Dragonfly Energy entered into a $30 million licensing agreement with Stryten Energy, a leading North American battery manufacturer, to allow for expansion of Battle Born Batteries® products into new markets
The Company announced progress in bringing its lithium battery technology to the trucking sector, including a new partnership with Highway Transport to integrate Dragonfly Energy’s all-electric auxiliary power units (“APUs”) into Highway Transport’s fleet of over 500 trucks
The Company achieved continued market share growth in the recreational vehicle (“RV”) segment through partnership with Fraserway RV, Canada’s largest nationwide RV dealer, as well as Meyer Distributing, a leading North American specialty products distributor, both of which extended Dragonfly Energy’s reach and presence across North America
Dragonfly Energy Holdings Corp. (“Dragonfly Energy” or the “Company”), maker of Battle Born Batteries® and an industry leader in energy storage, reported its financial and operational results for the second quarter ended June 30, 2024.
Second Quarter 2024 Financial Highlights
Net Sales were $13.2 million, compared to $19.3 million in Q2 2023
Gross Profit was $3.2 million, compared to $3.9 million in Q2 2023
Operating expenses were $(9.9) million, compared to $(12.5) million in Q2 2023
Net Loss of $(13.6) million, compared to Net Loss of $(11.9) million in Q2 2023
Diluted Net Loss per share was $(0.22), compared to Net Loss of $(0.25) per share in Q2 2023
EBITDA was $(8.4) million, compared to $(7.5) million in Q2 2023
Adjusted EBITDA was $(6.2) million, compared to $(5.7) million in Q2 2023
Operational and Business Highlights
Entered into $30 million licensing agreement for Battle Born Batteries Brand with Stryten Energy, a leading North American battery manufacturer (link)
Announced partnership with Highway Transport, a North American leader in liquid chemical transportation, to begin integrating Dragonfly Energy’s all-electric APUs into Highway Transport’s fleet of over 500 trucks (link)
Partnered with Refreshment Services Pepsi, an independent distributor of Pepsi-Cola products, to provide new liftgate battery systems (link)
Partnered with Fraserway RV, Canada’s largest coast-to-coast RV dealership group, to strengthen Dragonfly Energy’s presence in the Canadian RV market (link)
Announced partnership with Meyer Distributing, leveraging Meyer Distributing’s extensive network of over 100 locations across North America to deliver Battle Born Batteries to new business-to-business customers in the RV and surrounding industries (link)
Announced development of next-generation power charging solutions under the Company’s Wakespeed® Product Line: Wakespeed 500 Pro Bluetooth Alternator Regulator and 48V/12V Bi-Directional DC-DC Converter (link)
Hosted Secretary of Commerce Gina Raimondo and Nevada Senator Jacky Rosen, at an event at the Company’s Reno, Nevada headquarters to promote American innovation and workforce development within the state’s burgeoning lithium industry (link)
“I am incredibly proud of the significant strides Dragonfly Energy has made this quarter, despite the challenging economic environment. Our ability to expand into new verticals and secure strategic partnerships is a testament to the strength of our technology and the dedication of our team,” said Dr. Denis Phares, chief executive officer of Dragonfly Energy. “In particular, we believe the Stryten Energy agreement has the ability to expose our Battle Born Batteries brand to a broader audience and position us for mass market adoption. Moreover, Highway Transport’s decision to adopt our all-electric APUs across their large truck fleet marks a pivotal moment for Dragonfly Energy in the industry, and we anticipate this may inspire others to follow suit. We believe we are laying a solid foundation for future growth of Dragonfly Energy and are excited about the opportunities ahead.”
Second Quarter 2024 Financial and Operating Results
Second quarter 2024 Net Sales were $13.2 million, compared to $19.3 million in the second quarter of 2023. This decrease was primarily due to lower battery and accessory sales offset by a higher average sales price. For the second quarter 2024, direct-to-consumers (“DTC”) net sales decreased by $3.5 million to $6.5 million, compared to $10.0 million in the second quarter of 2023 due to decreased customer demand for the Company’s products, rising interest rates, and inflation. Original equipment manufacturers (“OEM”) revenue decreased by $2.6 million to $6.7 million, compared to $9.3 million in the second quarter of 2023 primarily due to the Company’s largest RV customer changing the Company’s product from a standard offering to an option, in addition to lower order volumes by key customers, primarily due to a weather event at the Company’s largest customer’s production facility, combined with persisting weakness in the motorized RV market.
Second quarter 2024 Gross Profit was $3.2 million, compared to $3.9 million in the second quarter of 2023. The decrease in the Company’s gross profit was primarily due to a lower unit volume of sales.
Operating Expenses in the second quarter of 2024 were $(9.9) million, compared to $(12.5) million in the second quarter of 2023. The decrease was primarily driven by lower employee-related costs and stock-based compensation in the prior year. Professional services, legal, insurance expenses and travel are also lower by $0.6 million, which is in part due to the Company’s June 2023 public offering.
Total Other Expense in the second quarter of 2024 was $(6.9) million, compared to $(3.3) million in the second quarter of 2023. Other expense of $(6.9) million in the quarter ended June 30, 2024 is comprised primarily of interest expense of $(4.9) million related to the Company’s debt securities and a change in fair market value of warrant liability in the amount of $(2.0) million.
Net Loss in the second quarter of 2024 was $(13.6) million, or $(0.22) cent loss per share, compared to Net Loss of $(11.9) million, or $(0.25) cent loss per share in the second quarter of 2023.
EBITDA in the second quarter of 2024 was $(8.4) million, compared to $(7.5) million in the second quarter of 2023.
In the second quarter of 2024, Adjusted EBITDA excluding stock-based compensation, changes in the fair market value of the Company’s warrants, and other one-time expenses, was a $(6.2) million, compared to a $(5.7) million for the second quarter of 2023.
The Company ended the second quarter with $4.7 million in cash, down from $8.5 million at the end of the first quarter of 2024. Although the Company continues to use its inventory as a source of working capital and expects this to continue into the second half of 2024, it has also accelerated accounts payable payments and moved some cash into other assets.
As such, the Company believes that its available cash management tools, including the $5 million upfront fee which was part of the Stryten Energy licensing deal (expected to be received in Q3 2024), combined with continued access to its largely untapped $150 million equity line of credit, provide the necessary liquidity and resources to execute on its operational plans and continue research and development efforts.
Battle Born Batteries Licensing Agreement with Stryten Energy
On July 30, 2024, the Company announced a strategic partnership with Stryten Energy, a leading North American battery manufacturer, for the licensing of the Dragonfly Energy’s Battle Born Batteries® brand of lithium-ion batteries. The licensing agreement, with a potential value of up to $30 million, granted Stryten Energy a license to market and distribute Dragonfly Energy’s Battle Born Batteries globally. Additional revenue above the initial contract value is expected from contract manufacturing, battery design, and technical support fees associated with the deal.
The agreement, which includes an upfront payment from Stryten Energy to Dragonfly Energy of $5 million, will see Stryten Energy leverage its vast distributor and customer network to introduce Battle Born Batteries branded products to new business-to-business markets, including military, automotive, marine, power sports, lawn & garden and golf carts.
Continued Progress and Major Milestone within Trucking Market
The Company has made significant progress in developing its distribution channels. The Company’s batteries have now received approval for installation at Daimler Truck CTS, Rush Enterprises CVS, and Fontaine Modification, all of which are PDI or modification and upfit centers. This development ensures the ready availability of batteries for shipment on new trucks and allows for their inclusion in the tractor’s purchase price.
On August 12, 2024, the Company announced that it would be partnering with Highway Transport, a leader in North American liquid chemical transportation, to transition Highway Transport’s entire fleet of over 500 trucks to Dragonfly Energy’s Battle Born all-electric APUs. As part of the partnership, Highway Transport is expected to install the Battle Born all-electric APUs on new tractors in addition to retrofitting current models in Highway Transport’s fleet. This partnership with Highway Transport marks a major step forward for Dragonfly Energy’s reach in the commercial trucking sector. The Company believes the planned integration of the Battle Born all-electric APU into Highway Transport’s fleet paves the way for wider adoption of the Company’s clean energy solutions, accelerating the transition towards a more sustainable transportation landscape.
On July 1, 2024, the Company announced it is now a provider of lithium based liftgate power solutions for Refreshment Services Pepsi, a privately-held independent bottler and distributor for Pepsi-Cola® products. With distribution centers across the U.S., Refreshment Services Pepsi will begin integrating the Company’s Battle Born Batteries products into their fleet to power liftgate operations. The expansion of the Company’s lithium-based power solutions to liftgate applications broadens sales opportunities within the trucking market.
Q3 2024 Outlook
The Company believes that the RV market continues to show signs of recovery. In addition, the Company believes that its entry into the heavy-duty trucking market and oil and gas market, as well as its licensing and contract manufacturing deal with Stryten Energy, has the potential to contribute more meaningful revenue in the second half of 2024.
Q3 2024 Guidance
Net Sales are expected to range between $13.5 – $15.0 million
Gross Margin is expected in the range of 24% – 26%
Operating Expenses are expected to be in a range of $(10.0) – $(10.5) million
Since other income and net income are impacted by the fair market revaluation of outstanding warrants each quarter, which is dependent on the Company’s future stock price on a given date and not reflective of operating results, the Company does not believe it is prudent to continue to provide guidance on other income and net income.
Webcast Information
The Dragonfly Energy management team will host a conference call to discuss its second quarter 2024 financial and operational results this afternoon, Wednesday, August 14, 2024, at 5:00 pm E.T. The call can be accessed live via webcast by clicking here, or through the Events and Presentations page within the Investor Relations section of Dragonfly Energy’s website at https://investors.dragonflyenergy.com/events-and-presentations/default.aspx. The call can also be accessed live via telephone by dialing (800) 549-8228 toll-free in North America, or for international callers +1 (289) 819-1520, and referencing conference ID: 70028. Please log in to the webcast or dial in to the call at least 10 minutes prior to the start of the event.
An archive of the webcast will be available for a period of time shortly after the call on the Events and Presentations page on the Investor Relations section of Dragonfly Energy’s website, along with the earnings press release.
