Dragonfly Energy Holdings Corp. Q2 FY2025 earnings call

• Strong second quarter net sales growth of 23% to $16.2 million, marking third consecutive quarter of year-over-year revenue growth. - OEM partners saw net sales increase over 50%, with momentum from OEMs integrating solutions at factory level. - DTC segment net sales $5.9 million due to macroeconomic uncertainty. - Corporate optimization initiatives delivering benefits, e.g., partnership with Airstream for integrated energy storage system in 2026 models. - Domestic manufacturing capabilities as strategic advantage in volatile trade environment. - Recently granted patent for nonflammable all solid-state battery program. - Exchanged remaining preferred shares to common stock and completed public offering of common stock in July. - OEM segment trends: OEMs seeking complete energy storage solutions, accelerated adoption of IntelLigence smart battery platform. - Heavy-duty trucking pilot programs with positive feedback on dual-flow power pack solution.

Net sales grew 23% to $16.2 million for the second quarter. The OEM segment saw net sales increase more than 50% year-over-year, reaching $10.1 million, which is approximately 62.35% of the total revenue. The DTC segment had net sales of $5.9 million, down from $6.5 million, making up around 36.42% of the total revenue.

• Anticipate third quarter net sales of $15.9 million, representing year-over-year growth of approximately 25% and adjusted EBITDA of negative $2.7 million. - Expect sequential improvement into Q4, with factors like expanded pilots and aftermarket business contributing.

• Macro-economic uncertainty affecting DTC segment performance. - Tariff volatility impacting costs and potential pricing adjustments. - Uncertainty in heavy-duty trucking market adoption timing for pilot programs to impact P&L.

Q: When do you expect some of the pilot programs in heavy-duty trucking to eventually result in P&L impact?

A: Right now, waiting for fleets to move on new truck orders; realistically looking at first half of next year. Before that, revenue from pilot systems starts to support business, with ramp of pilot systems in Q3 and Q4 benefiting revenue.

Q: How should we think about the P&L impact of tariffs over the next several quarters?

A: Managed tariff impact through better inventory pricing contributing to improved margins this quarter; passing on costs to customers, using bonded warehousing for cash flow, and onshoring most components with ability to source components as needed.

Q: Should we expect sequential improvement into Q4 and how are you tracking to EBITDA breakeven in Q4?

A: Sequential improvement combines continued RV industry growth and new markets contributing; heavy-duty trucking pilot ramp and aftermarket business expected to contribute, but specific EBITDA breakeven tracking tied to expanded pilots and market adoption.

Q: Can you talk about the technology behind the recently awarded patent?

A: The patent had to do with preparing feedstock for solid-state batteries, specifically the solid-state electrolyte, mixing composite material between ceramics, polymers, salts, and the dry electrode process for depositing layers.