Dragonfly Energy (DFLI) Q2 Earnings call transcript Aug 14, 2024

In Dragonfly Energy's second quarter 2024 earnings call, the company showcased its resilience and strategic moves aimed at diversifying its business and navigating market challenges. Amidst a backdrop of ongoing difficulties, Dragonfly Energy demonstrated its ability to capitalize on emerging opportunities and maintain a forward-looking outlook.

Market Conditions and Strategic Diversification

The call highlighted the company's ability to navigate challenging market conditions, with CEO Denis Phares acknowledging the impact of higher interest rates on consumer discretionary spending and the realities faced by their core markets. However, the company's strategic moves to diversify its downstream markets, including forays into heavy-duty trucking and oil and gas, position it for more stable growth and a rapid path back to profitability.

Licensing Deal with Stryten Energy

A significant highlight of the call was the announcement of a brand licensing deal with Stryten Energy, a major American energy storage company. This partnership is expected to bring considerable brand value and exposure for Dragonfly Energy, with Stryten's vast distribution channels extending to major retailers like Tractor Supply Company, Interstate, AutoZone, and Continental battery. This collaboration underscores the quality and reputation of Dragonfly Energy's Battle Born batteries and technology.

Heavy-Duty Trucking and Oil and Gas Initiatives

The call emphasized Dragonfly Energy's progress in the heavy-duty trucking market, with significant strides made in the deployment of their all-electric auxiliary power units (APUs) and Liftgate power systems. These solutions, aimed at reducing idling times and decarbonization, have demonstrated real savings for fleets in fuel and maintenance costs, and are expected to accelerate market adoption. The company's entry into the oil and gas industry, addressing the growing need to mitigate methane leakage, opens up a significant new market for Dragonfly Energy. The first deployment is expected in September, with a potential for thousands of installations over the next 18 months.

Financial Performance and Guidance

The call also provided an update on Dragonfly Energy's financial performance for the second quarter of 2024, with net sales of $13.2 million, down from $19.3 million in the second quarter of 2023. This decrease can be attributed to weak customer orders and lingering weakness in the motorized RV market. The company anticipates growth in the third quarter of 2024, with revenues expected to range between $13.5 million to $15 million, and a gross margin of 24% to 26%.

Conclusion

Overall, Dragonfly Energy's second quarter 2024 earnings call underscored the company's strategic moves to navigate market challenges and capitalize on emerging opportunities. The partnership with Stryten Energy, progress in the heavy-duty trucking and oil and gas markets, and a focus on expanding R&D efforts for scaled-up dry electrode cell production all position Dragonfly Energy for sustainable growth and profitability. The company's ability to weather market headwinds and diversify its business bodes well for its future prospects.