Q4 2023 Flux Power Holdings Inc Earnings Call

September 21, 2023

Speaker 1: Greetings and welcome to the SLUFS Power Holdings fourth quarter and fiscal year 2023 financial results comment

Greetings and welcome to the swaps power holdings fourth quarter and fiscal year 2023 financial results Conference call.

Speaker 1: At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to hand the call over to Carolyn Gordon, Marketing Manager. Carolyn? Good afternoon.37

This time all participants are in a listen only mode. A question and answer session will follow the formal presentation.

A reminder, this conference is being recorded I would now like to hand, the call over to Carolyn Gordon marketing manager Caroline.

Good afternoon.

Today, Ron Guy.

Speaker 2: executive officer and shy week. what he over how Little get into this she'd b

Executive.

Hi, Lee.

Yes.

Speaker 2: The present results of operations for the fiscal fourth quarter and fiscal year ended June 30th, 2020.

Regarding results of operations for the fiscal fourth quarter and fiscal year ended June 30th 40 23.

Speaker 2: press release detailing these results across the wires this afternoon at 4.01 p.m.

A press release detailing these results crossed the wires. This afternoon at 401 P. M. Eastern time and is available in the Investor Relations section of our company's website.

Speaker 2: and is available in the investor relations section of our company's website, LuxPower.

Uh huh.

Speaker 2: Before we begin the formal presentation, I would like to remind everyone that statements made on the call and webcast may include predictions, estimates, or other information that might be considered forward.

Before we begin the formal presentation I would like to remind everyone that statements made on the call and webcast may include predictions estimates or other information that might be considered forward looking.

Speaker 2: While these forward-looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ from the...

While these forward looking statements represent our current judgment on what the future holds they are subject to risks.

And uncertainties that could cause actual results to differ materially.

Speaker 2: Your caution not to place undue reliance on these forward-looking statements which reflect our opinions only as of the date of

Not to place undue reliance on these forward looking statements.

Our opinions only as of the date of this presentation.

Speaker 2: Please keep in mind we are not obligating ourselves to revise or publicly release the results of any revision to these forward looking statements. Invite a...

Please keep in mind, we are not obligating ourselves to revise or publicly release results of any revision to these forward looking statements.

In light of new information or future events.

Speaker 2: Throughout today's discussion, we will attempt to present some important factors relating to our business that may affect our

Throughout today's discussion we will attempt to present some important factors relating to our business that may affect our predictions.

Speaker 2: We should also review our most recent form 10K for a more complete discussion of these factors and other risks, particularly under the heading.

You should also review our most recent Form 10-K for a more complete discussion of these factors and other risks, particularly under the heading risk.

Speaker 2: I will turn the call over to our executive officer.

I'd like to turn the call over to our Chief Executive Officer Ron.

Thank you Carolyn and good afternoon, everyone I'm pleased to welcome you to todays fiscal fourth quarter and fiscal year 2003 financial results Conference call.

Speaker 3: Thank you, Carolyn, and good afternoon, everyone. I'm pleased to welcome you to today's Fiscal Fourth Quarter and Fiscal Year 2003 Financial Results Conference call.

Speaker 3: Firstly, please note that on slide three, if you are following the deck.

Firstly, please note that on slide three if you're following the deck.

Speaker 3: There is a short reminder of what we do. That is electrifying commerce.

There is a short reminder of what we do that is electrifying commerce.

Speaker 3: We are powering material handling, airport ground support.

We are powering material handling airport ground support.

Speaker 3: solar energy storage, port authority equipment, and other applications with new and clean technology.

All their energy storage Port authority equipment, and other applications with new and clean technology.

Speaker 3: Our products and services are focused on large nationwide fleets that are pursuing a better return on investment and a positive environmental impact compared to lead-acid batteries.

Our products and services are focused on large nationwide fleets that are pursuing a better return on investment.

And a positive environmental impact compared to lead acid batteries.

Our reputation and brand are critical as we target the household names, which I'll point out shortly.

Speaker 3: Our reputation and brand are critical as we target the household names, which I'll point out shortly.

Speaker 3: We must have a strong reputation and do what we say in order to satisfy these large fleets.

We must have a strong reputation and do what we say in order to satisfy these large fleets.

Speaker 3: that have hundreds of facilities and need their batteries for new equipment or existing equipment delivered on time without difficulty.

It has hundreds of facilities and need their batteries for new equipment.

Our existing equipment.

Levered on time without difficulty.

Speaker 3: Fortune 100 companies demand suppliers that are transparent, experienced, and accountable as they transition their fleets to do

Fortune 100 companies demand suppliers that are transparent.

Experienced and accountable as they transition their fleets.

They do in clean technologies.

Speaker 3: which puts us in a very strong position in the electrification market.

Which puts us in a very strong position in the electrification market.

Now onto our year end results.

Speaker 3: Our business priority this past fiscal year focused on progress to cash flow breakeven.

Our business priority this past fiscal year focused on progress to cash flow breakeven.

Speaker 3: while continuing to capture increasing demand for lithium batteries.

While continuing to capture increasing demand for lithium batteries.

Fiscal year 'twenty twenty-three reflected arcade our strong revenue growth as we continue to focus on fulfilling orders.

Speaker 3: strong revenue growth as we continue to focus on fulfilling order.

Speaker 3: fiscal 2023 revenues were 66.3 million up 57% from 42.3 million.

In fiscal 'twenty twenty-three revenues were $66 3 million up.

57% from 42 point.

3 million in the prior year.

Speaker 3: Quarter 4, 23 revenue is up 7% to $16.3 million compared to Q4.

Quarter, 423 revenue was up 7% to $16 3 million compared to Q4.

Speaker 3: of 2022 revenue of $15.2 million.

2022 revenue of $15 2 million.

Speaker 3: marking our 20th consecutive quarter of year-over-year revenue growth.

Marking our 20th consecutive quarter of year over year revenue growth.

Yeah.

We also continue to improve gross profit.

Speaker 3: increasing 134% to 17.1 million in fiscal year 2023 compared to 7.3 million in fiscal year 2022.

Increasing our hundred and 34% to 17.1 million in fiscal year 2023.

Compared to 7.3 million in fiscal year 2022.

And increasing 44% to 4.3 million.

Speaker 3: and increasing 44% to 4.3 million.

Speaker 3: in Q423 compared to 3 million in Q423 compared to 3 million in Q423 compared to 3 million

In Q4, 23 compared to 3 million.

In Q4 22.

Speaker 3: Gross margin was 26% fiscal year 2023 compared to 17% in fiscal year 2022 and 27% in Q4 2023 compared to 20% in Q4 2022.

Gross margin was 26% in fiscal year, 'twenty twenty-three compared to 17.

Chris sat in fiscal year 2022.

27%.

In Q4, 2023 compared to 20% in Q4 2022.

Speaker 3: Adjusted EBITDA loss decreased 74% to $3.7 million for the year ended June 30, 2023, compared to a loss of $14.1 million for the year ended June 30, 2022.

Adjusted EBITDA loss decreased 74% at 3.7 million for the year ended June 30th 2023.

Impaired to a loss of 14.1 million for the year ended June 30th 2022.

Speaker 3: And adjusted even though I decreased 73% to a loss of $600,000 for Q4 23 compared to a loss of 2.2 million in Q4 of 22.

And adjusted EBITDA decreased 73% to a loss of 600000.

For Q4, 23 compared to a loss of $2 2 million in Q4 of 'twenty two.

Speaker 3: and $700,000 in Q3 2023.

And 700000.

In Q3, 2023.

Speaker 3: For the fourth quarter, our customer order backlog increased from $25 million to $29 million as of June 30, 2023, reflecting continued lithium adoption.

For the fourth quarter.

Our customer order backlog increased from 25 million to 29 million as of June 30th 2023.

<unk> continued lithium adoption.

Speaker 3: A new $15 million credit facility from Gibraltar Business Capital provides funds for working capital and replaces the $14 million line with Silicon Valley Bank.

A new $15 million credit facility from Gibraltar business capital provides funds for working capital.

And replaces the $14 million line with Silicon Valley Bank.

The new facility has a two year term with provisions to increase the line to 20 million.

Speaker 3: The new facility has a two-year term with provisions to increase the line to 20 million and provides for our working capital needs of our planned business growth.

And provides for working capital needs of our planned business growth.

Speaker 3: We're highly focused on achieving cash flow, break even in the near term.

We're highly focused on achieving cash flow flow breakeven in the near term near term.

Speaker 3: reflected in the reduction of cash used by operations in fiscal 2023.

Reflected in the reduction of cash used by operations in fiscal 2023.

Speaker 3: which declined 20.3 million or 85% compared to fiscal year 2022.

Which declined 20.3 million or 85% compared to fiscal year 2022.

Our cost and price initiatives also contributed to gross margin improvement to 26% in the fiscal year 2023 compared to 17% in fiscal year 'twenty to 'twenty two.

Speaker 3: Our cost and price initiatives also contributed to gross margin improvements to 26% in the fiscal year 2023 compared to 17% in fiscal year 2022.

Speaker 3: and 27% in Q4 of 23 compared to 20% in Q4.

And 27% in Q4 of 23 compared to 20%.

In Q4 22.

Speaker 3: as well. Our inventory balance has become more consistent due to improved inventory management, sourcing and supply chain management.

As well our inventory balance has become more consistent due to improved inventory management sourcing and supply chain management.

Speaker 3: Taken together, we are executing on our strategy for cash flow, Greek even, and sustained profitability as we continue to drive expansion of our product lineup and service network.

Taken together, we are executing on our strategy for cash flow breakeven.

And sustained profitability as we continue to drive expansion of our product lineup and service network.

Speaker 3: In a longer term, our strategy revolves around building scale to sell our products to-

And the longer term our strategy revolves around building scale to.

To sell our products to large fleets.

Speaker 3: Building on our Rome momentum in revenue, gross margin and operating leverage. Right now we're growing...

Building on our own momentum in revenue gross margin and operating leverage.

Right now we're growing organically.

Speaker 3: and beginning to explore and develop strategies to build partnerships that can leverage revenue growth, technology and profitability.

And beginning to explore and develop strategies to build partnerships that can leverage revenue growth.

Technology and profitability.

Speaker 3: Our efforts on increasing revenue and margin improvement.

Our efforts on increasing revenue and margin improvement specifically for adjusted EBITDA I reflected on slide seven showing the upward trend over the past fiscal year and our momentum towards breakeven.

Speaker 3: specifically for a justediba dot or reflected on slide seven, showing the upward trend over the past fiscal year and our momentum toward break even.

We are executing our specific supply chain and cost reduction initiatives to continue this momentum.

Speaker 3: We are executing our specifics, supply chain, and cost reduction initiatives to continue this momentum.

Further I realised successes are being applied across various customer applications.

Speaker 3: Are there real life successes? Are being applied across various customer applications?

Yeah.

Speaker 3: Our current potential pipeline of customers continues to expand with three new customers this past quarter and it's all of eight new customers in the four year 2023.

Our current and potential pipeline of customers continues to expand with three new customers this past quarter.

A total of eight new customers in the full year 2023.

Speaker 3: Our full product line caters to large fleets who seek a relationship partner to meet current and future needs, not just one time purchase.

Our full product line caters to large fleets, who seek a relationship partner to meet current and future needs not just one time purchases.

Speaker 3: Please customers represent a diverse base in multiple sectors, all of whom are seeking lower costs during the life of the product.

These customers represent a diverse base in multiple sectors, all of whom are seeking lower costs during the life of the product.

And higher performance from lithium battery packs from a reliable partner.

Speaker 3: higher performance from lithium battery packs from a reliable partner.

For example.

Speaker 3: Mexico has hundreds of facilities across the country and we deliver to all of them. Our primary revenue has come from orders for our packs on new Fort Cliff delivery.

Pepsico has hundreds of facilities across the country and we deliver it to all of them.

Our primary revenue has come from orders for packs on new forklifts deliveries.

Speaker 3: customer adoption of lithium ion solutions increases the cross fleet.

Customer adoption of lithium ion solutions increases across fleets.

Speaker 3: When anticipating increasing orders to replace lead acid batteries, reaching their end of life.

We're anticipating increasing orders to replace lead acid batteries, reaching their end of life.

Speaker 3: prior to foreclift in the life, given the generally longer life of lithium versus lead-ass.

Prior to forklift into life, given the generally longer life of lithium versus lead acid.

Speaker 3: We have taken actions to restore our gross margin trajectory that was interrupted by the pandemic. With our goal now, it sustained profitability. While full year of gross margin expanded, 680 basis points to 27% compared to the prior year.

We have taken actions to restore our gross margin trajectory that was interrupted by the pandemic, but our goal now sustained profitability, while full year gross margin expanded 680 basis points to 27% compared to the prior year.

Sure.

Speaker 3: We continue to see some quarter to quarter lumpiness as shipment delays persist to delays in some selected heavier duty forklift model deliveries.

We continue to see some quarter to quarter Lumpiness of shipment delays persist two delays in some selected heavier duty forklifts model deliveries.

Speaker 3: Our improvement initiatives include a number of actions that have begun to impact gross margin. Price increases to offset commodity increases.

Our improvement initiatives include a number of actions that have begun to impact gross margin.

Price increases to offset commodity increases increased pack lions more competitive shipping costs.

Lower cost more reliable and secondary suppliers of key components.

Speaker 3: Lower costs, more reliable, and secondary suppliers are key components.

Speaker 3: Procrove manufacturing capacity and production processes. In transition, a product line.

Improved manufacturing capacity and production processes.

And transition our product lines.

Two a new modular platform.

All of these initiatives are part of our plan to accelerate gross margins.

Speaker 3: All these initiatives are part of our plan to accelerate growth smart.

Speaker 3: During the fiscal fourth quarter, our backlog increased to 29 million due to new orders

During the fiscal fourth quarter, our backlog increased to 29 million.

Due to new orders outpacing shipments.

Normalization of global supply chains, and ongoing adoption of our lean manufacturing principles are driving throughput and capacity improvements as we continue to monetize.

Speaker 3: Normalization and global supply chains and ongoing adoption of our lean manufacturing principles are driving through put and capacity improvements as we continue to monetize a healthy customer backlog.

Healthy customer backlog.

Our strategic initiatives.

Speaker 3: are also improving sourcing actions to mitigate part story.

Are also improving sourcing actions to mitigate parts shortages.

Speaker 3: Accelerating backlog conversion to ship

Accelerating backlog conversion to shipments.

Speaker 3: and increasing inventory turns to help mitigate backlog expansion.

And increasing inventory turns should help mitigate backlog expansion.

Speaker 3: These initiatives are key drivers of Gross Margin along with operating leverage discussed previously.

These initiatives are key drivers of gross margin along with operating leverage discussed previously.

During the quarter.

Speaker 3: We have slightly decreased our inventory raw materials, finished goods and component parts to $19 million. As of June 3, 2023.

We have slightly decreased our inventory of raw materials finished goods and component parts to $19 million as of June 32023.

Speaker 3: I'll do to improve inventory management while at the same time supporting our strong revenue growth.

All due to improved inventory management, while at the same time supporting our strong revenue growth.

Speaker 3: With that, I will now turn it over to Chuck Shaiwi, our Chief Financial Officer, to review the financial results for the quarter and fiscal year ended June 30th, 2023. Chuck. Thank you, Ron.

With that I will now turn it over to Chuck <unk>, Our Chief Financial Officer to review the financial results for the quarter and fiscal year ended June 30th 2023, Chuck Thank you Ron.

Speaker 1: Now, turning to review our financial results in the quarter and at June 30, 2023.

Now turning to review our financial results in the quarter ended June 32023.

Speaker 1: As Ron mentioned, revenue for the fiscal fourth quarter of 2023 increased by 7% to 16.3 million compared to 15.2 million in the fiscal fourth quarter of 2022.

As Ron mentioned revenue for the fiscal fourth quarter of 'twenty to 'twenty three.

Increased by 7% to $16 3 million compared to $15 2 million in the fiscal fourth quarter of 2022.

Speaker 1: So it's driven by the sale of energy storage solutions with higher average selling prices, a higher volume of units sold, and especially significant increases in our GSE sales.

It was driven by the sale of energy storage solutions with higher average selling prices.

A higher volume of units sold and an especially significant increases in our G. S E sales.

Speaker 1: The gross profit for the fiscal force quarter of 2023.

The gross profit for the fiscal fourth quarter of 2023.

Speaker 1: It increased to 4.3 million compared to a gross profit of 3 million in the fiscal fourth quarter of 2022.

First a 4.3 million compared to a gross profit of 3 million in the fiscal fourth quarter of 2022.

Gross margin was 27%.

Speaker 4: in the fiscal fourth quarter of 2023, as compared to 20% in the fiscal fourth quarter of 2020.

On the fiscal fourth quarter of 2023.

As compared to 20% on the fiscal fourth quarter of 'twenty two.

Speaker 4: This reflected higher volume of unit sold, again with higher gross margin.

This reflected higher volume of units sold.

With higher gross margin.

Speaker 4: and just lower cost of sales, as a result of the gross margin improvement initiatives we continue to work.

And just lower cost of sale as a result of the gross margin improvement initiatives, we continue to work through.

Selling and administrative expenses remained unchanged at $4 1 million.

Speaker 4: selling in the administrative expenses remained unchanged at 4.1 million in the fiscal fourth quarter of

In the fiscal fourth quarter of 'twenty three.

Speaker 4: This is a contributing to our operating leverage we've discussed in the past.

This is a continuous as are contributing to our operating leverage we've discussed in the past.

Speaker 4: Research and development expenses decreased to 1.3 million in the fourth quarter of 2023 compared to 1.4 million

Research and development expenses decreased to $1 3 million.

In the fourth quarter of 2023 compared to 1.4 million.

Speaker 4: in the fourth quarter of 2022. This is primarily due to lower expenses related to development of new products.

In the fourth quarter of 2022. This is primarily due to lower expenses related to development of new products.

Adjusted EBITDA loss.

Speaker 4: decreased to 600K in the fiscal fourth quarter of 23, from 22 million in the fiscal fourth quarter of 22. This is mostly driven by the

Kris just 600 K.

The fourth quarter of 23 from $22 million in the fiscal fourth quarter of 'twenty two.

So, it's mostly driven by the improved gross margins.

Speaker 4: our continued initiatives, business growth, and operating leverage all contribute to drive this trajectory.

Our continued initiatives business growth and operating leverage all contributed to drive this trajectory.

[noise] net loss for the fourth quarter of 2023.

Speaker 4: Net loss for the fourth quarter of 2023 decreased to 1.5 million from a net loss of 2.7 million in the fifth or fourth quarter of 2022. This principally reflecting increased growth problem.

Decreased to one 5 million from a net loss of $2 7 million in.

In the fiscal fourth quarter of 2022 it's principally reflecting increased gross profit.

Speaker 4: partially offset by increased operating expenses along with some modest interest.

Partially offset by increased operating expenses, along with some modest interest expense.

Now turning to review our financial results and the year ended June 30th.

Speaker 4: Now, turning to review our financial results in the here end of June 30.

Revenue for the fiscal year 2023 increased by 57% to $66 3 million.

Speaker 4: revenue for the fiscal year 2023 increased by 57% to 66.3 million compared to 42.3 million in the fiscal year 2022.

Compared to $42 3 million in the fiscal year 2022.

Mainly a result of sales of.

Speaker 4: of energy storage solutions with higher average selling prices, higher volume of unit sold, and the significant increases in...

Energy storage solutions with higher average selling prices higher volume of units sold.

And the significant increases in the GSE sales.

Speaker 4: Gross profit for FY 2023 increased to 17.1 million compared to gross profit of 7.3 million in FY 2022.

Gross.

For FY, 2020 three increased to $17 1 million compared to a gross profit of $7 3 million in FY 2022.

Gross margin was 26% in FY 2023 as compared to 17% in FY 2022.

Speaker 4: Gross margin was 26% in FY 2023, as compared to 17% in FY 2022.

Speaker 4: Again, reflects higher volume of units sold with greater gross margin, lower cost of sales, as a result of the gross margin improvement emissions.

Again reflects higher volume of units sold with greater gross margin.

Lower cost of sales as a result of the gross margin improvement initiatives.

Speaker 4: Selling an administrative expenses increased to 17.6 million in FY 2023 from 15.5 million in FY 2022.

Selling and administrative expenses increased to $17 6 million in FY 2020 three.

From $15 5 million in FY 2022.

This is primarily attributable to increase in outbound shipping costs insurance premiums.

Speaker 4: primarily attributable increase in outbound shipping costs, insurance premiums, new hours.

New hours and temporary labor.

Speaker 4: Suburban expenses incurred, increases in depreciation expense, travel expenses increased, marketing expenses.

Some severance expenses incurred increase.

The increases in depreciation expense travel expenses increased marketing expenses.

Speaker 4: and facility-related costs partially offset by decreases in our commissions, bad debt expenses, consulting fees, public relation expenses, and stock based compensation.

And facility related costs, partially offset by decreases in our commissions bad debt expenses consulting fees public relation expenses and stock based compensation.

Speaker 4: Research and development expenses decreased to 4.9 million in FY 2023.

Research and development expenses decreased to $4 9 million in FY 2020 three.

So as compared to $7 1 million in FY 'twenty to 'twenty two.

Speaker 4: compared to 7.1 million in FY 2022.

Speaker 4: primarily due to lower expenses related to development and testing of new products.

This is primarily due to lower expenses related to development and testing of new products.

Speaker 4: by utilizing our in-house testing equipment, we have pertin.

By utilizing our in house testing equipment, we have purchased.

Speaker 4: adjusted even a loss decreased to 3.7 million in FY 2023.

Adjusted EBITDA loss decreased to $3 7 million in FY, 2020 three.

Speaker 4: This is significantly lower from the 14.1 million in FY 2022. This is driven by the improved gross marketing.

This is significantly lower from the $14 1 million in FY 2022.

Carolyn Gorman: Greetings and welcome to the Flux Powe Hldg's fourth quarter in fiscal year 2023 financial results conference call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to hand the call over to Carolyn Gorman, Marketing Manager, Carolyn. Good afternoon.

Unknown Attendee: Greetings and welcome to the Flux Powe Hldg's fourth quarter in fiscal year 2023 financial results conference call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded.

This was driven by the improved gross margins and the higher revenue.

Net loss for FY 'twenty twenty-three decreased to $6 7 million from a net loss of $15 6 million in FY 2022.

Speaker 4: Net loss for FY 2023 decreased to 6.7 million from a net loss of 15.6 million in FY 2022.

Carolyn Gorman: I would now like to hand the call over to Carolyn Gorman, Marketing Manager, Carolyn. Good afternoon.

Speaker 4: Plensibly is reflecting the increased gross profit and slightly decreased operating expenses partially offset by increases in interest.

Principally is reflecting the increased gross profit.

Ron Gutt: Your host today, Ron Gutt, he's executive officer and professor Scheiwe.

Ron Gutt: Your host today, Ron Gutt, he's executive officer and professor Scheiwe. She's financial officer will present results of operations for the fiscal quarter and fiscal year ended June 30, 2023. Across release, detailing these results across the wires this afternoon at 4 o'clock on PM Eastern time and is available in the investor relations section of our company's website booktower.com.

<unk> slightly decreased operating expenses, partially offset by increases in interest expense.

Unknown Attendee: She's financial officer will present results of operations for the fiscal quarter and fiscal year ended June 30, 2023. Across release, detailing these results across the wires this afternoon at 4 o'clock on PM Eastern time and is available in the investor relations section of our company's website booktower.com. Before we begin the formal presentation, I would like to remind everyone that statements made on the call and webcast may include predictions estimates or other information that might be considered forward looking while these forward looking statements represent our current judgment on what the future holds.

Speaker 4: Cash was 2.4 million at June 30, 2023 as compared to 500,000 at June 30 of 2020.

Cash was $2 4 million at June 32023, as compared to 500000 at June 30th.

2022.

Net cash used in operating activities decreased to $3 6 million.

Speaker 4: Netcash, use and operating activities, decreased 3.6 million.

Speaker 4: in fiscal year 2023 compared to 23.9 million in fiscal year 2022.

In fiscal year, 2023, compared to $23 9 million.

Ron Gutt: Before we begin the formal presentation, I would like to remind everyone that statements made on the call and webcast may include predictions estimates or other information that might be considered forward looking while these forward looking statements represent our current judgment on what the future holds. There are subject to risk and uncertainties that could cause actual results to differ materially. Your caution not to place a new reliance on these forward looking statements which reflect our opinions only as of the date of this presentation.

In fiscal year 2022.

Again this is primarily due to the decrease in net loss lower inventory levels.

Speaker 4: Again, this is primarily due to the decrease in net loss, lower inventory levels, and an increase in the counts pay.

And an increase in accounts payable.

Available working capital includes a line of credit.

Unknown Attendee: There are subject to risk and uncertainties that could cause actual results to differ materially. Your caution not to place a new reliance on these forward looking statements which reflect our opinions only as of the date of this presentation. Please keep in mind we are not obligating ourselves to revise or publicly release the results of any revision to these forward looking statements in light of new information or future events. Throughout today's discussion, we will attempt to present some important factors relating to our business that may affect our predictions.

As of September 20th 2023, under our $15 million.

Speaker 4: Credit facility with your RULTER business capital with the remaining available balance of 3.8 million.

Credit facility, but you Walter business capital.

With the remaining available balance of $3 8 million.

Speaker 4: and the 4 million available under the subordinated line of credit.

And the 4 million available under the subordinated line of credit.

Ron Gutt: Please keep in mind we are not obligating ourselves to revise or publicly release the results of any revision to these forward looking statements in light of new information or future events. Throughout today's discussion, we will attempt to present some important factors relating to our business that may affect our predictions.

Yeah.

Speaker 4: We recently announced that new 15 million credit facility from Gibraltar Business Capital to fund working capital and to refinance the existing credit facility was Silicon Valley Bay. THIS was a asteroid trouble at the cost of 250 dollars far from the city.

We recently announced that new 15 million credit facility from Gibraltar business capital to fund working capital.

And to refinance the.

Existing credit facility with Silicon Valley Bank this facility.

Unknown Attendee: You should also review our most recent form 10k for a more complete discussion of these factors and other risks, particularly under the heading risk factors.

Ron Gutt: You should also review our most recent form 10k for a more complete discussion of these factors and other risks, particularly under the heading risk factors.

Facility has been used to repay.

The credit facility with SPD.

Speaker 4: And along with our existing cash is intended to help meet our anticipated working capital needs to fund planned operations.

And.

Along with our existing cash is intended to help meet our anticipated working capital needs to fund planned operations.

Ron Gutt: Hi, my will turn the call over to Fox Power Chief Executive Officer, Ron Gutt. Thank you, Carolyn. And good afternoon, everyone.

Speaker 4: to meet the demands of our growth trajectory for the foreseeable future.

To meet the demands of our growth trajectory for the foreseeable future.

Ron Gutt: I'm pleased to welcome you to today's fiscal fourth quarter. And fiscal year 2003 financial results conference call. Firstly, please note that on slide three, if you are following the deck, there is a short reminder of what we do. That is electrifying commerce. We are powering material handling, airport ground support, solar energy storage, port authority equipment and other applications with new and clean technology. Our products and services are focused on large nationwide fleets that are pursuing a better return on investment and a positive environmental impact compared to lead absent batteries.

In summary, you know the.

Speaker 4: Stantial progress made, reducing fiscal full year, full year 2023 net cash, used in operating activities now positioned Sclux Power Toward.

Progress made reducing fiscal full year full year 2023 net cash.

Used in operating activities now positions flex power toward an improved cash flow trajectory in fiscal year 2024.

Speaker 4: improved cash flow trajectory in fiscal year 2020.

Speaker 4: Supported by a reinforced balance sheet and strong Fortune 500 customer order back.

Supported by a reinforced balance sheet and strong fortune 500 customer order backlog.

Speaker 4: I now like to pass it back to Ron to offer some closing remarks.

I'd now like to pass it back to Ron to offer some closing remarks.

Thanks Chuck.

Speaker 3: Looking at the positive momentum in fiscal 2020-03, that Chuck just took you through, we are confident that we are on a strong trajectory toward near-term profitability.

Looking at the positive momentum in fiscal 2023 that Chuck just took you through.

We're confident that we're on a strong trajectory toward near term profitability.

Speaker 3: While balancing with continued revenue growth, growth, more dense improvement, and ongoing cost control,

Well balancing.

Revenue growth gross margin improvement and ongoing cost control initiatives.

Ron Gutt: Our reputation and brand are critical as we target the household names, which I'll point out shortly. We must have a strong reputation and do what we say in order to satisfy these large fleets that have hundreds of facilities and need their batteries for new equipment or existing equipment delivered on time without difficulty. Fortune 100 companies demand suppliers that a transparent, experienced and accountable as they transition their fleets, to do in clean technologies, which puts us in a very strong position in the electrification market.

Our long term growth strategy continues to focus on the strong demand for sustainable energy.

Speaker 3: Our long-term growth strategy continues to focus on the strong demand for sustainable sustainable energy.

Speaker 3: We believe the combination of existing customer orders and the acquisition of new customers who want the benefits of lithium ion technology business can drive continued revenue growth.

We believe the combination of existing customer orders and the acquisition of new customers, who want the benefits of lithium ion technology business.

Can drive continued revenue growth.

Product quality.

<unk> technology.

Speaker 3: and service our key factors as to why we continue to attract and maintain business relationships, which will enable continuation.

And service are key factors as to why we continue to attract and maintain business relationships.

Well.

Enable continuation.

Speaker 3: of our growth trajectory that you've seen on the slide.

Although our growth trajectory.

What you've seen on the slides.

Speaker 3: For our technology and our proprietary technology, by the way, we are now working to implement artificial intelligence features and capabilities into our Sky BMS telematics platform, which delivers insight into...

For our technology and our proprietary technology by the way we are now working to implement artificial intelligence features and capabilities into our sky B M. S telematics platform.

Ron Gutt: Now onto our year-in results. Our business priority is past fiscal year focused on progress to cash flow breakeven, while continuing to capture increasing demand for lithium batteries. Fiscal year 2023 reflected our cadence, a strong revenue growth as we continue to focus on fulfilling orders. In fiscal 2023 revenues were 66.3 million up, 57% from 42.3 million in the prior year. Quarter four, 23 revenue was up, 7% to 16.3 million compared to Q4 of 2022 revenue of 15.2 million.

<unk> delivers insight into fleet management.

Speaker 3: So customers can make more informed and timely decision to maximize operational efficiency.

So customers can make more informed and timely decision to maximize operational efficiencies.

Speaker 3: With AI, we can have the capability to anticipate and resolve issues sometimes before they happen, addressing the number one driver and fleet management pain point.

With AI.

He can have the capability to anticipate and resolve issues, sometimes before they happen addressed.

Addressing the number one driver and fleet management.

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And we want to minimize downtime of the equipment.

Speaker 3: And we want to minimize downtime of the equipment.

And our current production facility should support annual revenue up $250 million given our facility footprint.

Speaker 3: And our current production facility should support annual revenue up to $150 million given our facility footprint.

Ron Gutt: Marking our 20th consecutive quarter of year-to-year revenue growth. We also continue to improve growth profit, increasing 134% to 17.1 million in fiscal year 2023 compared to 7.3 million in fiscal year 2022. And increasing 44% to 4.3 million in Q4, 23 compared to 3 million in Q4, 22. Gross margin was 26% fiscal year 2023 compared to 17% in fiscal year 2022 and 27% in Q4, 20, 23 compared to 20% in Q4, 20, 22.

Speaker 3: Second, shift, build out and lead manufacturing implementation.

Second ship build out and lean manufacturing implementation.

Speaker 3: Looking beyond reaching profitability and building on our success in the material handling industry, we are also...

Looking beyond reaching profitability and building on our success in the material handling industry.

There are also.

Speaker 3: focused on broadening our reach into related verticals such as warehouse robotics.

Focused on broadening our reach into related verticals, such as warehouse robotics.

With our operational strategy, including eight assembly lines.

Speaker 3: Our operational strategy, including eight assembly lines,

Speaker 3: We are well positioned to continue to leverage our capabilities. As the adoption of lithium energy solution continues to accelerate.

Well positioned to continue to leverage our capabilities.

The adoption of lithium energy solution continues to accelerate.

Speaker 3: We will also pursue relationships and initiatives to ensure leadership in technology that expand the product and service value to our customers and then also to our...

We will also pursue pursue relationships and initiatives.

To ensure leadership and technology that expand the product and service value to our customers.

And then also to our shareholders in the ER.

Speaker 3: We ended the fiscal year supported by a new working capital line of credit of $50 million with Gibraltar business capital to support plan growth with provisions to increase to 29 as Chuck Headman.

We ended the fiscal year supported by a new working capital line of credit of $15 million with Gibraltar business capital to support planned growth.

Ron Gutt: Adjusted EBITDA loss decreased 74% to 3.7 million for the year ended June 30th, 2023 compared to a loss of 14.1 million for the year ended June 30th, 2022. And adjusted EBITDA decreased 73% to a loss of 600,000 dollars for Q4, 23 compared to a loss of 2.2 million in Q4 of 22 and 700,000 dollars in Q3, 20, 23. For the fourth quarter, our customer order backlog increased from 25 million to 29 million as of June 30th, 2023, reflecting continued lithium adoption.

With provisions to increase to 20 million as Chuck has mentioned.

Speaker 3: In summary, we are well positioned to execute our strategy of electrifying com.

In summary, we.

We are well positioned to execute our strategy of electrifying commerce.

Speaker 3: as we offer customers stored energy solutions to increase productivity at a lower cost during the product's life. We are encouraged.

As we offer customers stored energy solutions to increase productivity at a lower cost during the product's life.

We are encouraged by strong purchase orders.

Speaker 3: expansion of margins through improved sourcing and supply management, ongoing process improvement and pricing.

An expansion of margins through improved sourcing and supply management.

Ongoing process improvement and pricing.

We continue to execute actions to improve adjusted EBITDA as shown on slide seven.

Speaker 3: Can you execute actions to improve adjusted eva dot as shown on slide seven?

Speaker 3: which is a key indicator to achieving profitability.

Which is a key and dedicated to achieving profitability.

Speaker 3: And further, we anticipate expanding into new markets, having strong demand for our value proposition of high performance and service at lower total cost of ownership.

And further we anticipate expanding into new markets, having strong demand for our value proposition of high performance and service at lower total cost of ownership.

Ron Gutt: A new $15 million craft facility from Gibraltar Business Capital provides funds for working capital and replaces the $14 million dollar loan. This line was Silicon Valley Bank. The new facility has a two year term with provisions to increase the line to 20 million and provides for our working capital needs of our planned business growth. Which declined 20.3 million or 85% compared to fiscal year 2022. Our cost and price initiatives also contributed to gross margin improvements to 26% in the fiscal year 2023 compared to 17% in fiscal year 2022. And 27% in Q4 of 23 compared to 20% in Q422 as well our inventory balance has become more consistent due to improved inventory management sourcing and supply chain management.

Speaker 3: I look forward to providing our shareholders with further updates in the near term as we strengthen our leadership position in lithium ion technology solution.

I look forward to providing our shareholders with further updates in the near term as we strengthen our leadership position in lithium ion technology solutions with our growing list of new and diverse large customers.

Speaker 3: with our growing list of new and diverse large cuss.

Yeah.

Speaker 3: I thank you all for attending. And now I'd like to hand the call over to the operator to begin our question and answer session. Operator. Thank you.

I. Thank you all for attending.

And now I'd like to hand, the call over to the operator to begin our question and answer session operator.

Thank you well now be conducting a question and answer session. If you'd like to ask me a question. Please press star one on your telephone keypad.

Speaker 1: If you'd like to ask a question, please press star one on your telephone keypad. The confirmation tone will indicate your line as in the question key. You may press star two, so you'd like to remove your question.

Confirmation tone will indicate your line has been the question Kim you May press star two if she'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star key one moment. Please while we poll for questions.

Speaker 1: for participants using speaker equipment and maybe not to start your pick up your hands that before processing the start team. One moment, please, while we pull for questions.

Speaker 1: Thank you. Our first question is from Rob Brown with Lake Street Capital Market. Please proceed with your question.

Thank you. Our first question is from Rob Brown with Lake Street Capital markets. Please proceed with your question.

Speaker 1: Good afternoon and congratulations on all the progress.

Hi, good afternoon, and congratulations on all the progress.

Thank you Rob.

Speaker 5: I just wanted to get a little bit into the order activity. It appeared pretty strong in the quarter. Did you give us some color on the uppick in orders you saw and what's driving it and maybe how that...

I just wanted to get a little bit into the the order activity it appeared pretty strong in the quarter.

Give us some color any color on on sort of the uptick in orders you saw and.

What's driving it and maybe how that Oh, that's playing out.

Ron Gutt: Taken together we are executing on our strategy for cash flow break even and sustained profitability as we continue to drive expansion of our product lineup and service network. In a longer term our strategy revolves around building scale to sell our products to large fleets. Building on our momentum in revenue gross margin and operating leverage right now we're growing organically and beginning to explore and develop strategies to build partnerships that can leverage revenue growth technology and profitability.

Speaker 3: Yeah, you know, unfortunately we have a number of Priya lines.

Yeah, you know Fortunately, we have a number of our product lines.

Speaker 3: And not only material handling, but GSE, which was really part of our strategy. And I mentioned we want to continue to add those lines because it's helpful, because particularly during the last six months of this fiscal year, in the last quarter.

And not only material handling the GSC, which was really part of our strategy and I mentioned, we want to continue to add those lines because it's helpful. Because.

Particularly during the last six months of this fiscal year and the last quarter of course.

Speaker 3: We saw a big increase in delta and and air Canada's orders in shipping and which was really well received. It was some kind of demand from

We saw a big increase in Delta and and Air Canada's orders in shipping and which was really well received at the end.

Demand from the.

Speaker 3: to supply chain disruption. And so that played well because it had been nearly zero for some period of time. And at the same time, as I mentioned in my remarks,

The supply chain disruption.

And so so that played well [laughter].

Then nearly zero for some period of time.

Ron Gutt: Our efforts on increasing revenue and margin improvement specifically for adjusted EBITDA are reflected on slide seven showing the upward trend over the past fiscal year and our momentum toward break even. We are executing our specific supply chain and cost reduction initiatives to continue this momentum. Further our realized successes are being applied across various customer applications. Our current potential pipeline of customers continues to expand with three new customers this past quarter and total of eight new customers in the full year 2023.

And at the same time as I mentioned in my remarks.

Speaker 3: We have seen some limited selected delays in new work-based lift deliveries from some of the major global OEMs being pushed out. So that didn't represent a losing any business just deferring more to the future. So...

We have seen some limited selected delays in new fork lift deliveries from some of the major global Oems being pushed out so that didn't represent a losing any business just deferring more too.

The future.

So.

Speaker 3: There was certainly the benefit of that diversification, of course, with all those orders. We have small, medium, and large packs, and there's a little bit of difference in the gross margin, depending on the mix of those packs. So those were the key drivers in the revenue.

There was a certainly the benefit of that diversification and of course with all of those orders. We we have a small medium and large packs.

And there's a little bit of difference in the gross margin depending on the mix of those packs. So those were the.

Ron Gutt: Our full product line caters to large fleets who seek a relationship partner to meet current and future needs not just one time purchases. These customers represent a diverse base in multiple sectors all of whom are seeking lower costs during the life of the product and higher performance from lithium battery packs from a reliable partner. For example Jessica has hundreds of facilities across the country and we deliver to all of them. Our primary revenue has come from orders for our packs on new forklift deliveries.

Key drivers of it.

And in the revenue.

Okay.

Speaker 5: Pick right, thank you. And then on the gross margins, you had some bumpiness in the different, you know, a couple of few three I guess was down a little bit. Could you spend on that? Are you sort of where you want to be on pricing or do you have more to go on pricing or have the market?

Okay, great. Thank you and then on the gross margins you had some bumping assembly and the and the different you know prior to Q3, I guess it was down a little bit could you expand on that do you are you sort of where you want to be on pricing or do you have more to go on pricing or margin are retrenching a little bit.

Yeah, you know it's a good it's a good question, Rob we're always looking at pricing in the marketplace, particularly what we've gone through in the in the past three years with passing on price increases by vendors.

Speaker 3: Yeah, you know, it's a good question, Rob. We're always looking at pricing in the market place, particularly what we've going through in the past three years with passing on pricing increases by vendors. And the...

Ron Gutt: If customer adoption of lithium ion solutions increases across fleets, we anticipate increasing orders to replace lead acid batteries reaching their end of life prior to forklift in the life given the generally longer life of lithium versus lead acid. We have taken actions to restore our gross margin trajectory that was interrupted by the pandemic, with our goal now of sustained profitability. While full year of gross margin expanded, 680 basis points to 27% compared to the prior year, we continue to see some quarter to quarter lumpiness of shipment delays persist to delays in some selected heavier duty forklift model deliveries.

And the.

Hum.

Speaker 3: Abagment of a lot of those effects of the supply that change as we sit here now But the pricing is one of them. We've made progress in in trying to achieve growth margin at Sustainable levels for product lines and it ranges larger packs can have a hard growth margin than the smaller packs

Abatement of a lot of those effects of the supply chain is great as we sit here now but.

But the pricing is one of them, we've made progress in and trying to achieve.

Our gross margin.

At at sustainable levels for product lines and it ranges larger packs tend to have a higher gross margin than the smaller packs, but yes. In fact that we were just discussing earlier today some potential pricing actions on an.

Speaker 3: But yes, in fact, we were just discussing earlier today's and potential pricing actions on a chunk of our business. And it's something we continually look at, but the variation or lumpiness, however you want to turn it, turn it in the past couple quarters.

A chunk of our business.

And I know, it's something we continually look at but that that the variation or lumpiness salary when a turn it turn it in the in the past couple of quarters.

Speaker 3: is driven by, as really these factors I've mentioned, the product mix can change some, the model lines, and as well. So, yeah, that's all part of what we manage. We feel confident in our overall management of trend line, and as it relates to our forecast accuracy, which is critical to manage the business.

It is driven by its really these factors I've mentioned the product Mexican change though.

Model lines and as well so yeah. That's all part of what we manage are we feel confident in our overall management of a trend line.

Ron Gutt: Our improvement initiatives include a number of actions that have begun to impact gross margin. Price increases to offset commodity increases, increase pack volumes, more competitive shipping costs, lower costs, more reliable and secondary suppliers of key components, improve manufacturing capacity and production processes. In transition of product lines to a new modular platform, all these initiatives are proud of our plan to accelerate gross margins. During the fiscal fourth quarter, our backlog increased to 29 million due to new orders outpacing shipments.

And as it relates to our forecast accuracy, which is which is critical.

To manage the business.

Yeah.

Okay. Good. Thank you I'll turn it over thank you I'll turn it over.

That's wrong.

Speaker 1: Thank you. Our next question is from Matt Bucolinco with Maxim Group. Please prepare your question. All right. Thanks for taking my questions.

Thank you. Our next question is from Matthew Kalinka with Maxim Group. Please proceed with your question.

Alright, thanks for taking my questions.

I think you mentioned two new customers.

Speaker 1: in the fourth quarter. Anything you can share about the market they're in or sides or expected opportunity? Yeah.

In the fourth quarter.

Anything you can share about T.

The market Theyre in or yeah.

Ron Gutt: Normalization of global supply chains and ongoing adoption of our lean manufacturing principles are driving throughput and capacity improvements as we continue to monetize a multi-customer backlog. Our strategic initiatives are also improving sourcing actions to mitigate parts shortages, accelerating backlog conversion to shipments and increasing inventory turns to help mitigate backlog expansion. These initiatives are key drivers of gross margin along with operating leverage discussed previously. During the quarter, we have slightly decreased our inventory raw materials, finished goods and component parts to 19 million dollars as of June 30, 2023, all due to improved inventory management while at the same time supporting our strong revenue growth.

Size or expected.

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Yeah.

We've been adding.

Speaker 3: Two or three new customers some are different in.

Two or three new new customers. Some are different and are some of the big 800 pound gorillas, which we we try to really focus our effort in a very large fleet. Some of the some of them are more moderate fleets are important as well because they represent a good diversity of good balance as part of our overall.

Speaker 3: Some of the big 800 pound gorillas which we try to really focus our effort on it very largely. Some of the more more moderate fleets are important as well because they represent.

Speaker 3: good diversity, good balance as part of our overall strategy for four large athletes. We added two in the Pacific Northwest, and we also added...

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For for larger fleets, we added two in the Pacific Northwest.

And we also added.

Speaker 3: a supplier who had picked up the business in the project. I don't know if you recall some quarters ago. We have a

A supplier who had picked up the business and the project I don't know if you recall some quarters ago, we have a product.

Speaker 3: in a project for 400 bulk autonomous shuttle vehicles of eight people at limited speed. So we see that as a segment.

And a project for 400 volt.

Autonomous shuttle vehicles of eight people at limited speed. So we see that as a segment that is an adjacency and they picked it up.

Speaker 3: that is an adjacency and they picked it up.

Chuck Scheiwe: With that, I will now turn it over to Chuck Shaiwi, our Chief Financial Officer, to review the financial results for the quarter and fiscal year ended June 30, 2023. Chuck. Thank you, Ron. Now, turning to review our financial results in the quarter ended June 30, 2023. You know, as Ron mentioned, revenue for the fiscal fourth quarter of 2023 increased by 7% to 16.3 million compared to 15.2 million in the fiscal fourth quarter of 2022.

Speaker 3: and we understand they're gonna expand that. So that's important. We like as part of our strategy, expanding to larger PACs.

And or a and we understand they're going to expand that so that's important we like as part of our strategy.

Expanding to larger packs, whether they be 80 volt packs and material handling are 80 volt and GSE or more and also 400 volts in this case.

Speaker 3: whether they be 80 volt packs of material handling, 80 volts in GSE or more, and also 400 volts in this case.

Speaker 3: That demand that sophistication of our engineering capabilities and of course then to gross margins. So please to see see that happening. Some quarters we get bigger bumps in the new customers, but it's all part of all the new customers.

That demand the sophistication of our engineering capabilities and of course, then to gross margin. So pleased to see see that happening some quarters, we get bigger bumps into new customers, but it's all part of all the new customers.

Chuck Scheiwe: It was driven by the sale of energy storage solutions with higher average selling prices, a higher volume of units sold, and especially significant increases in our GSE sales. The gross profit for the fiscal fourth quarter of 2023 increased to 4.3 million compared to a gross profit of 3 million in the fiscal fourth quarter of 2022. The gross margin was 27% in the fiscal fourth quarter of 2023 as compared to 20% in the fiscal fourth quarter of 2022.

Speaker 3: have a timeline of how fast they order, how fast they adopt, how many locations they have. So, you know, in summary, the diversification is very welcome in part of our strategy.

Have a timeline of how fast they order how fast they adopt how many locations. They have them. So you know in summary, our diversification is a very welcome and part of our strategy.

Speaker 1: Great, thank you. My follow up, I guess really around and apologies if you covered this earlier, but you know,

Great. Thank you and my follow up I guess really around and apologies if you've covered this earlier, but.

No.

Speaker 1: How your availability is for revenue?

How your visibility is for revenue.

Chuck Scheiwe: This reflected higher volume of units sold again with higher gross margin and just lower cost of sale as a result of the gross margin improvement initiatives we continue to work through. Selling in the administrative expenses remained unchanged at 4.1 million in the fiscal fourth quarter of 23. This is a contributing to our operating leverage we've discussed in the past. Research and development expenses decreased to 1.3 million in the fourth quarter of 2023 compared to 1.4 million in the fourth quarter of 2022.

Speaker 1: over the next fiscal year and any, you know, just early

Over the next fiscal year and any just.

Early.

Speaker 1: even qualitative comments on what we might expect over the next year. But I guess to qualify that a little bit.

Even qualitative comments on.

What we might expect over the next year.

I guess to qualify that a little bit.

Speaker 1: you know, revenue ended the year a little lower than it. Enter the year, Q4 versus Q1, but obviously we had the strong growth for the full year in 23. So just how should we be thinking about the 24 trajectory on the top line?

You know revenue ended the year, a little lower than it entered the year Q4 versus Q1, but obviously, we had the strong growth full year and 23. So just how should we be thinking about the 24 trajectory on the top line.

Speaker 3: Yeah, no good question. So there will be a lot of time looking at that as you might imagine. And again, we are, we live by the ordering patterns of the deliveries of the new forklifts, which is probably 95% of their business, as opposed to replacing in the life-led asset battery. So depending on how or those orders flow and who it's from, you could really get some some amount.

Yeah No a good question, let me spend a lot of time looking at that as you might as you might imagine and again, we are we live by the ordering patterns of the deliveries of the new for Eclipse, which is probably 95% of their business as opposed to replacing that in the life.

Chuck Scheiwe: This is primarily due to lower expenses related to development of new products. Adjusted EBITDA loss decreased to 600K in the fiscal fourth quarter of 23 from 22 million in the fiscal fourth quarter of 22. This is mostly driven by the improved gross margins. Our continued initiatives, business growth, and operating leverage all contribute to drive this trajectory. Net loss for the fourth quarter of 2023 decreased to 1.5 million from a net loss of 2.7 million in the fiscal fourth quarter of 2022. This principally reflecting increased gross profit partially offset by increased operating expenses along with some modest interest expense.

As a battery so depending on how all those order flow and who it's from you you can really get some some.

Speaker 3: variability in how that proceeds. At the same time,

Variability in how that proceeds at the same time.

Speaker 3: a number of our largest customers.

We're.

Number of our largest customers.

Speaker 3: uh... a couple of them have been giving us letters of intent for all of calendar year twenty four and twenty five they're not buying a course

A couple of them had been giving us letters of intent for all of calendar year, 'twenty four and 'twenty five they're non binding of course, but certainly there's like the larger companies in the world.

Speaker 3: but certainly the larger companies in the world of where

Ware.

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Where there's been some battle scars from shortages of parts are very keen on ring fencing, the allotment that they get their first so we're we're.

Speaker 3: where there's been some battle scars from shorty to the parts are very keen on ring fencing the allotment that they get there's first. So we're seeing that very encouraging signs continued growth. All of our customers are expanding through their tens and hundreds of facilities and they typically do it one at a time and add them and say.

Chuck Scheiwe: Now, turning to review our financial results in the year ended June 30. Revenue for the fiscal year 2023 increased by 57% to 66.3 million compared to 42.3 million in the fiscal year 2022. This is mainly result of sales of energy store solutions with higher average selling prices, higher volume of units sold, and the significant increases in the GSE sales. Gross profit for FY 2023 increased to 17.1 million compared to gross profit of 7.3 million in FY 2022.

We're seeing that are very encouraging signs continued growth all of our customers are expanding through there are tens and hundreds of facilities and they typically do it one at a time and add them and so you'd see that.

Speaker 3: thatacc? Nnellation is a simulation process.

That accumulation process.

So.

We think this growth trajectory is going to continue because of that also in our slides. We have at our DAC are that are on our website show you. All the accounts that we were in very early stages. A lot of them are household names that have a very large fleet.

Speaker 3: We think this growth trajectory is going to continue because of that also. In our, the slides we have on our deck that are on our website show you, all the accounts that we're in very early stages and a lot of them are household names that have very large fleets.

Chuck Scheiwe: Gross Margin was 26% in FY 2023 as compared to 17% in FY 2022. Again, reflects higher volume of units sold with greater gross margin, lower cost of sales as a result of the gross margin improvement initiatives. Selling an administrative expense is increased to 17.6 million in FY 2023 from 15.5 million in FY 2022. This is primarily attributable increase in outbound shipping costs, insurance premiums, new hours and temporary labor, some severance expenses incurred, increases in depreciation expense, travel expenses increased, marketing expenses, and facility related costs partially offset by decreases in our commissions, bad debt expenses, consulting fees, public relation expenses, and stock based compensation.

Speaker 3: And bringing those new customers on are going to add to that. How much? How fast? It's a little uncertain. The other final element I would point to, as we look to fiscal year revenue, is we said we are in the process of rolling out some heavy duty models of our current...

And bringing those those new customers on are going to add to that how much how fast it's a little uncertain.

The other final element I would point to as we look to fiscal year revenue as we said we are in the process of rolling out some heavy duty models of our all of our current offerings.

Speaker 3: And these are, for example, for...

And these are for example for the.

Speaker 3: companies like Subaru or Caterpillar that are lifting heavy industrial items and need that heavier capacity.

Companies like Subaru or caterpillar that are lifting heavy industrial items and need that heavier capacity. So we see a really expansion of opportunity given those models that where we're just now starting to roll to roll out over and over.

Speaker 3: So we see really expansion of opportunity given those models that we're just now starting to roll out over the next year. So we're optimistic for next year, but of course, cautious lay optimistic, but very, very bullish on over the next several years as all those factors I mentioned gain momentum.

The next year. So we're optimistic for next year, but of course cautiously optimistic.

But very very bullish on it over the next several years as all of those factors I mentioned gained momentum.

Chuck Scheiwe: Research and development expenses decreased to 4.9 million in FY 2023, so compared to 7.1 million in FY 2022. This is primarily due to lower expenses related to development and testing of new products by utilizing our in-house testing equipment we have purchased. Adjusted EBITDA loss decreased to 3.7 million in FY 2023. This is significantly lower from the 14.1 million in FY 2022. This is driven by the improved gross margins in the higher revenue.

Great. Thank you I'll jump back in the queue.

Okay.

Yeah.

Speaker 1: As a reminder, if you'd like to ask a question, please press star one on your telephone keypad.

As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad.

Our next question is from Jeff Grant. Please proceed with your question.

Speaker 1: Our next question is from Jeff Grant. Please proceed with your question.

Hey, guys. Thanks for the time.

Speaker 6: Ron, in the release, you mentioned exploring and developing some partnership opportunities that could include vendors, technology partners, and just kind of, I guess other various opportunities. So I'm wondering, that can take a lot of different directions. Can you give us either maybe some examples of what you're assessing, or maybe just kind of high level of benefits you're looking to achieve through any of these kind of opportunities that you guys are thinking about?

Hey, Brian .

In the release, you mentioned exploring and developing some partnership opportunities that could include vendors technology partners and and just kind of I guess other various opportunities. So I'm I'm wondering you know that can take a lot of different directions can you give us either maybe some examples of what you're assessing or maybe just kind of high.

Chuck Scheiwe: Net loss for FY 2023 decreased to 6.7 million from a net loss of 15.6 million in FY 2022. Principle is reflecting the increased gross profit and slightly decreased operating expenses partially offset by increases in interest expense. Cash was 2.4 million at June 30, 2023 as compared to 500,000 at June 30 of 2022. Net cash used in operating activities decreased to 3.6 million in FY 2023 compared to 23.9 million in FY 2022.

Level the benefits, you're you're looking to achieve through any of these kind of opportunities that you guys are thinking about.

Speaker 3: Yeah, sure. No, I'm not keen because it goes with our strategy, which I mentioned many times is the build scale. And we're executing to our plan right now, building scale organically, but certainly developing partnerships where they make sense.

Yeah, there are no notes keen because.

It goes with our strategy, which I mentioned, many many times is to build scale and where.

We're we're executing to our plan right now building scale organically, but certainly developing partnerships where they make sense.

Speaker 3: where it fits with our strategy and with their partners we have that we can trust and work with. So I mean I've done a dozen acquisitions in my time and I could tell you it's easy to do on a bad one. And integration is a big part but the two areas that we are.

Where it fits with our strategy and with their partners we have.

That we can trust and work with so I mean, I I've done it doesn't acquisitions in my time and I can tell you it's easier to do on a bad one and.

Chuck Scheiwe: Again, this is primarily due to decreasing net loss lower inventory levels and an increase in accounts payable. Available working capital includes alignment credit as of September 20, 2023 under our 15 million credit facility which are Walter Business Capital with the remaining available balance 3.8 million and the 4 million available under the subordinated line of credit we have. We recently announced that new 15 million credit facility from Gibraltar Business Capital to fund working capital and to refinance the existing credit facility with Silicon Valley Bay.

Integration is a big part but are the two areas that a we are.

Chuck Scheiwe: Available working capital includes alignment credit as of September 20, 2023 under our 15 million credit facility which are Walter Business Capital with the remaining available balance 3.8 million and the 4 million available under the subordinated line of credit we have. We recently announced that new 15 million credit facility from Gibraltar Business Capital to fund working capital and to refinance the existing credit facility with Silicon Valley Bay. This facility has been used to repay the credit facility with SVB and along with our existing cash is intended to help meet our anticipated working capital needs to fund planned operations to meet the demands of our growth trajectory for the foreseeable future.

Speaker 3: in early stages of our expanding our capability with, for example, automation of modular of...

In early stages of our expanding.

Our capability with for example automation of March or what.

Of.

Speaker 3: Such projects as well related to production and and leveraging the most efficient source to the-

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[music] partner.

That's.

Such projects as well related to production and and leveraging the most efficient source.

Chuck Scheiwe: This facility has been used to repay the credit facility with SVB and along with our existing cash is intended to help meet our anticipated working capital needs to fund planned operations to meet the demands of our growth trajectory for the foreseeable future.

Two does it.

Speaker 3: And also we have a partner who is interested in licensing or PACS.

And also we have a partner who is interested in licensing our packs are in South America will see their very early stages, we're not committing on anything and I. Just wanted to give you. Some color of some of the type of thing that that we could do.

Speaker 3: in South America. We'll see the very early stages. We're not committing on anything. I just want to give you some color of some of the types of things that we could do. Another one is technology.

Chuck Scheiwe: In summary, the substantial progress made reducing fiscal full year 2023 net cash used in operating activities now positioned squats powered toward an improved cash flow trajectory in fiscal year 2024. Supported by a reinforced balance sheet and strong Fortune 500 customer order backlog.

And the other one is technology.

Speaker 3: Villians are spent all over the world trying to get the next best increment of technology and the cells lithium battery cells and We have some discussion going on one opportunity So I think it's a little bit like in the world of acquisitions with some of you know

Billion.

Millions are spread all over the world trying to get the next step.

Increment of technology and the cell.

Lithium battery cells and.

Have some discussion going on one opportunity. So I think it's a little bit like the world of acquisitions with some of you know it's important to really explore these relationships because the timelines can be pretty long.

Ron Gutt: I'd now like to pass it back to Ron to offer some closing remarks. Thanks, Chuck. Looking at the positive momentum in fiscal 2023 that Chuck just took you through. We are confident that we are on a strong trajectory toward near term profitability while balancing with continued revenue growth growth margin improvement and ongoing cost control initiatives. Our long term growth strategy continues to focus on the strong demand for sustainable energy. We believe the combination of existing customer orders and the acquisition of new customers who want the benefits of lithium ion technology business can drive continued revenue growth.

Speaker 3: It's important to really explore these relationships because the timelines can be pretty long, but it's certainly part of our long-term strategy.

But it's certainly part of our long term strategy.

Great. That's super helpful. I appreciate that and for my follow up you guys mentioned and highlighted the inventory being able to be worked down a little bit sequentially.

Speaker 6: Great, that's super helpful, I appreciate that. And for my follow up, you guys mentioned and highlighted the inventory being able to be worked down a little bit sequentially. How much more room is there to have that be a source of cash or a bit of a tailwind on the cash generation side of the business in fiscal and the upcoming fiscal year?

How much more room is there to have that be kind of a source of cash for a bit of a tailwind on the cash generation side of the business and in fiscal <unk> and the upcoming fiscal year.

Yeah, Chuck Angela Yeah, you know, we continue to work through that and we do see some opportunity to continue to monetize some more of that.

Speaker 4: Yeah, Chuck Ann, Ellen. Yeah, we continue to work through that, and we do see some opportunity to continue to monetize some more of that. What we've been seeing lately is order shifting around so finished goods is higher than we would like it to be. You know, I think we're running four to five million typically, it should be down more on two to three. So there's some space there.

Hmm.

What we've been seeing lately is order shifting around some finished goods is higher than we would like it to be you know I think we're running four to 5 million typically it should be down two to three so there's there's some space there.

Ron Gutt: Product quality leading technology and service are key factors as to why we continue to attract and maintain business relationships which will enable continuation of our growth trajectory that you've seen on the slides. For our technology and our proprietary technology, by the way, we are now working to implement artificial intelligence features and capabilities into our Sky BMS telematics platform which delivers insight into fleet management. So customers can make more informed and timely decisions to maximize operational efficiencies.

Speaker 4: And then what we continue to do is we grow larger, we're able to push some inventory off the balance sheet to like we'd have a Chinese supplier of truck adapters that holds it in their own inventory on their at their risk. So we can start to look at more relationships like that or through common off the shelf parts and have them actually roll out to our property and stock in our rather than making more. So we spend a lot of time working on

And then what we continue to do as we grow larger we're able to push some inventory off the balance sheet too.

Like we'd have a Chinese supplier of truck adapters that hold it in their own inventory.

Under a thorough risk. So we can start to look at more relationships like that for through common off the shelf parts a lot of them actually rollout to our property and stops you know rather.

Making orders so we spend a lot of time working on.

Speaker 4: tweaking that to just get the most out of that, but there's definitely a few million there, a couple million. Great.

Tweaking that too to just get the most out of that but there's definitely a you know a few million there couple of million dollars.

Great. Thank you guys appreciate it.

Yeah. Thanks, Joe.

Ron Gutt: With AI, we can have the capability to anticipate and resolve issues sometimes before they happen addressing the number one driver and fleet management pain points. And we want to minimize downtime of the equipment. In our current production facility should support annual revenue up to $150 million given our facility footprint, second chip build out and lean manufacturing implementation. Looking beyond reaching profitability and building on our success in the material handling industry, we are also focused on broadening our reach into related verticals.

Yeah.

Speaker 1: Thank you. Our next question is from Samir Goshi with H.C. Wayne Wright.

Thank you. Our next question is from Sameer Joshi.

With H C. Wainwright. Please proceed with your question.

Speaker 7: Great, thanks. Ron, check, congratulations on the progress. I just thought of a couple of questions. I think you mentioned the AI initiative for the SkyDMS. Should we look at this as additional functionality to remain competitive? Or should we consider this to be an effort to improve margins by selling this event? I don't.

Great. Thanks.

Oh, Ron Chuckle, congratulations on the progress.

Couple of questions.

I think you mentioned.

She will do for the Sky D M S.

Should we look at this additional functionality to remove comp what to do.

Or should we consider this to be an effort to improve margins by shops.

And I'm, just wondering how long service.

Speaker 3: You know, I'm sorry, our sound was a very good. Could you repeat that? I couldn't quite hear it.

You know I I'm, sorry, our art sound wasn't very good could you repeat that I couldn't quite couldn't quite hear it.

Ron Gutt: Such as warehouse robotics with our operational strategy, including eight assembly lines. We are well-positioned to continue to leverage our capabilities. As the adoption of lithium energy solution continues to accelerate, we will also pursue relationships and initiatives to ensure leadership in technology that expand the product and service value to our customers and then also to our shareholders in the end. We ended the fiscal year supported by a new working capital line of credit of $15 million with Gibraltar Business Capital to support plan growth with provisions to increase to 29, as Chuck had mentioned.

Speaker 7: Yeah, yeah. So basically the AI initiative for the SkyBNS should we consider it to be additional service that could be improving revenues or is it to give additional functionality that will make your product more calm.

Yeah, Yeah, so basically the yeah initiate due for the Sky B M S.

We consider it to be.

Additionally, so it was a that could be improving revenues or is it to give them additional functionality that will make your product more competition.

Speaker 3: Yeah, you know, it's really both. I think it's very exciting, you know, about every time you pick up something nowadays, but we have this SkyDamnMess is our battery management system from workshop for.

Yeah, you know it's really both are I think it's very exciting you know you read about a every time you pick up something nowadays, but we had this guy I always sky being masked as our battery management systems firmware software. It connects the path to the cloud and then from the cloud goes anywhere and everywhere.

Speaker 3: It connects the pack to the cloud and then from the cloud goes anywhere and everywhere.

Speaker 3: and the capabilities that that affords are just limitless and work real keen on it our CTO has been leading that effort for a number of years now and we're seeing

And the capabilities that that affords our just limit less and we're real keen on it our C. T O has been leading that effort for a number of years now and we're seeing.

Speaker 3: given our experience you know we're probably moving in this that we're the first ones to have you all listed batteries in 2014

Ron Gutt: In summary, we are well-positioned to execute our strategy of electrifying commerce. As we offer customers stored energy solutions to increase productivity at a lower cost during the product's life. We are encouraged by strong purchase orders, an expansion of margins through improved sourcing and supply management, ongoing process improvement and pricing. We continue to execute actions to improve adjusted EBITDA as shown on slide 7, which is a key indicator to achieving profitability. And further, we anticipate expanding into new markets, having strong demand for our value proposition of high performance and service at lower total cost of ownership.

Given our experience you know we're a prime mover in this that we were the first ones to have you always had batteries in 2014.

And.

Speaker 3: So having that experience and understanding the spectrum of use, opportunities, environmental factors.

So having that experience and that understanding the spectrum abuse opportunities.

Environmental factors.

Speaker 3: and our BMS is allowing us to identify patterns early on, communicate them, communicate, needing any necessary fixes to PACs to support people or to the customer before PACs.

And our BMS is allowing us to identify patterns yearly on communicate them communicate.

Need any necessary fixes to packs to support people or to the customer before pack might go down it started not attended to.

Speaker 3: might go down if not at not attended to can identify service patterns that are needed can identify the remaining length of life of packs of that they can balance the use of packs

Can identify a service patterns that are needed can identify the remaining length of life of packs is that they can balance the use of packs over different pieces of equipment, some use energy faster than others and in short.

Speaker 3: over different pieces of equipment. Some use energy faster than others. And in short,

Ron Gutt: I look forward to providing our shareholders with further updates in the near term as we strengthen our leadership position in lithium ion technology solutions with our growing list of new and diverse large customers.

Speaker 3: to help the asset management of their fleet down.

To healthy asset management.

Their fleet now we believe this adds a lot of value we're starting to sell it. It does help with our margin as well you know because its essentially software base.

Speaker 3: We believe this adds a lot of value. We're starting to sell it. It does help with margin as well, cause it's essentially software base.

Speaker 3: so that, you know, that certainly is a plus.

So that you know that certainly is a plus.

Ron Gutt: I thank you all for attending.

Both the revenue.

Speaker 3: both the revenue and the margin. And I'd say strategically it's particularly important because our customers, we have a long-term relationship.

Unknown Attendee: And now I'd like to hand the call over to the operator to begin our question and answer session operator. Thank you. Well now we conduct any question and answer session. If you'd like to ask any question, please press star one on your telephone key plan. The confirmation tone will indicate your line is in the question key. You may press star two if you'd like to remove your questions from the key for participants using speaker equipment. It may be necessary to pick up your hand step before pressing the star team. One moment later, while we pull for questions. Thank you.

And the margin and I say strategically, it's particularly important because our customers we have a long term relationship.

Speaker 3: And these Fortune 100 500 companies. Select.

And these fortune 100 500 companies.

Select it out.

Hey, guys.

Speaker 3: of our ability and proprietary technology to have continued to have leading technology for them in the future because it's very disruptive for them to change vendors. Now they can always add a vendor, but to change vendors is very...

Our viability and prepare a proprietary technology to have continue to have leading technology for them in the future because it's very disruptive for them to change vendors are now they can always add a vendor that to change vendors is very.

Speaker 3: very, very difficult. And a final point is that one of our largest customers has asked us to partner with them in implementing a joint...

Rob Brown: Our first question is from Rob Brown with Lake Street Capital Market. Please proceed with your question. Good afternoon and congratulations on all the progress. Thank you, Rob. I just wanted to get a little bit into the order activity. It appeared pretty strong in the quarter. Could you give us some color on sort of the uptick in orders you saw and what's driving it and maybe how that all that's playing out? Yeah, you know, fortunately we have a number of product lines and not only material handling, but GSE, which was really part of our strategy.

Very very difficult.

Final point is that one of our largest customers has asked us to partner with them in and are implementing a joint.

Hum.

Speaker 3: AI or Sky BM Master telemetry, if you will.

AI or sky B M mass or telemetry telemetry, if you will with the telemetry of the forklift 'cause it has planned maintenance and other information needed to manage that asset with ours and have it all all in one location.

Speaker 3: with the telemetry of the forklift because it has planned maintenance and other information needed to manage that as that with ours and have it all in one location and one spot. So this really represents a breakthrough.

In one spot so.

This really represents a breakthrough with the customer base. We have so we're really excited about the future with this.

Rob Brown: And I mentioned we want to continue to add those lines because it's helpful because particularly during the last six months of this fiscal year in the last quarter, of course. We saw a big increase in delta and air candidates orders in shipping and which was really well received. It was some kind of demand from the supply chain disruption. And so that played well to have been nearly zero for some period of time.

Speaker 3: customer base we have so we're really excited about the future with this.

Speaker 3: and being in a leadership position and being in a leadership position with the top global OEM.

And being in a leadership position and being in a leadership position with the top global Oems.

Speaker 7: Thanks, Ron, for that color. In terms of cost, I think there was a question about around gross margins and you also gave some color on it. But it seems that the SGNA expense was also lower, quarter or quarter. I think the third quarter SGNA was 4.7 versus 4.1.

Thanks for that color.

In terms of costs I think we are.

Number one on gross margins and you also do.

Some color on it but it seems that the SG&A expense.

Was also lower quarter over quarter, I think the third quarter.

Rob Brown: And at the same time, as I mentioned in my remarks. We have seen some limited selected delays in due work-based lift deliveries from some of the major global OEMs being pushed out so that didn't represent a losing any business just deferring more to the future. So there was certainly the benefit of that diversification and of course with all those orders we have small medium and large packs and there's a little bit of difference in the gross margin depending on the mix of those packs. So those were the key drivers in the revenue.

It's G. M. D was four point something with this 4.1 should we read anything into that or was that just some noncash items.

Speaker 7: Should we read anything into that or was that just some non-cash-

Speaker 4: Yeah, it's not to read anything. I think the thing to read in that is we are keeping it sustained. So that's the bigger point is the operating level. So we're not, you know, there would be some like he said, non-cash items and non-recurring time stuff hit. But we really want to keep that operating leverage going forward and keep the pop-ex stable.

Yeah.

It's not to read anything I think the thing to read in that is we are keeping it sustained so that's the bigger point is the operating leverage so we're not.

You know there would be some like you said some noncash items.

Non recurring type stuff hit, but we really want to keep that.

Operating leverage going forward and keep opex.

Stable here.

Speaker 3: Yeah, and it's really hard. We've spoken of this a number of times. In order to secure, and particularly to keep these large customers that have these large sheets, we have to have the capability to deliver product on time and service and service in a timely face.

Yeah, that's interesting or BARDA weight, we spoke to this a number of times in order to secure and particularly to keep these large customers.

That have these large fleets we have to have the capability to deliver product the product on time in service and service in a timely basis. So it does take a I think of it this way a minimum level of capability in your and your fixed costs. Your operating costs. Your operating resources in order to do that and if.

Speaker 3: So it does take, I think of it this way, a minimum level capability in your fixed costs, your operating costs, your operating resources in order to do that. And if you look at our numbers you've seen for a number of quarters now, very impressive operating leverage.

Ron Gutt: Okay, great. Thank you. And then on the gross margins, you had some bumpiness in the, in the different, you know, a pretty cute thing I guess was down a little bit. Could you spend on that? Are you sort of where you want to be on pricing or do you have more to go on pricing or have the margin of a crunch a little bit? Yeah, you know, it's a good, it's a good question, Rob.

Rob Brown: Okay, great. Thank you. And then on the gross margins, you had some bumpiness in the, in the different, you know, a pretty cute thing I guess was down a little bit. Could you spend on that? Are you sort of where you want to be on pricing or do you have more to go on pricing or have the margin of a crunch a little bit? Yeah, you know, it's a good, it's a good question, Rob.

You look at our numbers because you've seen for a number of quarters now very impressive operating leverage of our revenue growing much faster than operating expense and we expect that to continue as we have made the investment.

Speaker 3: revenue growing much faster than operating expense. And we expect that to continue as we have made the investment in

Ron Gutt: We're always looking at pricing in the marketplace, particularly what we've going through in the, in the past three years with passing on pricing increases by vendors and, and the abatement of a lot of those effects of the supply that changed as we sit here now, but pricing is one of them. We've made progress in trying to achieve a gross margin at sustainable levels for product lines and it ranges larger packs can have a hard gross margin than the smaller packs.

Rob Brown: We're always looking at pricing in the marketplace, particularly what we've going through in the, in the past three years with passing on pricing increases by vendors and, and the abatement of a lot of those effects of the supply that changed as we sit here now, but pricing is one of them. We've made progress in trying to achieve a gross margin at sustainable levels for product lines and it ranges larger packs can have a hard gross margin than the smaller packs.

And Ah Ah you all listings our quality our lean manufacturing I said 9000 that we felt are necessary to be a leader.

Speaker 3: UL listings are quality, lean manufacturing, I-9000.

Speaker 3: that we felt are necessary to be a leader that's sustainable.

A sustainable leader in the sector.

Speaker 7: Great, great, thanks. And then the last, we are already towards the end of September , this quarter is coming to an end. I know for the fiscal 2024, you may not be able to give guidance, but for this next quarter, based on whatever you have seen thus far, should we expect sequential or year-over your improvements in the top line?

Great. Thanks.

And then the last the last Oh, you don't really towards the end of September this quarter, it's coming to an end Oh I know I know.

For the fiscal 'twenty 'twenty four.

Ron Gutt: But yes, in fact, we were just discussing earlier today some potential pricing actions on on a chunk of our business. And no, it's something we continually look at, but that, but the variation or lumpiness, I already want to turn it in the past couple quarters is driven by as really these factors that I've mentioned. The product mix can change some model lines and as well. Yeah, that's all part of what we manage. We do have confident in our overall management of trend line and as it relates to our forecast accuracy, which is, which is critical to manage the business. Okay, good.

Rob Brown: But yes, in fact, we were just discussing earlier today some potential pricing actions on on a chunk of our business. And no, it's something we continually look at, but that, but the variation or lumpiness, I already want to turn it in the past couple quarters is driven by as really these factors that I've mentioned. The product mix can change some model lines and as well. Yeah, that's all part of what we manage. We do have confident in our overall management of trend line and as it relates to our forecast accuracy, which is, which is critical to manage the business. Okay, good.

To be able to do guidance, but for this next quarter.

Based on what you have seen thus far should we expect a sequential or year over year improvements in the top line.

How should we look at it.

Speaker 3: Well, I think this quarter, you know, this quarter historically for us has often been the weaker quarter because of some of the number of our large customers are beverage and food delivery companies that do not like...

Well I think I think this quarter you know this quarter historically for US says that has often been an M D.

The weaker quarter because of.

Some of it but a number of our large customers, our beverage and food delivery companies that do not like.

Speaker 3: implementing new assets during this summer, July , August , and, you know, even September . And so it's a tend to shy away from that and how they how they pace their deliveries. So I think that continues. It wasn't quite so much last year, but again, we are seeing it. We are seeing it have Chuck, can you hit anything? It's exactly it. We are seasoned, you know, seeing that typical seasonality we see in this.

Implementing.

New assets during the summer July August and even September .

And so it's it tend to shy away from that and how they how they pace their deliveries. So right I think that continues it wasn't quite so much last year, but again, we are seeing it we're seeing it have Chuck could you add anything to that no. It's exactly we are seasons seem that typical seasonality we see in this.

Rob Brown: Thank you, I'll turn it over. Yes, thank you, I'll turn it over. Thanks, Rob. Thank you.

Matthew Galinko: Our next question is from Matt, New Galenco with Maxim Group. Please prepare the question. All right. Thanks for taking my questions. I think you mentioned two new customers in the fourth quarter, anything you can share about the market they're in or, you know, size or expected opportunity. Yeah, you know, in quarter, we've been adding two or three new customers. Some are different in some of the big 800 pound gorillas, which we try to really focus our effort on a very large fleet.

Matthew Galinko: Our next question is from Matt, New Galenco with Maxim Group. Please prepare the question. All right.

Speaker 4: July August the Tim Recorders typically down a little bit over for our quarters. And a lot of

July August September quarter is typically down a little bit over prior quarters.

And a lot of that is driven as you know.

Ron Gutt: Thanks for taking my questions. I think you mentioned two new customers in the fourth quarter, anything you can share about the market they're in or, you know, size or expected opportunity. Yeah, you know, in quarter, we've been adding two or three new customers. Some are different in some of the big 800 pound gorillas, which we try to really focus our effort on a very large fleet. Some of the more more moderate fleets are important as well, because they represent good diversity, good balance, as part of our overall strategy for four larger fleets.

Some of our largest customer I used to call. It you know just the summer months. So they go quiet.

Speaker 4: Some of our largest customers used to call it, you know, just the summer months.

Speaker 7: go quiet because they're too busy delivering beverages. Thanks very much, thank you, thank you for your time

Because they're too busy delivering beverages.

Understood.

And good luck.

Yeah. Thank you. Thank you.

Yes.

Thank you there are no further questions at this time I would now like to turn the call back to Mr. Doyle for closing remarks.

Speaker 4: Thank you. There are no further questions at this time. I would now like to turn the call back to Mr. Dutt for closing remarks.

Speaker 3: Thank you, operator. I'd like to thank each of you for turning our financial results conference call today and look forward to continuing to update you on our ongoing progress and growth.

Thank you operator, I'd like to thank each of you for joining our financial results conference call today, and look forward to continuing to update you on our ongoing progress and growth.

Matthew Galinko: Some of the more more moderate fleets are important as well, because they represent good diversity, good balance, as part of our overall strategy for four larger fleets. We added two in the Pacific Northwest, and we also added a supplier who had picked up the business in the project. I don't know if you recall some quarters ago. We have a product and a project for 400 volt autonomous shuttle vehicles of eight people at limited speed.

Speaker 3: If we were unable to answer any of your questions or didn't get to them, please reach out to our IR firm, NC Group, who would be more than happy to assist. And this can...

If we were unable to answer any of your questions or didn't get to them. Please reach out to our IR firm MZ group, who would be more than happy to assist.

Ron Gutt: We added two in the Pacific Northwest, and we also added a supplier who had picked up the business in the project. I don't know if you recall some quarters ago. We have a product and a project for 400 volt autonomous shuttle vehicles of eight people at limited speed. So we see that as a segment that is an adjacency, and they picked it up, and we understand they're going to expand that. So that's important.

And this concludes our call. Thank you.

Yeah.

Speaker 7: This concludes today's conference. You may just connect your lines at this time. Thank you for your participation.

This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.

Matthew Galinko: So we see that as a segment that is an adjacency, and they picked it up, and we understand they're going to expand that. So that's important. We like, as part of our strategy, expanding to larger packs, whether they be 80 volt packs of material handling, 80 volts and GSE or more, and also 400 volts in this case, that demand that sophistication of our engineering capabilities, and of course, then to gross margins.

Ron Gutt: We like, as part of our strategy, expanding to larger packs, whether they be 80 volt packs of material handling, 80 volts and GSE or more, and also 400 volts in this case, that demand that sophistication of our engineering capabilities, and of course, then to gross margins. So please see that happening. Some quarters we get bigger bumps in the new customers, but it's all part of all the new customers have a timeline of how fast they order, how fast they adopt, how many locations they have.

Matthew Galinko: So please see that happening. Some quarters we get bigger bumps in the new customers, but it's all part of all the new customers have a timeline of how fast they order, how fast they adopt, how many locations they have.

Ron Gutt: So, you know, in summary, the diversification is very welcome in part of our strategy. Great. Thank you, my follow-up. I guess really around and apologies if you covered this earlier, but, you know, how your visibility is for revenue over the next fiscal year, and any, you know, just early, even qualitative comments on what we might expect over the next year. You know, I guess to qualify that a little bit, you know, revenue ended the year a little lower than it.

Ron Gutt: So, you know, in summary, the diversification is very welcome in part of our strategy. Great.

Ron Gutt: Thank you, my follow-up. I guess really around and apologies if you covered this earlier, but, you know, how your visibility is for revenue over the next fiscal year, and any, you know, just early, even qualitative comments on what we might expect over the next year. You know, I guess to qualify that a little bit, you know, revenue ended the year a little lower than it. Enter the year, Q4 versus Q1, but obviously we had the strong growth for the full year and 23.

Ron Gutt: Enter the year, Q4 versus Q1, but obviously we had the strong growth for the full year and 23. So just, how should we be thinking about the 24 trajectory on the top line? Yeah, no, good question. We spent a lot of time looking at that as you might imagine. And again, we are, we live by the ordering patterns of the deliveries of the new forklifts, which is probably 95% of their business as opposed to replacing that in the life-led asset battery.

Ron Gutt: So just, how should we be thinking about the 24 trajectory on the top line? Yeah, no, good question. We spent a lot of time looking at that as you might imagine. And again, we are, we live by the ordering patterns of the deliveries of the new forklifts, which is probably 95% of their business as opposed to replacing that in the life-led asset battery. So depending on how or those orders flow and who it's from, you could really get some variability in how that proceeds.

Ron Gutt: So depending on how or those orders flow and who it's from, you could really get some variability in how that proceeds. At the same time, We're a number of our largest customers, a couple of them have been giving us letters of intent for all of calendar year 24 and 25. They're non-binding, of course. But certainly the larger companies in the world of where there's been some battle scars from shortage of parts are very keen on ring fencing the allotment that they get there first.

Ron Gutt: At the same time, We're a number of our largest customers, a couple of them have been giving us letters of intent for all of calendar year 24 and 25. They're non-binding, of course. But certainly the larger companies in the world of where there's been some battle scars from shortage of parts are very keen on ring fencing the allotment that they get there first. We're seeing that very encouraging signs, continued growth. All of our customers are expanding through their tens and hundreds of facilities and they typically do it one at a time and add them.

Ron Gutt: We're seeing that very encouraging signs, continued growth. All of our customers are expanding through their tens and hundreds of facilities and they typically do it one at a time and add them. And so you see that accumulation process. So we think this growth trajectory is going to continue because of that also. In our, the slides we have on our deck that are on our website show you all the accounts that we were in very early stages and a lot of them are household names that have very large fleets and bringing those those new customers on are going to add to that how much how fast it's a little uncertain.

Ron Gutt: And so you see that accumulation process. So we think this growth trajectory is going to continue because of that also. In our, the slides we have on our deck that are on our website show you all the accounts that we were in very early stages and a lot of them are household names that have very large fleets and bringing those those new customers on are going to add to that how much how fast it's a little uncertain.

Ron Gutt: The other final element I would point to as we look to fiscal year revenue is we said we are in the process of rolling out some heavy duty models of our current offerings. And these are for example for companies like Subaru or Caterpillar that are lifting heavy industrial items and need that heavier capacity. So we see really expansion of opportunity given those models that we're just now starting to roll out over over the next year.

Matthew Galinko: So we're optimistic for next year but of course cautiously optimistic but very very bullish on over the next several years as all those factors I mentioned gain momentum. Great thank you all jump back in the queue.

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Jeff Grant: Our next question is from Jeff Grant please proceed with your question. Hey guys thanks for the time. In the release you mentioned exploring and developing some partnership opportunities that could include vendors technology partners and just kind of I guess other various opportunities. So I'm wondering you know that can take a lot of different directions. Can you give us either maybe some examples of what you're assessing or maybe just kind of high level of benefits you're looking to achieve through any of these kind of opportunities that you guys are thinking about.

Jeff Grant: Yeah sure no I'm not keen because it goes with our strategy which I mentioned many times is to build scale and we're executing to our plan right now building scale organically but certainly developing partnerships where they make sense where it fits with our strategy and with their partners we have that we can trust and work with. So I mean I've done a dozen acquisitions in my time and I could tell you it's easy to do on a bad one and integration is a big part but the two areas that we are in early stages of our expanding our capability with, for example, automation of modularizing our style, we have a partner that projects as well related to production and leveraging the most efficient source to those ends. And also, we have a partner who is interested in licensing our packs in South America.

Ron Gutt: We'll see that very early stages, we're not committing on anything. I just want to give you some color of some of the types of things that we could do.

Chuck Scheiwe: Another one is technology. Billions are spent all over the world trying to get the next best increment of technology in the cells, lithium battery cells, and we have some discussion going on one opportunity. So I think it's a little bit like in the world of acquisitions with some of you know it's important to really explore these relationships because the timelines can be pretty long. But it's certainly part of our long-term strategy.

Chuck Scheiwe: Great, that's super helpful, I appreciate that. And for my follow-up, you guys mentioned and highlighted the inventory being able to be worked down a little bit sequentially. How much more room is there to have that be kind of a source of cash for a bit of the tailwind on the cash generation side of the business in fiscal and the upcoming fiscal year?

Chuck Scheiwe: Yeah, Chuck and Ellen. Yeah, we continue to work through that and we do see some opportunity to continue to monetize some more of that. What we've been seeing lately is order shifting around some finished goods is higher than we would like it to be. I think we're running four to five million typically, it should be down two to three. So there's some space there. And then what we continue to do is we grow larger, we're able to push some inventory off the balance sheet to like we have a Chinese supplier of truck adapters that holds it in their own inventory on their at their risk.

Chuck Scheiwe: So we can start to look at more relationships like that or through comment off the shelf parts and have them actually roll out to our property and stock in our rather than us making orders. So we spend a lot of time working on tweaking that to just get the most out of that. But there's definitely a few million there, a couple of million.

Jeff Grant: Great. Thank you guys. Appreciate it. Yeah, thanks, Jeff.

Unknown Attendee: Thank you.

Sameer Joshi: Our next question is from Samir Goshi with H.C. Wayne, right? Please great. Thanks. Ron, check, congratulations on the progress. I just thought of a couple of questions.

Ron Gutt: I think you mentioned the AI initiative for the SkyDMS. Should we look at this as additional functionality to remain competitive or should we consider this to be an effort to improve margins by selling the original. I don't, and Service. You know, I'm sorry, our sound wasn't very good. Could you repeat that? I couldn't quite hear it. Yeah, yeah. So basically, the AI initiative for the Sky BMS should be considered to be an additional service that could be improving revenues or is it to give additional functionality that will make your product more competitive.

Ron Gutt: Yeah, you know, it's really both. I think it's very exciting. You know, every time you pick up something nowadays, but we have this Sky BMS is our battery management system firmware software. It connects the pack to the cloud and then from the clouds goes anywhere and everywhere. And the capabilities that that affords are just limitless and we're real keen on it. Our CTO has been leading that effort for a number of years now.

Ron Gutt: And we're seeing given our experience, you know, we're probably moving in this. We're the first ones to have you all listed batteries in 2014. And so having that experience and understanding the spectrum of use opportunities, environmental factors and our BMS is allowing us to identify patterns early on, communicate them, communicate. We need any necessary fixes to packs to support people or to the customer before a pack might go down if not at not attended to can identify service patterns that are needed can identify the remaining length of life of packs of that they can balance the use of packs over different pieces of equipment.

Ron Gutt: Some use energy faster than others and in short to help the asset management of their fleet now. We believe this adds a lot of value. We're starting to sell it. It does help with margin as well, you know, because it's essentially software bait. So that, you know, that certainly is a plus both the revenue and the margin. And I'd say strategically, it's particularly important because our customers, we have a long term relationship.

Ron Gutt: And these fortune 100 500 companies selected us because of our ability and prepare proprietary technology to have continue to have leading technology for them in the future because it's very disruptive for them to change vendors. Now they can always add a vendor, but to change vendors is very, very, very difficult. And a final point is that one of our largest customers has asked us to partner with them in in implementing a joint.

Ron Gutt: AI or SkyBMAS or telemetry, if you will, with the telemetry of the forklift because it has planned maintenance and other information needed to manage that as that with ours and have it all in one location and one spot. So this really represents a breakthrough with customer base we have. So we're really excited about the future with this and being in a leadership position and being a leadership position with the top global OEM.

Ron Gutt: Thanks, Ron, for that color. In terms of cost, I think there was a question around gross margins and you also gave some color on it, but it seems that the SG&A expense was also lower quarter or quarter. I think the third quarter SG&A was 4.7 versus 4.1. Should we read anything into that or is that just some non-cash items? Yeah, it's not to read anything. I think the thing to read in that is we are keeping it sustained.

Ron Gutt: So that's the bigger point is the operation lever. So there would be some non-cash items and non-recurring time stuff here, but we really want to keep that operating lever going forward and keep up extra stable here. Yeah, and it's really important that we spoke to this a number of times in order to secure and particularly to keep these large customers that have these large fleets. We have to have the capability to deliver product and product on time and service and service in a timely basis.

Ron Gutt: So it does take, I think of it this way, a minimum level capability in your fixed costs, your operating costs, your operating resources in order to do that. And if you look at our numbers you've seen for a number of quarters now, very impressive operating leverage of revenue growing much faster than operating expense. And we expect that to continue as we have made the investment in UL listings, our quality, lean manufacturing, ISO 9000, that we felt are necessary to be a leader.

Ron Gutt: A sustainable leader in the sector. Great. Thanks. And then the last last we are already towards the end of September, this quarter is coming to an end. I know for the fiscal 2024 you may not be able to give guidance, but for this next quarter based on whatever you have seen thus far, should we expect sequential or year over year improvements in the top line? How should we let this quarter? Well, I think this quarter historically for us has often been the weaker quarter because of some of the number of our large customers are beverage and food delivery companies that do not like implementing new assets during the summer July August.

Ron Gutt: And you know, even September and so tend to shy away from that and how they how they pace their deliveries. So I think that continues. It wasn't quite so much last year, but again, we are seeing it. We are seeing it have Chuck, can you hit anything? No, it's exactly we are seasoned, you know, seeing that typical seasonality we see in this July August, the Tim reporters typically down a little bit over for our quarters. You know, a lot of that is driven as, you know, some of our largest customers used to call, you know, just the summer months, they go quiet because they're too busy delivering beverages. Thank you, operator.

Ron Gutt: You know, a lot of that is driven as, you know, some of our largest customers used to call, you know, just the summer months, they go quiet because they're too busy delivering beverages. Thank you, operator. I'd like to thank each of you for turning our financial results conference call today and look forward to continuing to update you on our ongoing progress and growth. If we were unable to answer any of your questions or didn't get to them, please reach out to our IR firm, NC Group, who would be more than happy to assist.

Ron Gutt: I'd like to thank each of you for turning our financial results conference call today and look forward to continuing to update you on our ongoing progress and growth. If we were unable to answer any of your questions or didn't get to them, please reach out to our IR firm, NC Group, who would be more than happy to assist.

Unknown Attendee: And this concludes our call. Thank you.

Unknown Attendee: This concludes today's conference. You may just connect your lines at this time. Thank you for your participation.

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