Dragonfly Energy Holdings Corp. Q4 FY2025 earnings call

• In 2025, focused on strengthening financial foundation, expanding commercial footprint and validating technology, completed capital raising and debt restructuring to improve liquidity and balance sheet. - Net sales grew, OEM channel performed well, made progress in heavy duty trucking industry with Werner Enterprises placing an order. - Expanded into adjacent industries like rail and marine, advanced IP portfolio with nearly 90 issued or pending patents. - Realigned cost structure including 20% reduction in cash compensation for executives, workforce and compensation adjustments, and reduction in discretionary spending, expected to generate annualized cost savings of approximately $8.9 million and help achieve positive adjusted EBITDA.

Fourth quarter net sales grew 6.9% to $13.1 million, driven by strength in the OEM channel. OEM revenue increased approximately 30% year over year, while DTC revenue declined to $4.7 million from $5.7 million. Full year net sales increased 16% to $58.6 million, driven by 34% growth in OEM revenue. Fourth quarter gross profit was $2.4 million with a gross margin of 18.2%, compared to full year gross margin improved 370 basis points to 26.7%. Net loss in fourth quarter was $45 million versus $9.8 million in the prior year, and adjusted EBITDA was negative $3.8 million compared to negative $2.3 million. Full year adjusted EBITDA improved to negative $11.4 million from negative $18.5 million.

Priorities in 2026 remain expanding OEM partnerships, pursuing opportunities across commercial markets and improving operational efficiency. Expect first quarter revenue to be approximately $9.5 million and adjusted EBITDA loss to be $4.6 million. As the year progresses, expect improved operating leverage towards positive adjusted EBITDA.

Forward-looking statements subject to risks and uncertainties where actual results may differ materially. Susceptible to raw component price volatility like lithium carbonate, though lithium carbonate is a relatively small component of the battery pack, raw material prices have been volatile and likely to fluctuate over the next 12 months.

Q: Chip Moore inquired about the RV OEM market.

A: Wade responded that demand was not as strong in January but saw recovery in February and early March, and saw demand for expanded energy storage capacity.

Q: Chip Moore inquired about heavy duty trucking revenue ramp.

A: Capital expenditures start to happen again, 2027 engines have higher idle rates making the product more relevant, anticipating a strong second half of the year.

Q: Chip Moore inquired about DTC business.

A: DTC revenue has been declining for several years and now focusing on OEM and commercial markets.

Q: Leanne Hayden inquired about customer feedback on expanded product lines.

A: Full system integration brings revenue growth, customers have individual purchases but full system integration is a big boon.

Q: Leanne Hayden inquired about lithium carbonate price volatility impact.

A: Industry is susceptible to raw material price increases, lithium carbonate is a relatively small component of the battery pack but still has volatility risk.

Q: Leanne Hayden inquired about cash burn in 2026.

A: Cost cuts help with cash flow, focused on P&L and spending reduction, seeing growth in adjacent markets and expect improvement in cash flow.