Release Date: May 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Dragonfly Energy Holdings Corp has demonstrated broad adoption of its lithium batteries in RVs and is expanding into other markets such as heavy-duty trucking.
- The company has launched new products like the all-electric auxiliary power units and liftgate power systems, leveraging its mobile alternator charging technology.
- Dragonfly Energy Holdings Corp has achieved significant certifications allowing entry into the oil and gas industry, with potential for thousands of deployments over the next 18 months.
- Despite a drop in OEM revenue from the previous year, excluding Keystone, OEM revenue grew year over year by 70% due to new partnerships and expansion.
- The company is advancing in its cell manufacturing technologies, particularly with its dry electrode process, which has garnered interest from large customers in various sectors.
Negative Points
- Net sales decreased to $12.5 million in Q1 2024 from $18.8 million in Q1 2023, partly due to the absence of standard install revenue from Keystone.
- Direct-to-consumer segment sales were down from $10.0 million in Q1 2023 to $5.2 million in Q1 2024, showing flat sales despite ongoing consumer spending pressures.
- The company reported a net loss of $10.4 million in Q1 2024 compared to a net income of $4.8 million in Q1 2023.
- Operating expenses, although reduced, and other expenses remain a challenge with a total other expense of $4.5 million in Q1 2024.
- Dragonfly Energy Holdings Corp's cash position decreased to $8.5 million at the end of Q1 2024 from $12.7 million at the end of 2023, indicating significant cash use.
Q & A Highlights
Q: Could you discuss the impact of the recent tariff changes on your core business and your cell production expansion plans?
A: Denis Phares, CEO of Dragonfly Energy, explained that the increase in tariffs from 7.5% to 25% for EV batteries this year and for non-EV batteries in 2026 is actually beneficial for Dragonfly. It aligns with their strategy to onshore cell production, making domestic manufacturing more attractive due to the IRA incentives and higher tariffs.
Q: How is the RV market performing, and what are your expectations for its growth?
A: Denis Phares noted a positive shift in the RV market, particularly with lithium battery uptake outpacing general market recovery. He anticipates further growth driven by new model releases and increased standardization of lithium batteries in RVs.
Q: Can you provide more details on the new opportunities in the oil and gas market, particularly regarding methane mitigation?
A: Denis Phares highlighted a significant new venture into the oil and gas sector, focusing on methane mitigation. He mentioned the potential for thousands of deployments over the next 18 months, driven by new regulatory requirements and a strong partnership with a legacy natural gas compressor packager.
Q: What are your strategies for managing the company's cash position and financial health?
A: Denis Phares discussed leveraging inventory as a source of working capital and the strategic use of an undrawn $150 million equity line of credit. He emphasized prudent financial management to support ongoing R&D and market expansion.
Q: Could you elaborate on the environmental and competitive advantages of eliminating PFAS chemicals in your battery production?
A: Denis Phares explained that removing PFAS chemicals not only addresses potential regulatory issues but also provides an environmental benefit. The batteries produced are as efficient as traditional ones but are more environmentally friendly, which could offer a competitive edge, especially in markets like Europe that are sensitive to environmental impacts.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
