• Net Sales: $13.2 million in Q2 2024, down from $19.3 million in Q2 2023.

• Direct-to-Consumer Sales: $6.5 million in Q2 2024, down from $10 million in Q2 2023.

• OEM Sales: $6.7 million in Q2 2024, down from $9.3 million in Q2 2023.

• Gross Profit: $3.2 million in Q2 2024, compared to $3.9 million in Q2 2023.

• Operating Expenses: $9.9 million in Q2 2024, down from $12.5 million in Q2 2023.

• Total Other Expense: $6.9 million in Q2 2024, compared to $3.3 million in Q2 2023.

• Net Loss: $13.6 million or $0.22 loss per share in Q2 2024, compared to $11.9 million or $0.25 loss per share in Q2 2023.

• EBITDA: Negative $8.4 million in Q2 2024, compared to negative $7.5 million in Q2 2023.

• Adjusted EBITDA: Negative $6.2 million in Q2 2024, compared to negative $5.7 million in Q2 2023.

• Cash Position: $4.7 million at the end of Q2 2024, down from $8.5 million at the end of Q1 2024.

• Q3 2024 Revenue Guidance: Expected to be in the range of $13.5 million to $15 million.

• Q3 2024 Gross Margin Guidance: Expected to remain in the range of 24% to 26%.

• Q3 2024 Operating Expenses Guidance: Expected to be in the range of $10 million to $10.5 million.

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

Release Date: August 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) has entered into a brand licensing deal with Stryten Energy, which is expected to provide broad exposure for their Battle Born Batteries brand through extensive distribution channels.

• The company is making significant progress in the heavy-duty trucking market, with ongoing trials showing improvements in idle times and fuel savings.

• Dragonfly Energy Holdings Corp (NASDAQ:DFLI) is actively seeking non-dilutive funding for their dry electrode cell production plant and is in advanced negotiations for government funding.

• The company has achieved necessary certifications for their products in the oil and gas industry, opening new market opportunities driven by EPA mandates.

• Dragonfly Energy Holdings Corp (NASDAQ:DFLI) is expanding its distribution channels, with their batteries now approved for installation at major truck modification centers, enhancing market growth potential.

Negative Points

• Dragonfly Energy Holdings Corp (NASDAQ:DFLI) reported a decrease in net sales to $13.2 million in Q2 2024, down from $19.3 million in Q2 2023, due to weak customer orders and weather-related disruptions.

• The company's direct-to-consumer segment saw a decline in net sales from $10 million in Q2 2023 to $6.5 million in Q2 2024.

• Operating expenses remain high, with $9.9 million reported in Q2 2024, despite a decrease from the previous year.

• The company experienced a net loss of $13.6 million in Q2 2024, compared to a net loss of $11.9 million in Q2 2023.

• Dragonfly Energy Holdings Corp (NASDAQ:DFLI) is facing challenges in the RV market, with a decline in the motorized segment and the impact of a severe hailstorm affecting production.

Q & A Highlights

Q: Can you elaborate on the impact of the Airstream weather event and the heavy-duty trucking delays on Q3 guidance? A: Wade Seaburg, Chief Revenue Officer, explained that the Airstream weather event is impacting Q3 revenue slightly, but production lines are coming back online, which should normalize by Q4. The heavy-duty trucking delays are due to a prolonged freight recession and the need for fleets to see a three-season test of the system to ensure ROI, which is expected to pan out based on current data.

Q: Any thoughts on Tesla's unveiling of the first Cybertruck using dry-cathode 4680 cells? A: Denis Phares, CEO, noted that Tesla's dry process is different from Dragonfly's, involving different chemistries and polymers. He refrained from commenting on the efficacy of Tesla's process but highlighted the differences in their approach.

Q: How does the partnership with Stryten Energy affect non-dilutive funding efforts and government funding opportunities? A: Denis Phares stated that the partnership with Stryten is synergistic, as they are interested in domestic cell supply using Dragonfly's dry-electrode process. He mentioned ongoing success in securing government funding across North America and is in the process of site selection for further developments.

Q: Can you provide an update on the methane leakage opportunity and the timeline for potential follow-on orders? A: Denis Phares explained that the first deployment is set for September, where customers will observe the system reclaiming methane continuously. The project is expected to take off rapidly due to mandates for detecting methane leaks, which are significant greenhouse gases.

Q: Regarding the trucking deal, what is the timeline for converting the fleet of 500-plus trucks? A: Wade Seaburg indicated that the conversion will follow a normal trade cycle of four to five years, with some units being converted in the aftermarket if they are under a year to 15 months old. A significant percentage will be converted as aftermarket, while the rest will follow the normal cycle.

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

This article first appeared on GuruFocus.