Dragonfly Energy (DFLI) Q2 2024 earnings summary

Executive summary

• Secured a $30 million global licensing agreement with Stryten Energy for Battle Born Batteries®, including a $5 million upfront payment expected in Q3 2024 and additional royalty revenue, expanding reach into new B2B and retail channels.

• Advanced R&D on dry electrode cell production, seeking non-dilutive and government funding for a new manufacturing facility.

• Expanded into heavy-duty trucking with Highway Transport's commitment to convert its 500+ truck fleet to all-electric APUs, new distribution approvals, and partnerships with Refreshment Services Pepsi, Daimler Truck CTS, Rush Enterprises, and Fontaine Modification.

• Strengthened RV market presence through partnerships with Fraserway RV and Meyer Distributing, despite weather-related disruptions and price sensitivity in the motorized segment.

• Achieved product certifications and prepared for first deployments in the oil & gas market, targeting methane mitigation under new EPA mandates.

Financial highlights

• Q2 2024 net sales were $13.2 million, down 31.6% year-over-year from $19.3 million in Q2 2023.

• Gross profit was $3.2 million (24% margin), down from $3.9 million (20.4% margin) in Q2 2023.

• Operating expenses decreased to $9.9 million from $12.5 million year-over-year.

• Net loss was $13.6 million ($0.22/share), compared to $11.9 million ($0.25/share) in Q2 2023.

• Adjusted EBITDA was $(6.2) million, versus $(5.7) million in Q2 2023.

Outlook and guidance

• Q3 2024 net sales expected between $13.5 million and $15 million; gross margin projected at 24%-26%; operating expenses expected at $10 million-$10.5 million.

• $5 million upfront payment from Stryten Energy anticipated in Q3 2024, with further licensing revenue based on unit volume.

• Majority of new revenue streams from Stryten, trucking, and oil & gas expected to ramp in Q4 2024.

• Management expects RV market revenue to increase in H2 2024, with oil & gas deployments contributing by Q4.

• Capital expenditures and R&D spending are expected to rise, especially for solid-state battery development and facility expansion.