Dragonfly Energy’s Q2 Earnings Call: Dakota Lithium Accretion Timeline and Heavy-Duty Trucking Growth Outlook Clash

Date of Call: Aug 6, 2026

Financials Results

• Revenue: $13.2 million
• EPS: $0.43 loss per diluted share, compared to a net loss of $5.77 per share prior year
• Gross Margin: 33.0%, which included a $1.1 million benefit related to tariff refund payments

Guidance:

• Net sales for Q3 expected to be approximately $13.5 million, reflecting growth in trucking offset by RV weakness.
• Adjusted EBITDA expected to be approximately negative $2.4 million, primarily due to temporary timing factors (vacant space restoration and pre-revenue costs for Dakota Lithium).
• Dakota Lithium expected to contribute meaningful revenue and be accretive to adjusted EBITDA in Q4.
• Target of positive adjusted EBITDA at an annualized net sales run rate of approximately $70 million.

Business Commentary:

Acquisition of Dakota Lithium:

• Dragonfly Energy Holdings acquired Dakota Lithium for a total purchase price of $4 million, with Dakota generating approximately $12 million in net revenue in 2025, despite performance being materially below prior year levels due to working capital and inventory constraints.
• The acquisition is expected to contribute meaningful revenue and be accretive to adjusted EBITDA in the fourth quarter, adding an established brand and expanding product and market reach.

Heavy Duty Trucking Revenue:

• Heavy duty trucking generated approximately $0.5 million in revenue in the second quarter, with expectations to more than double to approximately $1.3 million in the third quarter.
• This represents an inflection point as years of pilot programs and field validation translate into ongoing fleet revenue, supported by improved trucking conditions and the 2027 engine transition.

RV Market Softness:

• The RV market showed general softness, with shipments down 14.2% year-over-year in the second quarter.
• This softness is attributed to macroeconomic factors affecting discretionary spending, with expectations for improvement potentially in 2027.

Adjusted EBITDA Improvement:

• Adjusted EBITDA improved by $3 million sequentially from the first quarter to negative $1.6 million, despite lower net sales.
• The improvement was driven by cost reduction actions and tariff refund payments, with further growth expected in Q3 despite RV market weakness.

Strategic Additions and Patent Allowances:

• The company welcomed Robert Keller as director of national fleet sales and Dr. Lucas Lutz to the board, enhancing expertise in fleet operations and battery science.
• Recent patent allowances for dry electrode manufacturing and solid-state battery technology support the company's long-term technical and intellectual property goals.

Sentiment Analysis:

Overall Tone: Positive

• Management reported 'solid second quarter results' and 'pleased to see the foundation start to translate into financial results.' They highlighted a 'first meaningful revenue contribution' from heavy-duty trucking, an 'important commercial inflection point,' and stated the 'engine we have been building is now working.' The acquisition of Dakota Lithium is described as creating 'meaningful operating leverage,' and they are 'well positioned to reach' the target of positive adjusted EBITDA.

Q&A:

• Question from George Giannouridis (Canaccord Genuity): Focus on Dakota Lithium's financial metrics and how its run rate fits into guidance for 70 million annual revenue.
  Response: Confirmed the 70 million annual revenue run rate includes Dakota's contribution.

• Question from George Giannouridis (Canaccord Genuity): Update on Dakota Lithium's revenue trends and contribution expectations.
  Response: Dakota's revenue declined significantly due to inventory constraints; they aim to restart from prior levels.

• Question from George Giannouridis (Canaccord Genuity): Is Dakota a sales channel?
  Response: Yes, it's a complementary product suite serving different markets with minimal incremental operating expense.

• Question from George Giannouridis (Canaccord Genuity): Commentary on the RV market and expected rebound.
  Response: General softness persists due to macroeconomic factors; a rebound is not expected until 2027.

• Question from Chip Moore (Roth Capital Partners): Potential size of the trucking market pipeline and opportunity for 2027-2028.
  Response: Significant growth expected in 2027 from major fleets, but difficult to quantify precisely.

• Question from Chip Moore (Roth Capital Partners): Potential on the industrial side.
  Response: Green shoots in markets like intelligent transportation systems and cellular/telecom, but not currently a major focus.

• Question from Chip Moore (Roth Capital Partners): Will the company pursue similar opportunistic deals like Dakota Lithium?
  Response: Always looking for opportunities.

• Question from Chip Moore (Roth Capital Partners): Update on JV exploration for dry electrode.
  Response: Will talk more about those activities in the future.

Contradiction Point 1

Dakota Lithium Acquisition Financials and Contribution Timeline

Inconsistent statements about when Dakota becomes accretive to EBITDA and its inclusion in the revenue target.

George Giannouridis (Canaccord Genuity) - George Giannouridis (Canaccord Genuity)

2026Q2: The company expects Dakota to begin contributing meaningful revenue and being accretive to adjusted EBITDA in Q4 2026. - [Dennis Ferris](CFO)

What metrics are used to evaluate Dakota Lithium's acquisition, how is its run rate contributing to the 70M annual revenue target, and what has been its financial performance in recent quarters and expected contribution this year? - George Gianarikas (Canaccord Genuity)

2026Q2: The $70 million annualized net sales run rate target for positive adjusted EBITDA includes Dakota Lithium's revenue. ... They expect Dakota to begin contributing meaningful revenue and becoming accretive to adjusted EBITDA in Q4 2026. - [Dr. Denis Phares](CEO) and [Wade Seaburg](COO)

Contradiction Point 2

Heavy-Duty Trucking Market Growth Expectations

Timeline for significant market rebound shifts from immediate to delayed.

What were the key drivers of revenue growth in the quarter? - Chip Moore (Roth Capital Partners)

2026Q2: Significant growth is expected in 2027, though it's difficult to quantify precisely. - [Wade Seberg](COO)

What is the potential size of the heavy-duty trucking pipeline and the associated opportunity for 2027/2028? - Chip Moore (Roth)

2026Q1: Recent industry data shows a significant rebound... truck orders up 200%... marking a shift as fleets begin to spend capital on new technology. - [Wade Seaburg](COO)

Contradiction Point 3

Dry Electrode/Solid-State Battery Program Updates

Shift from active, near-term partnership development to minimal activity with vague future plans.

Chip Moore (Roth Capital Partners) - Chip Moore (Roth Capital Partners)

2026Q2: More details on JV activities related to dry electrode technology will be provided in future updates. - [Dennis Ferris](CFO)

What is the potential in the industrial market and any updates on the joint venture related to dry electrode technology? - Chip Moore (Roth)

2026Q1: Development of the dry electrode and solid-state technologies continues in the background with minimal capital spend... The goal is to be ready to announce something meaningful in the future... - [Denis Phares](CFO)

Contradiction Point 4

Outlook for the RV Market

Contradictory signals on RV market demand recovery and overall outlook.

George Giannouridis (Canaccord Genuity) - George Giannouridis (Canaccord Genuity)

2026Q2: The RV market remains generally soft, expected to persist through year-end and into 2027, due to macroeconomic factors and discretionary spending challenges. - [Wade Seberg](CCO)

What is your outlook for the RV market environment and when do you expect a rebound? - Alfred Moore (ROTH Capital)

20260317-2025 Q4: January saw lower-than-expected demand... However, demand recovered in February and early March. While the overall RV market is projected to be flat, Dragonfly expects to increase its energy storage footprint within existing OEMs. - [Wade Seaburg](CCO)

Contradiction Point 5

Timeline for Heavy-Duty Trucking Growth

Inconsistent expectations for when significant revenue growth will materialize in the heavy-duty trucking segment.

What question did Chip Moore of Roth Capital Partners pose during the earnings call? - Chip Moore (Roth Capital Partners)

2026Q2: Significant growth is expected in 2027, though it's difficult to quantify precisely. - [Wade Seberg](COO)

What is the potential size of the heavy-duty trucking pipeline and the associated opportunities for 2027/2028? - Alfred Moore (ROTH Capital)

20260317-2025 Q4: An exciting second half of the year for heavy-duty trucking is anticipated. - [Denis Phares](CEO)