Dragonfly Energy Holdings Corp. Q4 FY2023 earnings call

• RV Market: 2023 was difficult, but market is believed to have bottomed with recovery in RV shipments and lithium incorporation. Gaining share with new customer and program wins. - Heavy Duty Trucking: Diversification continues with expanded fleet pipeline using EAPU, recognized as top product of 2024, expected to contribute significantly to revenue. - Dragonfly Intelligence: Began shipping batteries with this feature in Q4 2023, advancing wireless monitoring, expected in RV models for new model year. - R&D: Focus on dry electrode cell manufacturing process, completed pilot line for anode and cathode production. Inbound interest from consumer electronics, data center, and automotive markets. Dry deposition process produces PFAS-free electrodes, cost-competitive study shows energy usage, factory area, and cost reductions.

In the fourth quarter of 2023, the DTC segment had net sales of $6.6 million, down from $10.7 million in the fourth quarter of 2022. For the full year 2023, DTC net sales were $36.9 million, down from $52.4 million in 2022, representing 57.3% of total 2023 revenue (down from 60.8% in 2022). The OEM segment had net sales of $3.9 million in the fourth quarter of 2023, down from $9.2 million in the fourth quarter of 2022. For the full year 2023, OEM net sales totaled $27.5 million, down from $33.8 million in 2022, contributing 42.7% of total net sales in 2023 (up from 39.2% in 2022).

• First Quarter 2024: Revenue expected $12M-$13M (midpoint 20% sequential growth). Gross margin 24%-26%. Operating expenses $8M-$9M. Other income/expense $3.5M-$4.5M. Net loss $8M-$10.5M or $0.13-$0.17 per share. - RV Market: Expected to recover in 2024, with OEM revenue to increase as percentage of sales. - Heavy Duty Trucking: Deployment of EAPU in fleets and mobile storage solutions in liftgate/refrigerated trucks expected to drive growth.

• Market Dependence: Core markets dependent on consumer discretionary spending, though RV market is recovering. - PFAS Regulations: European Union moving to ban PFAS, but company has demonstrated PFAS-free production, but compliance remains a factor. - Supply Chain and Execution: Uncertainty in pace of recovery in RV market and execution of growth in heavy duty trucking and R&D initiatives.

Q: George Gianarikas asks about momentum, bottoming of business, decontenting trend, and discussions with auto OEMs/consumer electronics A: John and Denis discuss RV market bottoming, second half potential, and inbounds from auto/electronics companies tuning process for their metrics Q: Brian Dobson asks about customer requirements, PFAS-free tech, trucking margins, and solid state efforts A: Denis and John discuss PFAS-free advantage, trucking margin expectations, and solid state R&D focus on conventional cells first Q: Chip Moore asks about dry electrodes, heavy duty trucking pipeline, and operating expenses A: John talks about margin expectations, Denis updates on trucking fleet progress Q: Pavel Molchanov asks about off-grid storage and solid state efforts A: John discusses off-grid momentum, Denis talks about solid state R&D focus on conventional cells first Q: Jeff Grampp asks about dry deposition timeline and working capital A: Denis talks about customer-driven progress, John discusses working capital inventory reduction