to OEM the RV to revenue we a trucking growth return with expect but Dragonfly growth We direct-to-consumer due in in especially Intelligence our revenue. Moreover, batteries. of markets, seasonality, slightly notable

in We to be XX%. quarter are of in the of be XXXX margin range the to expect expenses in quarter the fourth XX% fourth $X.X range expected million. $X.X to of gross the to Operating million in

RV the prospect about As brand backdrop the from and unique addition a business market, and revenue battery our can and within increasing we of recovering we required our provide manufacturing of oil think core trucking, Dragonfly lithium establishment the about streams and X. truly the initiatives. major gas ion domestic mining landscape. tariffs Energy cell of infrastructure are Against excited to believe X The we few growth of domestic puts quarters, concurrent the licensing of other next of increased the position execution the in lithium for a onset

[Operator the Gianarikas comes Instructions] of George line Your from first Canaccord. from question

Could the your Maybe marketplace you've dry relative to as you of been start, and and share lot in to to thoughts last Denis, few your the the press technology those particularly in your there's couple on Tesla a your bringing over others. how batteries from months electrode of assessed technologies around thoughts market?

manufacturing. a George. on world to I available interest lower manufacturer by made to produce years. solvent ability We've entire Well, compete eliminate domestic to stage is some of And the by manufacturing electrode why reducing function a in of you, drop really over today. the costs. for really push is the think of on Thank think, is in first electrode And dry electrode and ability a really the all, the first overall of driven drying sort decade. thoughts step the my costs. NMP And back the particular, that's Sure. dry I working lot on step, step go for the manufacturing such obvious cost well dry in is a of this been desire the to electrode the to

was There than motivation trying develop to processes. electrode dry are and electrode our these that ours. processes other really dry So different

where we film. in and And our an terms process is on one then very on film is grade the press together we're acquisition, their what along a the directly lamination as time to it to layer extrusion, So others, of through film a and Maxwell electric conducting that some current on mixed is adhere foil, there's the and polymer type extruded And it's that where has do because substrate. to have I scale. known take whereas say and coating specific into more dry extra freestanding Tesla foil. done are of a that with What reason the specific a powders that powder at a collecting is view growing difficult you step a

scale the applies So process developed demonstrates also view, technologies well. in reductions only but our that actually electric a my view, very dry not we've in cost that

think be So domestically. positioned a technology garnering in some very interest, we're to be well to we excited at cells mass a produce least this topic to that deploy and actually on working is now really we're position and

Can give that And maybe could hour of nondilutive to around calls, your mentioned a more that couple this gigawatt involves and earnings you detail follow production. to now you X.X financial? how fund up on what on something just capital of you've any a securing that close times are sort

the process the the obtaining Well, in up we Yes. subsidiary. setting and a in subsidiary are of Canada financing through

deploy would So that the we're the the allow parent through to instead through going And capital subsidiary -- subsidiary to that of us with. capital way, able through technology to in begin be the company. that to raise will And allow the raise us to the sorry.

give And us the program details can more specifically? on any you

be advanced are going in the we I couple take. direction, which of provinces say will I in path Well, to select Canada. we'll speak as guess, we're with more negotiations And in to we detail able which a

next Capital the ROTH your Chip And from comes question Moore line from Partners. of

auxilliary great on revenues now. quarter, a market this right nice that's doing particularly in to not I job wanted Wade, ask particularly and power, some Denis getting

about sort I to So growth thinking frame Or right thought just you're way Is these hats start but are looking next significant potential Or wins recovers you that of more to say thinking that? Is revenue heard hear guess, off. you the did there that are how I independent of year? then on market next of and fleet I you quarter, ramp? market? any some I you opportunity? for

I'll Thanks, This Chip. that one. Wade. is take

both So market looking it at is It's threefold, the way of right? kind we're acceptance.

going place assisted also be transportation new programs of the the it that than out trials the will lever the And by identified. through within are -- we applications then seeing recovery. that the market overall we're themselves but for more is the be lastly, market the trucks -- those year put that to are fleets its getting, then fleets in and transportation product the this APUs just third there initially we market the are expansion proving So our

year So level they was still it the high. for when at really even what offering solutions a and we're now higher there's fleets a engaging are that than real were last fairly need much the

Got Maybe question reduction. on a methane it. second

it So going first pilot well. like are things completed, sounds

new And an Or us we then how potential? on have get update could there thinking and you then impact? a Just market EPA that concerns that administration about any are that?

packaging morph both there's conversations fleet they've which orders no the [ say, that that over the themselves company down negotiations are hill, control. solution. to with already with administration to the in they're Sure. now right regardless really positive real kind an and that ] we've in getting users stop is to want the gas of the very It's the is speed natural operators I And rolling had working packages take the providers. -- influx The it their the and over now And way end of for is, they're sales have identified just the from they're really, it. ball we're of right our been solution our what was

they're Did answer that that fully? through So working right I now.

Yes. No, think on just next there timing Any few I about OpEx? if mind? OpEx we anything I one could just do looks it. Or maybe to the the more, that's QX sneak how quarters or guide. keep helpful. notable. Appreciate in modeling guess issues sequential And pretty step-down the

conservation pulling every can. mean, mode Well, we've know, lever for as I And you been time we we've that now. quite cash in some been

focus So there's frugal other notable cash wouldn't being anything management. say report on to our continued I than in

this no to Mr. There for remarks. the Phares Denis time. hand are back at any call closing Instructions] further questions now [Operator I will

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

for that you. Thank participating. today. conference concludes for our And you all Thank

now may disconnect. You