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Flux Power Reports 3rd Quarter Fiscal 2023 Financial Results

Third Quarter Fiscal 2023 Revenue Increased 14% to $15.1 Million

Third Quarter Fiscal 2023 Gross Profit Increased 146% to $4.7 Million

Management to Host Conference Call Today at 4:30 p.m. Eastern Time

Flux Power Holdings, Inc. (NASDAQ: FLUX), a developer of advanced lithium-ion energy storage solutions for electrification of commercial and industrial equipment, has reported its financial and operational results for the fiscal third quarter ended March 31, 2023.

Key Financial & Operational Highlights for the Third Quarter Fiscal Year 2023

  • Revenue (Shipments) increased 14% to $15.1M in Q3’23 compared to Q3’22 revenue of $13.2M.
  • Achieved 19th consecutive quarter of year-over-year revenue growth.
  • Gross profit increased 146% to $4.7M in Q3’23 compared to $1.9M in Q3’22.
  • Q3’23 gross margin was 31% compared to 15% in Q3’22, reflecting gross margin improvement initiatives including sourcing changes, design cost reductions, and pricing recovery of pandemic related cost increases.
  • Operating Leverage continued its positive trend for the nine months ended March 31, 2023, of revenue growth and gross margin improvement compared with no increase of operating expense.
  • Net cash used in operating activities decreased 16% in Q3’23 compared to Q3’22 and 73% for the nine months ended March 31, 2023, compared to the nine months ended March 31, 2022.
  • Adjusted EBITDA loss decreased 80% in Q3’23 compared to Q3’22 and decreased 74% for the nine months ended March 31, 2023 compared to the nine months ended March 31, 2022.
  • Customer order backlog totaled $25.0M as of March 31, 2023.
  • Renewed the existing credit facility with Silicon Valley Bank, a division of First Citizens Bank of $14.0 million to support working capital requirements.
  • Strategic Supply Chain & Profitability Improvement Initiatives continued to accelerate path to cash flow breakeven.
  • Added 2 new large fleet customers, reflecting customers desire to fulfill long-term fleet needs of replacing lead acid battery packs with lithium-ion.

Backlog Summary

Fiscal Quarter Ended

 

Beginning Backlog

 

��

New Orders

 

 

Shipments

 

 

Ending Backlog

 

December 31, 2021

 

$

19,433,000

 

 

$

19,819,000

 

 

$

7,837,000

 

 

$

31,415,000

 

March 31, 2022

 

$

31,415,000

 

 

$

20,495,000

 

 

$

13,317,000

 

 

$

38,593,000

 

June 30, 2022

 

$

38,593,000

 

 

$

11,622,000

 

 

$

15,195,000

 

 

$

35,020,000

 

September 30, 2022

 

$

35,020,000

 

 

$

9,678,000

 

 

$

17,840,000

 

 

$

26,858,000

 

December 31, 2022

 

$

26,858,000

 

 

$

20,652,000

 

 

$

17,158,000

 

 

$

30,352,000

 

March 31, 2023

 

$

30,352,000

 

 

$

9,751,000

 

 

$

15,087,000

 

 

$

25,016,000

 

Management Commentary

“We continued our successful cadence of year-over-year revenue growth with our 19th consecutive quarter of revenue growth, combined with a renewed credit facility providing additional cash to fund higher working capital requirements driven by increased customer demand and to meet our growth goals,” said Ron Dutt, Chief Executive Officer of Flux Power. “We also continued to improve gross profit, up 146% in the third quarter to $4.7 million, and gross margin expansion of 16 basis points to 31% compared to the year ago period. Adjusted EBITDA loss decreased $0.2 million for the quarter on a sequential basis, and decreased $8.7 million, or 74%, for the nine months ended March 31, 2023 compared to the nine months ended March 31, 2022.

“The positive trend of operating leverage during the nine months ended March 31, 2023, versus prior year support our profitability goals with revenue growth of 85%, gross margin improvement of 197% against operating expense of a slight decrease.

“To supplement our customer support services in response to this growth in nationwide sales, we recently announced the opening of our new Atlanta facility. The facility will enable faster response times to our customer base, with an effective service and call center capability. Investment in the Atlanta office broadens our geographic footprint to bring comprehensive and responsive services to customers in the eastern half of the U.S. while also, and importantly, resulting in lower service logistics costs incurred by our Company.

“Although global supply chain disruptions have lessened, we increased our inventory to $21 million as of March 31, 2023, to accommodate lengthening of forklift OEM delivery timelines being experienced in the material handling sector. To address disruptions and reduce excess inventory, we have improved lean manufacturing processes and supply chain management. We have launched an in-house automated modular production initiative to manage module SKUs and accommodate diversification of cell suppliers and also utilized lower cost, more reliable, and secondary suppliers of key components including cells, steel, electronics, circuit boards and other production critical components.

“We recently announced a renewal of the credit facility with Silicon Valley Bank, now a division of First Citizens Bank (“SVB Facility”), of $14.0 million to support higher working capital requirements related to increased customer demand. This renewal, along with our existing cash, will continue to meet our anticipated capital resources to fund planned operations. We also continue to explore alternative capital opportunities to enable us to meet the demands of our aggressive growth trajectory.

“Looking ahead, we believe our strong purchase orders, backlog and continued expansion of margins through improved sourcing and supply chain management, continual process improvement, and pricing is leading us toward what we believe is a clear path to profitability. We are focused on the continuation of our growth trajectory through the advancement of our technology, capacity, and customer and partnership relationships, and expanding into new markets. I look forward to additional announcements, as well as a customer demo day we are planning, in the months to come as we strive to create long-term sustainable growth and shareholder value,” concluded Dutt.

Q3’23 Financial Results

  • Revenue for the fiscal third quarter of 2023 increased by 14% to $15.1 million compared to $13.2 million in the fiscal third quarter of 2022, driven by increased sales volumes and models with higher selling prices, including greater sales to existing and new customers.
  • Gross profit for the fiscal third quarter of 2023 increased to $4.7 million compared to a gross profit of $1.9 million in the fiscal third quarter of 2022. Gross margin was 31% in the fiscal third quarter of 2023 as compared to 15% in the fiscal third quarter of 2022, reflecting higher volume of units sold with greater gross margin and lower cost of sales as a result of the gross margin improvement initiatives.
  • Adjusted EBITDA loss decreased to $0.7 million in the fiscal third quarter of 2023 from $3.4 million in the fiscal third quarter of 2022 and decreased 74% to $3.1 million for the nine months ended March 31, 2023 compared to $11.9 million in the nine months ended March 31, 2022, driven by the improved gross margins.
  • Selling & Administrative expenses increased to $4.7 million in the fiscal third quarter of 2023 from $3.9 million in the fiscal third quarter of 2022, reflecting increases in marketing expenses, commissions, insurance premiums, depreciation, and outbound shipping costs.
  • Research & Development expenses decreased to $1.2 million in the fiscal third quarter of 2023, compared to $1.7 million in the fiscal third quarter of 2022, primarily due to lower staff related expenses and expenses related to development of new products.
  • Net loss for the fiscal third quarter of 2023 decreased to $1.4 million from a net loss of $3.7 million in the fiscal third quarter of 2022, principally reflecting increased gross profit, partially offset by increased operating expenses and interest expense.
  • Cash was $0.8 million at March 31, 2023, as compared to $0.5 million at June 30, 2022. Available working capital includes: our line of credit as of May 10, 2023, under our $14.0 million revolving line of credit with Silicon Valley Bank (“SVB Credit Facility”) with a remaining available balance of $3.8 million; and $4.0 million available under the subordinated line of credit (“Subordinated LOC”).
  • Net cash used in operating activities decreased to $3.3 million in Q3’23 compared to $3.9 million in Q3’22 and to $5.2 million for the nine months ended March 31, 2023 compared to $19.3 million for the nine months ended March 31, 2022, primarily due to a decrease in net loss and an increase in accounts payable.

Third Quarter Fiscal Year 2023 Results Conference Call

Flux Power CEO Ron Dutt and CFO Chuck Scheiwe will host the conference call, followed by a question-and-answer session. The conference call will be accompanied by a presentation, which can be viewed during the webcast or accessed via the investor relations section of the Company’s website here.

To access the call, please use the following information:

Date:

Thursday, May 11, 2023

Time:

4:30 p.m. Eastern Time, 1:30 p.m. Pacific Time

Toll-free dial-in number:

1-877-407-4018

International dial-in number:

1-201-689-8471

Conference ID:

13738000

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact MZ Group at 1-949-491-8235.

The conference call will be broadcast live and available for replay at https://viavid.webcasts.com/starthere.jsp?ei=1609226&tp_key=dff562cf20 and via the investor relations section of the Company's website here.

A replay of the webcast will be available after 7:30 p.m. Eastern Time through August 11, 2023.

Toll-free replay number:

1-844-512-2921

International replay number:

1-412-317-6671

Replay ID:

13738000

About Flux Power Holdings, Inc.

Flux Power (NASDAQ: FLUX) designs, manufactures, and sells advanced lithium-ion energy storage solutions for electrification of a range of industrial and commercial sectors including material handling, airport ground support equipment (GSE), and stationary energy storage. Flux Power’s lithium-ion battery packs, including the proprietary battery management system (BMS) and telemetry, provide customers with a better performing, lower cost of ownership, and more environmentally friendly alternative, in many instances, to traditional lead acid and propane-based solutions. Lithium-ion battery packs reduce CO2 emissions and help improve sustainability and ESG metrics for fleets. For more information, please visit www.fluxpower.com.

Note about Non-GAAP Financial Measures

A non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with accounting principles generally accepted in the United States of America, or GAAP. Non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures. Other companies may use different non-GAAP measures and presentation of results.

In addition to financial results presented in accordance with GAAP, this press release presents adjusted EBITDA, which is a non-GAAP measure. Adjusted EBITDA is determined by taking net loss and adding interest, taxes, depreciation, amortization and stock-based compensation expenses. The company believes that this non-GAAP measure, viewed in addition to and not in lieu of net loss, provides additional information to investors by providing a more focused measure of operating results. This metric is an integral part of the Company’s internal reporting to evaluate its operations and the performance of senior management. A reconciliation of adjusted EBITDA to net loss, the most comparable GAAP measure, is available in the accompanying financial tables below. The non-GAAP measure presented herein may not be comparable to similarly titled measures presented by other companies.

US-GAAP NET INCOME (LOSS) TO ADJUSTED EBITDA RECONCILIATION

(Unaudited)

 

 

Nine Months Ended March 31,

 

 

 

2023

 

 

2022

 

Net loss

 

$

(5,265,000

)

 

$

(12,956,000

)

Add/Subtract:

 

 

 

 

 

 

 

 

Interest, net

 

 

971,000

 

 

 

86,000

 

Income tax provision

 

 

-

 

 

 

-

 

Depreciation and amortization

 

 

647,000

 

 

 

412,000

 

EBITDA

 

 

(3,647,000

)

 

 

(12,458,000

)

Add/Subtract:

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

539,000

 

 

 

601,000

 

Adjusted EBITDA

 

$

(3,108,000

)

 

$

(11,857,000

)

Forward-Looking Statements

This release contains projections and other "forward-looking statements" relating to Flux Power’s business, that are often identified using "believes," "expects" or similar expressions. Forward-looking statements involve several estimates, assumptions, risks, and other uncertainties that may cause actual results to be materially different from those anticipated, believed, estimated, expected, etc. Such forward-looking statements include impact of COVID-19 on Flux Power’s business, results and financial condition; Flux Power’s ability to obtain raw materials and other supplies for its products at competitive prices and on a timely basis, particularly in light of the potential impact of the COVID-19 pandemic on its suppliers and supply chain; the development and success of new products, projected sales, cancellation of purchase orders, deferral of shipments, Flux Power’s ability to fulfill backlog orders or realize profit from the contracts reflected in backlog sale; Flux Power’s ability to fulfill backlog orders due to changes in orders reflected in backlog sales, Flux Power’s ability to obtain the necessary funds under the credit facilities, Flux Power’s ability to timely obtain UL Listing for its products, Flux Power’s ability to fund its operations, distribution partnerships and business opportunities and the uncertainties of customer acceptance and purchase of current and new products, and changes in pricing, and Flux Power’s ability to negotiate and enter into a definitive agreement in connection with the Letter of Intent. Actual results could differ from those projected due to numerous factors and uncertainties. Although Flux Power believes that the expectations, opinions, projections, and comments reflected in these forward-looking statements are reasonable, they can give no assurance that such statements will prove to be correct, and that the Flux Power’s actual results of ‎operations, financial condition and performance will not differ materially from the ‎results of operations, financial condition and performance reflected or implied by these forward-‎looking statements. Undue reliance should not be placed on the forward-looking statements and Investors should refer to the risk factors outlined in our Form 10-K, 10-Q and other reports filed with the SEC and available at www.sec.gov/edgar. These forward-looking statements are made as of the date of this news release, and Flux Power assumes no obligation to update these statements or the reasons why actual results could differ from those projected.

Flux, Flux Power, and associated logos are trademarks of Flux Power Holdings, Inc. All other third-party brands, products, trademarks, or registered marks are the property of and used to identify the products or services of their respective owners.

Follow us at:

Blog: Flux Power Blog

News Flux Power News

Twitter: @FLUXpwr

LinkedIn: Flux Power

FLUX POWER HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

 

 

March 31,

2023

 

 

June 30,

2022

 

 

 

(Unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash

 

$

790,000

 

 

$

485,000

 

Accounts receivable

 

 

9,853,000

 

 

 

8,609,000

 

Inventories, net

 

 

20,959,000

 

 

 

16,262,000

 

Other current assets

 

 

775,000

 

 

 

1,261,000

 

Total current assets

 

 

32,377,000

 

 

 

26,617,000

 

Right of use assets

 

 

3,035,000

 

 

 

2,597,000

 

Property, plant and equipment, net

 

 

1,724,000

 

 

 

1,578,000

 

Other assets

 

 

119,000

 

 

 

89,000

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

37,255,000

 

 

$

30,881,000

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

10,827,000

 

 

$

6,645,000

 

Accrued expenses

 

 

2,604,000

 

 

 

2,209,000

 

Line of credit

 

 

10,491,000

 

 

 

4,889,000

 

Deferred revenue

 

 

-

 

 

 

163,000

 

Customer deposits

 

 

135,000

 

 

 

175,000

 

Finance lease payable, current portion

 

 

140,000

 

 

 

-

 

Office lease payable, current portion

 

 

616,000

 

 

 

504,000

 

Accrued interest

 

 

3,000

 

 

 

1,000

 

Total current liabilities

 

 

24,816,000

 

 

 

14,586,000

 

 

 

 

 

 

 

 

 

 

Office lease payable, less current portion

 

 

2,223,000

 

 

 

2,361,000

 

Finance lease payable, less current portion

 

 

311,000

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

27,350,000

 

 

 

16,947,000

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value; 500,000 shares authorized; none issued and outstanding

 

 

-

 

 

 

-

 

Common stock, $0.001 par value; 30,000,000 shares authorized; 16,156,432 and 15,996,658 shares issued and outstanding at March 31, 2023 and June 30, 2022, respectively

 

 

16,000

 

 

 

16,000

 

Additional paid-in capital

 

 

96,968,000

 

 

 

95,732,000

 

Accumulated deficit

 

 

(87,079,000

)

 

 

(81,814,000

)

 

 

 

 

 

 

 

 

 

Total stockholders’ equity

 

 

9,905,000

 

 

 

13,934,000

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

37,255,000

 

 

$

30,881,000

 

 

 

 

 

 

 

 

 

 

FLUX POWER HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

Three Months Ended March 31,

 

 

Nine Months Ended March 31,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenues

 

$

15,087,000

 

 

$

13,177,000

 

 

$

50,085,000

 

 

$

27,138,000

 

Cost of sales

 

 

10,368,000

 

 

 

11,257,000

 

 

 

37,310,000

 

 

 

22,838,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

4,719,000

 

 

 

1,920,000

 

 

 

12,775,000

 

 

 

4,300,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and administrative

 

 

4,724,000

 

 

 

3,904,000

 

 

 

13,510,000

 

 

 

11,402,000

 

Research and development

 

 

1,182,000

 

 

 

1,713,000

 

 

 

3,567,000

 

 

 

5,768,000

 

Total operating expenses

 

 

5,906,000

 

 

 

5,617,000

 

 

 

17,077,000

 

 

 

17,170,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss

 

 

(1,187,000

)

 

 

(3,697,000

)

 

 

(4,302,000

)

 

 

(12,870,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income

 

 

-

 

 

 

-

 

 

 

8,000

 

 

 

-

 

Interest expense

 

 

(258,000

)

 

 

(52,000

)

 

 

(971,000

)

 

 

(86,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(1,445,000

)

 

$

(3,749,000

)

 

$

(5,265,000

)

 

$

(12,956,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share - basic and diluted

 

$

(0.09

)

 

$

(0.23

)

 

$

(0.33

)

 

$

(0.85

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding - basic and diluted

 

 

16,048,054

 

 

 

15,988,926

 

 

 

16,021,653

 

 

 

15,254,983

 

FLUX POWER HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

Nine Months Ended March 31,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(5,265,000

)

 

$

(12,956,000

)

Adjustments to reconcile net loss to net cash used in operating activities

 

 

 

 

 

 

 

 

Depreciation

 

 

647,000

 

 

 

412,000

 

Stock-based compensation

 

 

539,000

 

 

 

601,000

 

Amortization of debt issuance costs

 

 

445,000

 

 

 

-

 

Noncash lease expense

 

 

370,000

 

 

 

324,000

 

Allowance for inventory reserve

 

 

214,000

 

 

 

109,000

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(1,244,000

)

 

 

(3,411,000

)

Inventories

 

 

(4,911,000

)

 

 

(10,530,000

)

Other current assets

 

 

11,000

 

 

 

(118,000

)

Accounts payable

 

 

4,182,000

 

 

 

6,186,000

 

Accrued expenses

 

 

395,000

 

 

 

(441,000

)

Accrued interest

 

 

2,000

 

 

 

-

 

Office lease payable

 

 

(379,000

)

 

 

(322,000

)

Deferred revenue

 

 

(163,000

)

 

 

289,000

 

Customer deposits

 

 

(40,000

)

 

 

519,000

 

Net cash used in operating activities

 

 

(5,197,000

)

 

 

(19,338,000

)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Purchases of equipment

 

 

(753,000

)

 

 

(644,000

)

Proceeds from sale of fixed assets

 

 

8,000

 

 

 

-

 

Net cash used in investing activities

 

 

(745,000

)

 

 

(644,000

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock in registered direct offering, net of offering costs

 

 

-

 

 

 

13,971,000

 

Proceeds from issuance of common stock in public offering, net of offering costs

 

 

697,000

 

 

 

1,602,000

 

Proceeds from revolving line of credit

 

 

48,800,000

 

 

 

3,500,000

 

Payment of revolving line of credit

 

 

(43,198,000

)

 

 

-

 

Payment of financed leases

 

 

(52,000

)

 

 

-

 

Net cash provided by financing activities

 

 

6,247,000

 

 

 

19,073,000

 

 

 

 

 

 

 

 

 

 

Net change in cash

 

 

305,000

 

 

 

(909,000

)

Cash, beginning of period

 

 

485,000

 

 

 

4,713,000

 

 

 

 

 

 

 

 

 

 

Cash, end of period

 

$

790,000

 

 

$

3,804,000

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosures of Non-Cash Investing and Financing Activities:

 

 

 

 

 

 

 

 

Initial right of use asset recognition

 

$

855,000

 

 

$

-

 

Common stock issued for vested RSUs

 

$

114,000

 

 

$

10,000

 

Supplemental cash flow information:

 

 

 

 

 

 

 

 

Interest paid

 

$

524,000

 

 

$

86,000

 

 

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