Release Date: November 14, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Dragonfly Energy Holdings Corp (NASDAQ:DFLI) reported its first meaningful revenue from the trucking sector in Q3 2024, indicating successful market penetration.
• The company has introduced Dragonfly Intelligence technology, offering real-time monitoring and diagnostics, which is expected to enhance product offerings and market penetration.
• Strategic partnerships, such as with Strien Energy, are expanding the reach of Dragonfly's product line and have generated positive initial responses.
• OEM revenue increased from $5.6 million in Q2 2024 to $7.4 million in Q3 2024, showing a recovery in the RV market and successful implementation of new smart battery products.
• Dragonfly Energy Holdings Corp (NASDAQ:DFLI) ended Q3 2024 with $8.0 million in cash, up from $4.7 million at the end of Q2 2024, indicating improved liquidity.

Negative Points

• Net sales decreased from $15.9 million in Q3 2023 to $12.7 million in Q3 2024, primarily due to weakness in direct-to-consumer battery sales.
• Gross profit fell from $4.6 million in Q3 2023 to $2.9 million in Q3 2024, with a decrease in gross margin from 28.9% to 22.5%.
• The company reported a net loss of $6.8 million in Q3 2024, compared to a net loss of $10 million in Q3 2023.
• Direct-to-consumer segment sales dropped significantly from $10.3 million in Q3 2023 to $5.2 million in Q3 2024.
• Operating expenses, although reduced, were still high at $8.9 million in Q3 2024, impacting overall profitability.

Q & A Highlights

• Warning! GuruFocus has detected 4 Warning Signs with DFLI.

Q: Could you share your thoughts on dry electrode batteries in the marketplace, particularly in comparison to Tesla's technology? A: (CEO, Dr. Dennis Faras) Our dry electrode technology focuses on reducing manufacturing costs by eliminating the NMP solvent and drying step. Unlike Tesla's extrusion method, which involves an extra lamination step, our process grows the film directly on the foil, making it easier to scale. We believe our approach positions us well for mass production of cells domestically.

Q: Can you provide more details on the non-dilutive capital for the half gigawatt hour production? A: (CEO, Dr. Dennis Faras) We are setting up a subsidiary in Canada to secure financing through it, allowing us to deploy the technology initially. We are in advanced negotiations with a couple of Canadian provinces and will provide more details as we finalize our direction.

Q: Regarding auxiliary power, you mentioned significant revenue potential next year. Can you elaborate on this? A: (CRO, Wade Sberg) We see growth driven by market acceptance, expansion of trials, and overall market recovery. Additionally, we are identifying more applications for our products within the transportation market, which is increasing fleet engagement.

Q: Can you update us on the methane reduction pilot and any potential impact from a new EPA administration? A: (CRO, Wade Sberg) Feedback from fleet operators and end users has been positive, regardless of the administration. The momentum for methane reduction is strong, and packaging companies are receiving increased orders, indicating robust market potential.

Q: The Q4 guide shows a notable sequential step down in OpEx. Are there any timing issues or considerations for the next few quarters? A: (CEO, Dr. Dennis Faras) We have been in cash conservation mode, focusing on being frugal and managing cash effectively. There are no significant timing issues, just a continued emphasis on cost management.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.