Ongoing Gross Margin Initiatives Result in
700BP Improvement in Gross Margins
Backlog Increased to $31M as of November 2,
2023
Partnering with Fortune 100 Customer on
Industry’s First Telematics Integration for Entire Fleet
Management to Host Conference Call Today at
4:30 p.m. Eastern Time
Flux Power Holdings, Inc. (NASDAQ: FLUX), a developer of
advanced lithium-ion energy storage solutions for electrification
of commercial and industrial equipment, has reported its financial
and operational results for the fiscal first quarter ended
September 30, 2023.
Key Financial FY 2024 First Quarter and Subsequent
Operational Highlights and Business Update
($ millions)
Q1 Comparison
Q1 2024
Q1 2023
$ Change YoY
% Change YoY
Revenue
$14.8
$17.8
-$3.0
-17%
Gross Profit
$4.3
$3.9
$0.4
9%
Gross Margin
29%
22%
--
32%
Adjusted EBITDA
-$1.2
-$1.5
$0.3
24%
- Expansion of Margins Leading to Profitability in FY2024:
- Gross profit increased 9% in Q1’24 compared to
Q1’23.
- Gross margin increased 700 basis points in Q1’24
compared to Q1’23.
- Adjusted EBITDA loss improved 24% in Q1’24 compared to
Q1’23.
- Continued Revenue Expansion
- High demand new heavy-duty models completed UL Listing,
to be launched for 2024.
- Private Label Program to be launched this quarter with
major forklift OEM.
- Partnering with Fortune 100 Customer on industry first
of telematics integration for entire fleet.
- Exploring potential partnership on fast charging
proprietary technology.
- Reached prototype stage for automation of battery cells
into modules to support current high customer demand, while
creating commonality and reducing inventory.
- Partnership for international sales channel making
progress.
- Backlog (open orders) increased to $31M as of November
2, 2023.
- Improved capital structure
- Secured a new $15 million credit facility, including
expansion provisions to $20 million, from Gibraltar Business
Capital (“GBC”) to fund working capital and to repay its existing
credit facility with Silicon Valley Bank (“SVB”).
- Terminated an at-the-market (“ATM”) offering
program.
- A new $2.0 million subordinated line of credit with
Cleveland Capital providing additional credit support with an
extended duration to August 15, 2025.
Backlog Summary
The backlog status is a point in time measure but in total
reflects underlying pacing of orders:
Fiscal Quarter Ended
Beginning Backlog
New Orders
Shipments
Ending Backlog
June 30, 2022
$
38,593,000
$
11,622,000
$
15,195,000
$
35,020,000
September 30, 2022
$
35,020,000
$
9,678,000
$
17,840,000
$
26,858,000
December 31, 2022
$
26,858,000
$
20,652,000
$
17,158,000
$
30,352,000
March 31, 2023
$
30,352,000
$
9,751,000
$
15,087,000
$
25,016,000
June 30, 2023
$
25,016,000
$
19,780,000
$
16,252,000
$
28,544,000
September 30, 2023
$
28,544,000
$
8,102,000
$
14,797,000
$
21,849,000
November 2, 2023, Ending Backlog $31,080,000
CEO Commentary
“In our first fiscal quarter of 2024, we have seen encouraging
strides towards profitability. This achievement comes amidst a
traditionally slower revenue period, further impacted by delays in
the delivery of forklifts. We are already seeing a pickup in our
second quarter to achieve another growth year in FY2024. Our sales
cycle normally reflects forklift lead times ranging from 2-3 months
but for much of the past 12 months, lead times have increased by up
to 12-months for several high volume forklift lines. Adjusted
EBITDA loss improved by 24% to $1.2 million in Q1’24. Gross margin
improvement initiatives contributed to a 700 basis point increase
in Q1’24 to 29%. Two new major customers have been added since June
30, 2023.
“As of November 2, 2023, our open order backlog has increased by
$9.2 million, reaching a total of $31.1 million. This growth is
attributable to the synchronization of our product offerings with
the schedule of new forklift and airport Ground Support Equipment
(“GSE”) deliveries. Two new customers contributed to this increase
in backlog, in both forklifts and airport GSE. Beyond our backlog
of open orders, we are working on a pipeline of high probability
orders of over $100 million which does stretch beyond the current
fiscal year. Recently at the GSE EXPO 2023, we featured our energy
storage and telematics platforms that are facilitating
electrification of GSE, with airline GSE integration partner
Averest Inc. As the airline industry transitions from lead acid and
propane to electrically powered GSE, the ability to have real time
access to actionable data has made telematics imperative for both
operational efficiency and successfully scaling fleet
electrification. Sustainability leaders like Delta Air Lines have
set the pace with their commitment to reach Net-Zero carbon
emissions by 2050 including a focus on transitioning fossil
fuel-powered belt loaders, bag, and tug tractors to electric,
zero-emission vehicles.
“Over the course of the year, our primary objective has been to
diligently follow our roadmap to achieve consistent profitability.
Alongside this, we have advanced in several growth-oriented
projects that promise both immediate and future benefits. Early in
2024, we anticipate our new heavy-duty models and OEM private label
program will meet the robust market demand effectively. In
parallel, our automated assembly for cell modules is progressing on
schedule. We plan to launch an industry first integrated
telematics, fleet-wide program with a Fortune 100 customer later in
2024. Building on these developments, we are collaborating with our
partners to bring battery cell innovations and expand our sales on
a global scale.
“We migrated from our Silicon Valley Bank credit facility to a
new $15 million credit facility with Gibraltar Business Capital
which provides lower interest rates, a two-year term, and the
potential to expand the facility to $20 million to accommodate
higher working capital needs as our business grows. This facility,
along with our improvement in operating cash requirements, supports
our current business growth. Additional credit support, beyond
projected needs, is provided by our new $2.0 million subordinated
line of credit with Cleveland Capital. Finally, as we look to the
future, we believe it is good corporate practice to replace our
previous shelf registration as it allows us to maintain flexibility
with respect to our capital management.
“Looking ahead, we believe our near-term track to profitability,
combined with our emerging growth strategy will position the
Company to both lead our sector in lithium-ion adoption and provide
accretive business growth to drive improved shareholder value. We
are pleased, but never content, with our progress regarding
customer satisfaction of product quality, service, and ease of
doing business. Our market reputation is very important to our
Fortune 500 customer base, and we have resourced our marketing
efforts to expand brand awareness. I look forward to providing
additional updates in the months to come,” concluded Dutt.
Q1’24 Financial Results
Revenue for the fiscal first quarter of 2024 decreased
17% to $14.8 million compared to $17.8 million in the fiscal first
quarter of 2023, due to fewer units of energy storage packs sold
during the current quarter primarily as a result of deferrals
related to forklift timing delays, seasonality, and product
mix.
Gross profit for the fiscal first quarter of 2024
increased to $4.3 million compared to a gross profit of $3.9
million in the fiscal first quarter of 2023. Gross margin increased
to 29% in the fiscal first quarter of 2024 as compared to 22% in
the fiscal first quarter of 2023. Gross profit improved by 9% as a
result of lower cost of sales per unit as a result of the gross
margin improvement initiatives, partially offset by lower number of
units sold.
Adjusted EBITDA was a loss of $1.2 million in the fiscal
first quarter of 2024 as compared to a loss of $1.5 million in the
fiscal first quarter of 2023, driven by the improved gross
margins.
Selling & Administrative expenses increased to $4.7
million in the fiscal first quarter of 2024, as compared to $4.5
million in fiscal first quarter of 2023, primarily attributable to
staff related expenses, depreciation, professional service fees,
stock-based compensation, and travel expenses, partially offset by
decreases in commissions, outbound shipping costs, recruiting
costs, and consulting fees.
Research & Development expenses increased to $1.3
million in the fiscal first quarter of 2024, compared to $1.2
million in the fiscal first quarter of 2023, primarily due to
higher staff related expenses.
Net loss for the fiscal first quarter of 2024 was $2.1
million, similar to the fiscal first quarter of 2023, with nominal
improvement principally reflecting increased gross profit, offset
by increased operating expenses and interest expense.
Cash was $1.1 million on September 30, 2023, as compared
to $2.4 million at June 30, 2023 reflecting changes in working
capital management. Available working capital includes: our line of
credit as of November 2, 2023, under our $15.0 million credit
facility from Gibraltar Business Capital with a remaining available
balance of $2.9 million; and $2.0 million available under the
subordinated line of credit with Cleveland Capital.
Net cash used in operating activities increased to $3.1
million in the three months ended September 30, 2023, compared to
$0.6 million in the three months ended September 30, 2022,
primarily due to changes in working capital of inventory,
receivables, and payables.
First Quarter Fiscal Year 2024 Results Conference
Call
Flux Power CEO Ron Dutt and CFO Chuck Scheiwe will host the
conference call, followed by a question-and-answer session. The
conference call will be accompanied by a presentation, which can be
viewed during the webcast or accessed via the investor relations
section of the Company’s website here.
To access the call, please use the following information:
Date:
Thursday, November 9, 2023
Time:
4:30 p.m. Eastern Time, 1:30 p.m. Pacific
Time
Toll-free dial-in number:
1-877-407-4018
International dial-in number:
1-201-689-8471
Conference ID:
13741955
Please call the conference telephone number 5-10 minutes prior
to the start time. An operator will register your name and
organization. If you have any difficulty connecting with the
conference call, please contact MZ Group at 1-949-491-8235.
The conference call will be broadcast live and available for
replay at
https://viavid.webcasts.com/starthere.jsp?ei=1638333&tp_key=4d161faacd
and via the investor relations section of the Company's website
here.
A replay of the webcast will be available after 7:30 p.m.
Eastern Time through February 9, 2024.
Toll-free replay number:
1-844-512-2921
International replay number:
1-412-317-6671
Replay ID:
13741955
Note about Non-GAAP Financial Measures
A non-GAAP financial measure is a numerical measure of a
company’s performance, financial position, or cash flows that
either excludes or includes amounts that are not normally excluded
or included in the most directly comparable measure calculated and
presented in accordance with accounting principles generally
accepted in the United States of America, or GAAP. Non-GAAP
measures are not in accordance with, nor are they a substitute for,
GAAP measures. Other companies may use different non-GAAP measures
and presentation of results.
In addition to financial results presented in accordance with
GAAP, this press release presents adjusted EBITDA, which is a
non-GAAP measure. Adjusted EBITDA is determined by taking net loss
and adding interest, taxes, depreciation, amortization, and
stock-based compensation expenses. The company believes that this
non-GAAP measure, viewed in addition to and not in lieu of net
loss, provides additional information to investors by providing a
more focused measure of operating results. This metric is an
integral part of the Company’s internal reporting to evaluate its
operations and the performance of senior management. A
reconciliation of adjusted EBITDA to net loss, the most comparable
GAAP measure, is available in the accompanying financial tables
below. The non-GAAP measure presented herein may not be comparable
to similarly titled measures presented by other companies.
US-GAAP NET INCOME (LOSS) TO
ADJUSTED EBITDA RECONCILIATION
(Unaudited)
Three Months Ended September
30,
2023
2022
Net loss
$
(2,112,000
)
$
(2,139,000
)
Add/Subtract:
Interest, net
403,000
328,000
Income tax provision
-
-
Depreciation and amortization
261,000
172,000
EBITDA
(1,448,000
)
(1,639,000
)
Add/Subtract:
Stock-based compensation
276,000
95,000
Adjusted EBITDA
$
(1,172,000
)
$
(1,544,000
)
About Flux Power Holdings, Inc.
Flux Power (NASDAQ: FLUX) designs, manufactures, and sells
advanced lithium-ion energy storage solutions for electrification
of a range of industrial and commercial sectors including material
handling, airport ground support equipment (GSE), and stationary
energy storage. Flux Power’s lithium-ion battery packs, including
the proprietary battery management system (BMS) and telemetry,
provide customers with a better performing, lower cost of
ownership, and more environmentally friendly alternative, in many
instances, to traditional lead acid and propane-based solutions.
Lithium-ion battery packs reduce CO2 emissions and help improve
sustainability and ESG metrics for fleets. For more information,
please visit www.fluxpower.com.
Forward-Looking Statements
This release contains projections and other "forward-looking
statements" relating to Flux Power’s business, that are often
identified using "believes," "expects" or similar expressions.
Forward-looking statements involve several estimates, assumptions,
risks, and other uncertainties that may cause actual results to be
materially different from those anticipated, believed, estimated,
expected, etc. Such forward-looking statements include impact of
COVID-19 on Flux Power’s business, results and financial condition;
statements regarding plans and expectations with respect to the
Company’s registration statement on Form S-3 and any potential
future offering or capital raises. Flux Power’s ability to obtain
raw materials and other supplies for its products at competitive
prices and on a timely basis, particularly in light of the
potential impact of the COVID-19 pandemic on its suppliers and
supply chain; the development and success of new products,
projected sales, cancellation of purchase orders, deferral of
shipments, Flux Power’s ability to improve its gross margins, or
achieve breakeven cash flow or profitability, Flux Power’s ability
to fulfill backlog orders or realize profit from the contracts
reflected in backlog sale; Flux Power’s ability to fulfill backlog
orders due to changes in orders reflected in backlog sales, Flux
Power’s ability to obtain the necessary funds under the credit
facilities, Flux Power’s ability to timely obtain UL Listing for
its products, Flux Power’s ability to fund its operations,
distribution partnerships and business opportunities and the
uncertainties of customer acceptance and purchase of current and
new products, and changes in pricing, and Flux Power’s ability to
negotiate and enter into a definitive agreement in connection with
the Letter of Intent. Actual results could differ from those
projected due to numerous factors and uncertainties. Although Flux
Power believes that the expectations, opinions, projections, and
comments reflected in these forward-looking statements are
reasonable, they can give no assurance that such statements will
prove to be correct, and that the Flux Power’s actual results of
operations, financial condition and performance will not differ
materially from the results of operations, financial condition and
performance reflected or implied by these forward-looking
statements. Undue reliance should not be placed on the
forward-looking statements and Investors should refer to the risk
factors outlined in our Form 10-K, 10-Q and other reports filed
with the SEC and available at www.sec.gov/edgar. These
forward-looking statements are made as of the date of this news
release, and Flux Power assumes no obligation to update these
statements or the reasons why actual results could differ from
those projected.
Flux, Flux Power, and associated logos are trademarks of Flux
Power Holdings, Inc. All other third-party brands, products,
trademarks, or registered marks are the property of and used to
identify the products or services of their respective owners.
Follow us at:
Blog: Flux Power Blog News Flux Power News Twitter: @FLUXpwr
LinkedIn: Flux Power
FLUX POWER HOLDINGS,
INC.
CONSOLIDATED BALANCE
SHEETS
September 30,
2023
June 30,
2023
(Unaudited)
ASSETS
Current assets:
Cash
$
1,139,000
$
2,379,000
Accounts receivable
10,699,000
8,649,000
Inventories, net
19,495,000
18,996,000
Other current assets
1,053,000
918,000
Total current assets
32,386,000
30,942,000
Right of use assets
2,670,000
2,854,000
Property, plant and equipment, net
1,747,000
1,789,000
Other assets
119,000
120,000
Total assets
$
36,922,000
$
35,705,000
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
10,065,000
$
9,735,000
Accrued expenses
3,782,000
3,181,000
Line of credit
11,986,000
9,912,000
Deferred revenue
336,000
131,000
Customer deposits
17,000
82,000
Finance lease payable, current portion
147,000
143,000
Office lease payable, current portion
667,000
644,000
Accrued interest
102,000
2,000
Total current liabilities
27,102,000
23,830,000
Office lease payable, less current
portion
1,880,000
2,055,000
Finance lease payable, less current
portion
229,000
273,000
Total liabilities
29,211,000
26,158,000
Stockholders’ equity:
Preferred stock, $0.001 par value; 500,000
shares authorized; none issued and outstanding
-
-
Common stock, $0.001 par value; 30,000,000
shares authorized; 16,478,237 and 16,462,215 shares issued and
outstanding at September 30, 2023 and June 30, 2023,
respectively
16,000
16,000
Additional paid-in-capital
98,362,000
98,086,000
Accumulated deficit
(90,667,000
)
(88,555,000
)
Total stockholders’ equity
7,711,000
9,547,000
Total liabilities and stockholders’
equity
$
36,922,000
$
35,705,000
FLUX POWER HOLDINGS,
INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
Three Months Ended September
30,
2023
2022
Revenues
$
14,797,000
$
17,840,000
Cost of sales
10,486,000
13,892,000
Gross profit
4,311,000
3,948,000
Operating expenses:
Selling and administrative
4,725,000
4,536,000
Research and development
1,295,000
1,223,000
Total operating expenses
6,020,000
5,759,000
Operating loss
(1,709,000
)
(1,811,000
)
Interest income (expense), net
(403,000
)
(328,000
)
Net loss
$
(2,112,000
)
$
(2,139,000
)
Net loss per share - basic and diluted
$
(0.13
)
$
(0.13
)
Weighted average number of common shares
outstanding - basic and diluted
16,474,754
15,997,296
FLUX POWER HOLDINGS,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended September
30,
2023
2022
Cash flows from operating activities:
Net loss
$
(2,112,000
)
$
(2,139,000
)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation
261,000
172,000
Stock-based compensation
276,000
95,000
Amortization of debt issuance costs
81,000
229,000
Noncash lease expense
146,000
117,000
Allowance for inventory reserve
(3,000
)
25,000
Changes in operating assets and
liabilities:
Accounts receivable
(2,050,000
)
(2,987,000
)
Inventories
(496,000
)
(2,641,000
)
Other assets
(215,000
)
(229,000
)
Accounts payable
330,000
6,860,000
Accrued expenses
601,000
19,000
Accrued interest
100,000
1,000
Office lease payable
(152,000
)
(120,000
)
Deferred revenue
205,000
184,000
Customer deposits
(65,000
)
(165,000
)
Net cash used in operating activities
(3,093,000
)
(579,000
)
Cash flows from investing activities
Purchases of equipment
(181,000
)
(352,000
)
Net cash used in investing activities
(181,000
)
(352,000
)
Cash flows from financing activities:
Proceeds from revolving line of credit
18,055,000
12,900,000
Payment of revolving line of credit
(15,981,000
)
(12,138,000
)
Payment of finance leases
(40,000
)
(10,000
)
Net cash provided by financing
activities
2,034,000
752,000
Net change in cash
(1,240,000
)
(179,000
)
Cash, beginning of period
2,379,000
485,000
Cash, end of period
$
1,139,000
$
306,000
Supplemental Disclosures of Non-Cash
Investing and Financing Activities:
Initial right of use asset recognition
$
-
$
78,000
Common stock issued for vested RSUs
$
-
$
5,000
Supplemental cash flow
information:
Interest paid
$
223,000
$
99,000
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231109190768/en/
Media & Investor Relations: info@fluxpower.com
External Investor Relations: Chris Tyson,
Executive Vice President MZ Group - MZ North America 949-491-8235
FLUX@mzgroup.us www.mzgroup.us
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