Operational Initiatives Result in Improvement
in Gross Margins to 31%
Revenue Increased 7% to Quarterly Record of
$18.3 Million
Adjusted EBITDA Improved to Positive $0.3M
Moving Toward Cash Flow Breakeven
Backlog was $29.7M as of February 1, 2024
Management to Host Conference Call Today at
4:30 p.m. Eastern Time
Flux Power Holdings, Inc. (NASDAQ: FLUX), a developer of
advanced lithium-ion energy storage solutions for electrification
of commercial and industrial equipment, has reported its financial
and operational results for the fiscal second quarter ended
December 31, 2023.
Key Financial FY 2024 Second Quarter and Subsequent
Operational Highlights and Business Update
($ millions)
Q2 Comparison
Q2 2024
Q2 2023
$ Change YoY
% Change YoY
Revenue
$18.3
$17.2
$1.2
7%
Gross Profit
$5.7
$4.1
$1.6
38%
Gross Margin
31%
24%
--
700 BPS
Adjusted EBITDA
$0.3
-$0.9
$1.2
--
- Expansion of Margins Leading to Profitability in FY2024:
- Gross profit increased 38% in Q2’24 compared to
Q2’23.
- Gross margin increased 700 basis points in Q2’24
compared to Q2’23.
- Adjusted EBITDA improved $1.2 million in Q2’24 compared
to Q2’23.
- Continued Revenue Expansion
- Revenue (Shipments) increased 7% to quarterly record of
$18.3 million in Q2’24 compared to Q2’23 revenue of $17.2
million.
- New purchase orders received during the quarter reached a
record $26.6 million
- Added four new customers in material handling, including
the largest wine producer in the world.
- High demand new heavy-duty models completed UL Listing,
to be launched for 2024.
- Private Label Program for selected models launched with
major forklift OEM.
- Exploring partnership with third party on fast charging
proprietary technology.
- Commenced development of Artificial Intelligence (AI)
features for SkyBMS® Telematics Platform to drive more informed
decision-making around asset management and maximize operational
efficiency.
- Currently piloting with existing Fortune 500 customer for three
distribution centers for data collection ROI.
- 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) was $29.7 million as of February
1, 2024.
- Improved Capital Structure
- 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
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
December 31, 2023
$
21,849,000
$
26,552,000
$
18,344,000
$
30,057,000
February 1, 2024, Ending Backlog $29.7 million
CEO Commentary
“The second fiscal quarter of 2024 saw ongoing momentum to both
top and bottom lines, as we continue to move steadily towards
profitability,” said Flux Power CEO Ron Dutt. “While reaching
record quarter revenue of $18.3 million during the quarter, we
continue to see lumpiness from timing of deliveries of customer new
forklift orders and interest rate variability. We improved gross
profit up 38% in the second quarter to $5.7 million, and gross
margin expansion of 700 basis points to 31% compared to the year
ago period and up sequentially from $4.3 million and 29%,
respectively, during the first fiscal quarter of 2024. With
strategic supply chain and profitability improvement initiatives,
lower costs and higher volume purchasing, we are targeting gross
margin improvement to continue, with a longer-term goal of 40%.
“A high priority for us remains reaching sustained cash flow
breakeven and continuing our upward margin trajectory. We made good
progress during the second fiscal quarter delivering positive
Adjusted EBITDA of $0.3 million, an improvement of $1.2 million
from an Adjusted EBITDA loss of $0.9 million in the second fiscal
quarter of 2023 and sequential improvement from a loss of $1.2
million in the first fiscal quarter of 2024. Cash used for
operations was also down significantly to $1.0 million in the
second fiscal quarter compared to $3.1 million in the first fiscal
quarter. We continue to focus on increasing profitability through
revenue, gross margins, and current operating leverage.
“As of February 1, 2024, our open order backlog was $29.7
million. This reflects ongoing lead times of incoming purchase
orders with the schedule of new forklift and airport Ground Support
Equipment (“GSE”) deliveries. Four new customers contributed to the
backlog this quarter in material handling including the largest
wine producer in the world. 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. However,
we continue to see extended lead times for forklifts from major
OEMs, while some GSE Equipment lead times are extended for certain
model lines. These extended lead times have resulted in some
shipment deferrals and delays in receiving anticipated orders, with
current backlog of open orders exceeding $30 million for the
quarter ended December 31, 2023.
“We took significant actions to strengthen our capital structure
while managing our business growth and margin expansion with
careful priorities as part of our strategy to enhance shareholder
value. An additional $2.0 million subordinated line of credit with
Cleveland Capital provides greater working capital optionality
beyond our projected needs and continued confidence in our growth
strategy from a long-term investor in Flux Power. We recently
increased our $15 million credit facility with Gibraltar Business
Capital to $16 million to support customer demand and our current
business growth.
“Looking ahead, we continue to develop new customer
relationships and remain confident that our growth strategies,
pipeline of orders and new customer opportunities, combined with
our cash profitability improvement initiatives, is leading us
toward near-term profitability. We have built a robust foundation
for establishing the required scale as the leading service provider
for large Fortune 500 material handling fleets. We are leveraging
our position with growth-oriented projects and developing
partnerships with vendors, technology partners, and opportunities
to further drive growth. Taken together, we believe we can continue
to expand our business, long-term sustained growth and shareholder
value in the year to come,” concluded Dutt.
Q2’24 Financial Results
Revenue for the fiscal second quarter of 2024 increased
7% to $18.3 million compared to $17.2 million in the fiscal second
quarter of 2023, due to higher number of units of energy storage
packs sold during the quarter, as well as price increases for
certain energy storage units sold.
Gross profit for the fiscal second quarter of 2024
increased 38% to $5.7 million compared to a gross profit of $4.1
million in the fiscal second quarter of 2023. Gross margin
increased to 31% in the fiscal second quarter of 2024 as compared
to 24% in the fiscal second quarter of 2023. Gross profit improved
by 38 percentage points due to lower average cost of sales per unit
achieved during the quarter as a result of our gross margin
improvement initiatives and revenue growth during the quarter.
Adjusted EBITDA was $0.3 million in the fiscal second
quarter of 2024 as compared to a loss of $0.9 million in the fiscal
second quarter of 2023, driven by the improved gross margins.
Selling & Administrative expenses increased to $4.6
million in the fiscal second quarter of 2024, as compared to $4.3
million in fiscal second 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 $1.4
million in the fiscal second quarter of 2024, compared to $1.2
million in the fiscal second quarter of 2023, primarily due to
additional engineering projects to support our products.
Net loss for the fiscal second quarter of 2024 improved
52% to $0.8 million, compared to a loss of $1.7 million in the
fiscal second quarter of 2023, with improvement principally
reflecting increased gross profit, offset by increased operating
expenses and interest expense.
Cash was $1.6 million on December 31, 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 January 31, 2023, under our $16.0 million credit
facility from Gibraltar Business Capital with a remaining available
balance of $6.0 million; and $2.0 million available under the
subordinated line of credit with Cleveland Capital. Credit line
with Gibraltar provides for expansion up to $20 million.
Net cash used in operating activities decreased by $2.1
million to $1.0 million in the three months ended December 31,
2023, compared to $3.1 million in the three months ended September
30, 2023.
Second 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, February 8, 2024
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:
13743693
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=1651243&tp_key=b42dbaf500
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 May 8, 2024.
Toll-free replay number:
1-844-512-2921
International replay number:
1-412-317-6671
Replay ID:
13743693
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 December
31,
Six Months Ended December
31,
2023
2022
2023
2022
Net loss
$
(814,000
)
$
(1,681,000
)
$
(2,926,000
)
$
(3,820,000
)
Add/Subtract:
Interest, net
449,000
385,000
852,000
713,000
Depreciation and amortization
262,000
199,000
523,000
371,000
EBITDA
(103,000
)
(1,097,000
)
(1,551,000
)
(2,736,000
)
Add/Subtract:
Stock-based compensation
394,000
209,000
670,000
304,000
Adjusted EBITDA
$
291,000
$
(888,000
)
$
(881,000
)
$
(2,432,000
)
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.
CONDENSED CONSOLIDATED BALANCE
SHEETS
December 31,
2023
June 30,
2023
(Unaudited)
ASSETS
Current assets:
Cash
$
1,584,000
$
2,379,000
Accounts receivable
12,579,000
8,649,000
Inventories, net
18,283,000
18,996,000
Other current assets
942,000
918,000
Total current assets
33,388,000
30,942,000
Right of use assets
2,482,000
2,854,000
Property, plant and equipment, net
1,680,000
1,789,000
Other assets
119,000
120,000
Total assets
$
37,669,000
$
35,705,000
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
10,021,000
$
9,735,000
Accrued expenses
3,290,000
3,181,000
Line of credit
13,575,000
9,912,000
Deferred revenue
310,000
131,000
Customer deposits
232,000
82,000
Finance lease payable, current portion
150,000
143,000
Office lease payable, current portion
689,000
644,000
Accrued interest
130,000
2,000
Total current liabilities
28,397,000
23,830,000
Office lease payable, less current
portion
1,698,000
2,055,000
Finance lease payable, less current
portion
191,000
273,000
Total liabilities
30,286,000
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; 16,532,275 and 16,462,215 shares issued and
outstanding at December 31, 2023 and June 30, 2023,
respectively
17,000
16,000
Additional paid-in-capital
98,847,000
98,086,000
Accumulated deficit
(91,481,000
)
(88,555,000
)
Total stockholders’ equity
7,383,000
9,547,000
Total liabilities and stockholders’
equity
$
37,669,000
$
35,705,000
FLUX POWER HOLDINGS,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
December 31,
Six Months Ended
December 31,
2023
2022
2023
2022
Revenues
$
18,344,000
$
17,158,000
$
33,141,000
$
34,998,000
Cost of sales
12,676,000
13,050,000
23,162,000
26,942,000
Gross profit
5,668,000
4,108,000
9,979,000
8,056,000
Operating expenses:
Selling and administrative
4,593,000
4,250,000
9,318,000
8,786,000
Research and development
1,440,000
1,162,000
2,735,000
2,385,000
Total operating expenses
6,033,000
5,412,000
12,053,000
11,171,000
Operating loss
(365,000
)
(1,304,000
)
(2,074,000
)
(3,115,000
)
Other income
-
8,000
-
8,000
Interest income (expense), net
(449,000
)
(385,000
)
(852,000
)
(713,000
)
Net loss
$
(814,000
)
$
(1,681,000
)
$
(2,926,000
)
$
(3,820,000
)
Net loss per share - basic and diluted
$
(0.05
)
$
(0.10
)
$
(0.18
)
$
(0.24
)
Weighted average number of common shares
outstanding - basic and diluted
16,516,700
16,020,183
16,495,727
16,008,740
FLUX POWER HOLDINGS,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended December
31,
2023
2022
Cash flows from operating activities:
Net loss
$
(2,926,000
)
$
(3,820,000
)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation
523,000
371,000
Stock-based compensation
670,000
304,000
Fair value of warrants issued as debt
issuance cost
92,000
-
Amortization of debt issuance costs
134,000
368,000
Noncash lease expense
296,000
236,000
Allowance for inventory reserve
(2,000
)
135,000
Changes in operating assets and
liabilities:
Accounts receivable
(3,930,000
)
(1,858,000
)
Inventories
715,000
(3,380,000
)
Other assets
(157,000
)
(17,000
)
Accounts payable
286,000
6,152,000
Accrued expenses
109,000
89,000
Accrued interest
128,000
-
Office lease payable
(312,000
)
(244,000
)
Deferred revenue
179,000
(82,000
)
Customer deposits
150,000
(146,000
)
Net cash used in operating activities
(4,045,000
)
(1,892,000
)
Cash flows from investing activities
Purchases of equipment
(338,000
)
(344,000
)
Proceeds from sale of fixed assets
-
8,000
Net cash used in investing activities
(338,000
)
(336,000
)
Cash flows from financing activities:
Proceeds from revolving line of credit
35,868,000
30,550,000
Payment of revolving line of credit
(32,205,000
)
(28,628,000
)
Payment of finance leases
(75,000
)
(22,000
)
Net cash provided by financing
activities
3,588,000
1,900,000
Net change in cash
(795,000
)
(328,000
)
Cash, beginning of period
2,379,000
485,000
Cash, end of period
$
1,584,000
$
157,000
Supplemental Disclosures of Non-Cash
Investing and Financing Activities:
Initial right of use asset recognition
$
-
$
258,000
Common stock issued for vested RSUs
$
183,000
$
114,000
Supplemental cash flow
information:
Interest paid
$
605,000
$
288,000
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240208464681/en/
Media & Investor Relations: media@fluxpower.com
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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