SKYX Platforms Corp. Q3 FY2024 earnings call

• Revenue grew 3% to $22.2 million. - Gross profit increased 4% to $6.8 million with a gross margin of 30.9%. - Net cash used in operating activities decreased 39% to $2.6 million. - Interest-bearing debt net of discounts decreased by $3.1 million during the quarter. - Products expected to be in close to 15,000 U.S. and Canadian homes by end of 2024, with tens of thousands more in 2025. - Products in production include exit signs, emergency lights, flush mounts, recessed lights, chandeliers, holiday lights, kids lights, plug & play smart ceiling fans, and various wall sconces. - Partnerships with GE, Home Depot, Wayfair, Kichler, Qouizel, and Ruee. - Aim to be recommended by insurance companies once entire product range is available. - Total addressable market in the U.S. alone is $500 billion with over 4.2 billion ceiling applications.

SKYX Platforms Corp reported record third quarter revenues of $22.2 million, up from $21.6 million in Q3 2023. Gross profit for the third quarter ending September 30, 2024 increased sequentially by 4% to $6.8 million, with a gross margin of 30.9%. Net cash used in operating activities decreased by 39% to $2.6 million compared to the second quarter of 2024. As of September 30, 2024, the company had $13 million plus in cash, cash equivalents, and restricted cash, down from $15.6 million on June 30, 2024. In October 2024, the company secured an $11 million equity preferred stock investment.

• Expect to be cash flow positive in 2025. - Products to be in close to 15,000 U.S. and Canadian homes by end of 2024, with tens of thousands more in 2025. - Additional products in production expected by end of 2024, including advanced and smart plug and play lighting, ceiling fans, and wall lights. - Plan to start shipping to builders and hotels early next year. - Gen 3 platform in final stages of production, with mass production expected soon.

• Potential increase in import tariffs, particularly if President Trump's proposed 60% tariff on Chinese goods is implemented. The company has backup factories in Taiwan, Vietnam, and the Philippines to mitigate this risk.

Q: Recently SKYX participated in the Real Deal Miami Real Estate Forum. Could you please provide an update on your collaboration with builders?

A: We are in production of most builders' fixtures. We supply ceiling outlet receptacles in various packs, and once the full assortment is ready, we will start delivering to builders. Production has started, and we expect to supply more products to builders soon.

Q: Most of your suppliers are based in China. How do you assess the potential increase in import tariffs? For instance, considering President Trump's statement proposing a 60% tariff on all Chinese goods, how might such change affect your gross profit margin? Additionally, if new tariffs are imposed, do you anticipate being able to negotiate the sharing of these tariff costs with your suppliers?

A: We have factories in Taiwan, Vietnam, and the Philippines as backups. We are well-protected, and we don't expect significant impact due to these backup factories.

Q: Collaborations Home Depot, Wayfair, in particular Home Depot, have they given you a schedule for the rollout of the products into the stores and as well as connecting them on to the web?

A: We started rolling into some stores, but product is arriving monthly. We expect to expand online and in stores as we ramp up production.

Q: Is Gen 3, the platform with WiFi, lighting, et cetera, in production? And if not, what's the time line for that to hit production?

A: We're in final stages, fine-tuning before mass production. Mass production expected soon, maybe as early as next month.

Q: I wanted to touch on the insurance recommendation issue. I was wondering, if you could expand a little bit on what that would look like from the consumer's point of view.

A: Our product significantly reduces fires, ladder falls, and electrocution. Discussions are ongoing, and once the full product range is available, we expect insurance recommendations.

Q: I just want to touch on the homebuilder channel. You've announced a Florida order to supply over 1,000 homes. Just wondering if you could provide any updated color on expectations for this channel.

A: We expect to start supplying early next year, with significant interest from major players due to time and cost savings in installation.

Q: Just wondering, you said like you're in total production now of the Sky Plugs. Is most of the production with the smart version or with the planned version? And if it's the planned version, how far off are we for the smart version?

A: We're producing both standard and smart versions. Smart is for high-end products, but standard has higher volume. Smart version is in development, with mass production expected soon.