Q3 2025 Flux Power Holdings Inc Earnings Call
Operator: Greetings and welcome to the Flux Power Holdings Fiscal 3rd Quarter 2025 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.
Greetings and welcome to the Flex power Holdings fiscal third quarter 'twenty to 'twenty five 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.
Operator: As a reminder, this conference is being recorded. Before we begin the formal presentation, I would like to remind everyone that statements made on the call-in 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, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this presentation. Please keep in mind that 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.
As a reminder, this conference is being recorded.
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 are their information that might be considered forward looking.
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.
You are cautioned not to place undue reliance on these forward looking statements, which reflect our opinions only as of the date of this presentation.
Please keep in mind that 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.
Operator: Throughout today's discussion, we will attempt to present some important factors relating to our business that may affect our predictions.
Throughout today's discussion we will attempt to present, some important factors relating to our business.
That may affect our predictions.
Operator: 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 factors.
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 factors.
Operator: A press release detailing these results crossed the wire this afternoon at 4.01pm ET and is available in the Investor Relations section of our company's website, FluxPower.com.
A press release detailing these results crossed the wire. This afternoon at four to one P. M. Eastern time and is available in the Investor Relations section of our company's website black spot where dotcom.
Krishna Vanka: Your host today, Krishna Vanka, Chief Executive Officer.
Krishna Vanco: Your hosts today Krishna Vanco Chief Executive Officer.
Krishna Vanka: Kevin Royal, Chief Financial Officer, and Jeff Mason, VP of Operations, will present results of operations for the fiscal third quarter ended March 31, 2025.
Krishna Vanco: Kevin Royal Chief Financial Officer, and Jeff Mason VP of Operation will present results of operations for the fiscal third quarter ended March 31, 'twenty 'twenty five.
Krishna Vanka: At this time, I will turn the call over to Flux Power's CEO, Krishna Vanka. Thank you, operator. And good afternoon, everyone. I am very pleased to welcome you to today's third fiscal quarter 2025 financial results conference call. Since joining Flux in March, I have spent some good time engaging with our internal teams, products, customers, and partners. This has given me a clear view into how our solutions drive value for our customers and where we must focus to scale responsibly and profitably.
Krishna Vanco: At this time I will turn the call over to flux Power's CEO Krishnan of Banca.
Speaker Change: Thank you operator, and good afternoon, everyone I'm very pleased to welcome you to today's.
Speaker Change: 2025 financial results conference call.
Speaker Change: Since joining <unk> in March.
Speaker Change: And some good time engaging with our internal team product customers and partners.
Speaker Change: Given me a clear view into how it's positioned to drive value for our customers and very much focused to scale that possibly unprofitably.
Krishna Vanka: With that said, based on this insight, we have aligned our five strategic initiatives that will guide our execution, culture, and performance metrics moving forward. Let me take them one by one with you.
Speaker Change: Based on these insights.
Speaker Change: Our final strategic initiative that will kind of an execution culture and performance metrics moving forward.
Speaker Change: Let me take them one by one with you no matter what profitable growth.
Krishna Vanka: Number one, profitable growth. Our top priority here is achieving consistent quarterly profitable results as we scale.
Speaker Change: Reality here is achieving consistent quarterly profitability growth.
Krishna Vanka: Number two, operational efficiencies. We are aggressively optimizing our supply chain and internal processes to reduce costs, especially amidst this tariff uncertainty.
Speaker Change: Number two.
Speaker Change: There's still efficiencies.
Speaker Change: So really optimizing our supply chain and internal processes to reduce costs, especially amidst this static with that kind of thing.
Krishna Vanka: Jeff Mason will touch on tariffs in more detail later on this call. Number three, Solution Selling.
Speaker Change: Nathan will touch on in more detail later on this call.
Speaker Change: I've got three so let's.
Krishna Vanka: Led by our Chief Revenue Officer, Kelly Frey, this initiative is transforming how we sell by aligning our offerings to the customer's profit. Number four, build the right products. We are focused on innovations that will meet real customer needs while expanding our market. Number five, software and recurring revenue. Very exciting here. SkyEMS, our intelligent battery platform, is the foundation for a broader recurring revenue pattern.
Speaker Change: Let's say you have a chief revenue Officer Kelly tried this initiative is transforming itself by aligning our offerings to the customers problem no.
Speaker Change: Never before build the right products, we are focused on delivering innovation that will meet.
Speaker Change: Some of them need while expanding our market.
Speaker Change: Number five software and recurring revenue very exciting here I am at our intelligent battery platform is the foundation for a broader recurring revenue strategy.
Krishna Vanka: With that said, today, I do want to do a little bit of deep dive onto those last two initiatives. With the launch of the G96 solution, Flux Power is advancing the electrification of airline drone support equipment by addressing growing demands for higher power, greater intelligence, and sustainable operations. This product is helping us further expand our portfolio to support high-energy demand pushback tractors, positioning Flux Power as a technology leader in the shift to clean, high-performance GSC electricity. We continue to develop and expand our KMSA platform to support the full life cycle of an intelligent battery.
Speaker Change: That said today I do want to do it it's a bit of deep dive onto those last two initiative.
Speaker Change: With the launch of a G 96 solution, but what is it wrong to think that electrification I paid later on and so forth. They give me by addressing the growing demand for higher power greater intelligence and sustainable operation.
Speaker Change: This product is.
Speaker Change: That's funded and expand our portfolio to support high energy demand pushback tractors.
Speaker Change: <unk> talked about are the technology leader in the ship clean high performing GSE electrification.
Speaker Change: We continue to develop it.
Speaker Change: It's a platform to support the full lifecycle of an intelligent battery what does this mean number one plant we have been providing tools to our fleet and infrastructure planning number to operate providing the real time operational insights number three optimizing the usage on indefinitely.
Krishna Vanka: What does this mean? Number one, plan. We will provide tools for fleet and infrastructure planning. Number two, operate. Providing the real-time operational information. Number three, optimizing the usage on the fleet. Number four, predictive maintenance. Number five, providing recycling with respect to the second life option. Sky EMS is already in pilot with select companies. As you may have noticed, earlier this week, we announced a patent award for Intelligent Battery Lifecycle Maximization, which is a proprietary AI-based algorithm.
Speaker Change: I worked for predictive maintenance network by providing recycling it affected the second option.
Speaker Change: He's already pilots with select customers.
Speaker Change: You may have noticed earlier. This week you know a patent award for intelligent battery lifecycle maximization beaches appropriately as they've kind of got it.
Krishna Vanka: As Flux Power accelerates its evolution from a battery manufacturer to a technology-driven energy solutions provider, these innovations and our SkyEMS software will play a central role. For us to achieve this vision, we are planning to have every battery we ship to be cloud-connected moving forward.
Speaker Change: So it accelerates its position from a battery manufacturer to a technology driven energy solutions provider. These innovations in the scheme of software play a central role.
Speaker Change: Finally for acute this weekend, we are planning to have everybody back to the ship to be cloud connected moving far away. We are incredibly excited about Scott your math I'm going to share more details about the software strategy on a future call.
Krishna Vanka: We are incredibly excited about Sky EMS, and we'll share more details about this software strategy on our future calls.
Jeff Mason: I will now turn the call over to Jeff Mason to discuss operational updates. Thank you, Krishna. As geopolitical complexities continue to influence global trade, we remain steadfast in our commitment to operational resilience and value creation. We are responding to tariff pressures and accelerating our roadmap to sustain momentum. Our product does contain a partial made-in-China content that is impacted by the latest tariffs. We have already updated our price list and are sharing with our customers. Considering recent tariff changes impacting the global supply chain, we are rapidly adapting sourcing tactics as part of our short-term supply chain response.
Jeff Mason: I didn't know I will turn the call over to Jeff made sense to discuss operational update Jeff.
Jeff Mason: Thank you Krishna.
Jeff Mason: As geopolitical complexities continue to influence global trade, we remain steadfast in our commitment to operational resilience and value creation.
Jeff Mason: We are responding to tariff pressures and accelerating our roadmap to sustain momentum.
Jeff Mason: Our product does contain a partial made in China content that is impacted by the latest tariffs we've already updated our price list and our share with our customers.
Jeff Mason: Considering our recent tariff changes impacting the global supply chain, we are rapidly adopting sourcing tactics as part of our short term supply chain response.
Jeff Mason: We are accelerating the evaluation of new suppliers, particularly for battery cells and other raw materials. We will continue supplier continuity by maintaining existing long term supplier relationships. while transitioning to alternative regions with lower tariff exposure. We are reinforcing the company's commitment to LFP battery solutions to ensure we meet our existing customer needs and requirements. And we are investigating new battery chemistries tailored to specific applications, ultimately providing new opportunities for our existing and future customers. Our long-term supply chain strategy has adopted a commodity-based sourcing strategy to ensure resilience and cost efficiency in key material categories. We are focused on partnerships and building strategic alliances with OEM suppliers and manufacturers who can consistently deliver high quality and competitively priced components.
Jeff Mason: We are accelerating the evaluation of new suppliers, particularly for battery cells and other raw materials.
Jeff Mason: We will continue to supply our continuity by maintaining existing long term supplier relationships.
Jeff Mason: While transitioning to alternative regions with lower tariff exposures.
Jeff Mason: We are reinforcing the company's commitment to L. A P battery solutions to ensure we meet our existing customer needs and requirements.
Jeff Mason: And we are investigating new battery chemistries tailored to specific applications.
Jeff Mason: Similarly, providing new opportunities for our existing and future customers.
Jeff Mason: Okay.
Jeff Mason: Our long term supply chain strategy has adopted a commodity based sourcing strategy to ensure resilience and cost efficiency and key material categories.
Jeff Mason: We are focused on partnerships and other strategic alliances with OEM suppliers and manufacturers, who can consistently deliver high quality and competitively priced components.
Jeff Mason: We're also focused on supplier diversification, reducing the exposure to high tariff regions by onboarding qualified suppliers across alternative regions, including North America. Our objective is to establish a diversified and agile supply network that supports long-term scalability and innovation.
Jeff Mason: We are also focused on supplier diversification, reducing the exposure to high tariff regions by Onboarding qualified suppliers across alternative regions, including North America.
Jeff Mason: Our objective is to establish a diversified and agile supply network that supports long term scalability and innovation.
Jeff Mason: Looking ahead, we are working toward domestic assembly and manufacturing expansion. We are committed to scaling domestic assembly capabilities in the US with a focus on reducing exposure to the international logistics in terms We are also planning accelerated R&D investment. including tariff resistant product design. Our engineering teams are prioritizing designs that use lower tariff materials and including potential new chemistry. We are also advancing innovation partnerships and collaboration with U.S.-based companies to secure future supply chains at competitive costs.
Jeff Mason: Looking ahead, we are working toward domestic assembly and manufacturing expansion.
Jeff Mason: We are committed to scaling domestic assembly capabilities in the U S with a focus on reducing exposure to the international logistics and tariffs zones.
Jeff Mason: We are also planning accelerated R&D investments, including tariff resistant product design.
Jeff Mason: Our engineering teams are prioritizing designs that use lower tariff materials and including potential new chemistries.
Jeff Mason: We're also advancing innovation partnerships and collaboration with U S based companies to secure future supply chain at competitive costs.
Jeff Mason: Despite near-term global headwinds, Our proactive strategy ensures three goals. Maintain optimal margins. Sustained growth driven by U.S.-based manufacturing and product innovation, and long-term competitiveness with a cost-efficient, diversified supply chain and scalable infrastructure.
Jeff Mason: Despite near term global headwinds.
Jeff Mason: Our proactive strategy ensures three goals maintain optimal margins.
Jeff Mason: Sustained growth driven by U S based manufacturing and product innovation and.
Jeff Mason: And long term competitiveness with a cost efficient diversified supply chain and scalable infrastructure.
Kevin Royal: Taken together, we are transforming challenges into catalysts for future I will now turn the call over to Kevin Royal to discuss the fiscal third quarter highlights and then walk through our business updates and financials. Thank you, Jeff. Revenue for the third fiscal quarter increased 16% to $16.7 million, compared to $14.5 million in the third fiscal quarter of 2024, driven by higher demand in the material handling and ground support equipment markets, with unit growth of 10% and 25%, respectively.
Jeff Mason: Together, we are transforming challenges into catalysts for future growth.
Speaker Change: I will now turn the call over to Kevin Royal to discuss the fiscal third quarter highlights and then walk through our business update and financials Kevin.
Kevin Royal: Thank you Jeff.
Kevin Royal: Revenue for the third fiscal quarter increased 16% to $16 7 million compared to $14 5 million in the third fiscal quarter of 2024, driven by higher demand in the material handling and ground support equipment market with unit growth of 10% and 25% respectively.
Kevin Royal: Revenue for the first quarter of fiscal 2025 was $16.1 million and revenue for the second quarter of fiscal 2025 was $16.8 million. Gross profit for the third fiscal quarter of 2025 increased 32.5% to $5.3 million, compared to a gross profit of $4 million in the third fiscal quarter of 2024. Gross margin increased to 32% in the third fiscal quarter of 2025 as compared to 28% in the third fiscal quarter of 2024. Gross profit margin increased by 374 basis points due to a decrease in warranty-related costs partially offset by slightly higher material We have a continued focus on product cost reduction in order to further improve our gross profit margins with a near-term target of 40% or higher gross profit margin.
Kevin Royal: Revenue for the first quarter of fiscal 2025 was $16 1 million in revenue for the second quarter of fiscal 2025 was $16 8 million.
Kevin Royal: Gross profit for the third fiscal quarter of 2025 increased 32, 5% to $5 3 million compared to a gross profit of $4 million in the third fiscal quarter of 2024.
Kevin Royal: <unk> margin increased to 32% in the third fiscal quarter of 2025 as compared to 28% in the third fiscal quarter of 2024.
Kevin Royal: Gross profit margin increased by 374 basis points due to a decrease in warranty related costs, partially offset by slightly higher material costs.
Kevin Royal: We have a continued focus on product cost reduction in order to further improve our gross profit margins for the near term target of 40% or higher gross profit margin.
Kevin Royal: Selling and administrative expenses increased to $5.7 million in the third fiscal quarter of 2025 as compared to $5.3 million in the third fiscal quarter of 2024, primarily attributable to professional fees of approximately $500,000 associated with a multi-year restatement of previously filed financial statements. Research and development expenses decreased to $1.1 million in the third fiscal quarter of 2025 compared to $1.3 million in the third fiscal quarter of 2024, mainly driven by lower salaries and severance costs. Adjusted EBITDA loss was $1.1 million in the third fiscal quarter of 2025 as compared to an adjusted EBITDA loss of $1.7 million in the third fiscal quarter of 2024.
Kevin Royal: Selling and administrative expenses increased to $5 7 million in the third fiscal quarter of 2025 as compared to $5 3 million in the third fiscal quarter of 2024, primarily attributable to professional fees of approximately 500000 associated with the multiyear.
Kevin Royal: Restatement of previously filed financial statements.
Kevin Royal: Research and development expenses decreased to $1 1 million in the third fiscal quarter of 2025 compared to $1 3 million in the third fiscal quarter of 2024, mainly driven by lower salaries and severance costs.
Kevin Royal: Adjusted EBITDA loss was $1 1 million in the third fiscal quarter of 2025 as compared to an adjusted EBITDA loss of $1 7 million in the third fiscal quarter of 2024.
Kevin Royal: Net loss for the third fiscal quarter of 2025 was $1.9 million compared to a net loss of $3 million in the third fiscal quarter of 2024, primarily attributable to an increase in gross profit in the current quarter, partially offset by the increase in selling and administrative expenses related to costs associated with the multi-year restatement of previously filed financial statements. Cash was $0.5 million on March 31, 2025, as compared to $0.6 million at June 30, 2024, reflecting changes in working capital management. Available working capital includes our line of credit as of March 31, 2025, under our $16 million credit facility from Gibraltar Business Capital, with a remaining available balance of $3.75 million.
Kevin Royal: Net loss for the third fiscal quarter of 2025 was $1 9 million compared to a net loss of $3 million in the third fiscal quarter of 2024, primarily attributable to an increase in gross profit in the current quarter, partially offset by the increase in selling and administrative expenses.
Kevin Royal: Related to costs associated with the multiyear restatement of previously filed financial statements.
Kevin Royal: Cash was <unk> 5 million on March 31, 2025, as compared to <unk> 6 million at June 32024, reflecting changes in working capital management.
Kevin Royal: Available working capital includes our line of credit as of March 31, 2025, under our $16 million credit facility from Gibraltar business capital with the remaining available balance of $3 75 million.
Kevin Royal: Subject to borrowing-based limitations and satisfaction of certain financial covenants and $1 million available under our subordinated line of credit with Freedman Capital. We continue to be in good standing with both Gibraltar and Cleveland Capitol and remain confident in their continued support of Flux in our long-term mission.
Kevin Royal: Subject to borrowing base limitations and satisfaction of certain financial covenants and $1 million available under our subordinated line of credit with favorable capital.
Kevin Royal: We continue to be in good standing with both Gibraltar and Cleveland capital and remain confident in their continued support of flux in their long term mission.
Krishna Vanka: I will now turn it over to Krishna for his final remarks prior to the question and answer session. Thank you, Kevin. As you saw, during the quarter, we delivered strong year-over-year revenue and cross-margin growth driven by enhanced sales strategies, growing demand for an innovative suite of products, even with some of the tariff challenges starting to emerge.
Kevin Royal: I will now turn it over to Krishna for his final remarks prior to the question and answer session.
Kevin Royal: Okay.
Krishna Vanco: Thank you Kevin as you saw during the quarter, we delivered strong year over year revenue and gross margin growth driven by enhanced sales strategy is growing demand for an integrated suite of products, even with some of the tariff challenges starting to have much in Q3.
Krishna Vanka: Here, we are shaping the future of intelligent energy solutions. where every battery functions as part of a connected self-optimizer. These revolutions allow us to deliver software-driven value that's going to extend beyond the traditional energy storage today, unlocking operational insights, predictive maintenance and long-term efficiencies for our customers. I'm very excited about this future.
Krishna Vanco: Here, we are shaping the future of intelligent energy transition, where every battery functions as part of a connected self optimizing network. This evolution allow us to date of our software driven value that's going to extend beyond the traditional energy storage today unlocking operational insight predictive maintenance and.
Krishna Vanco: Long term efficiencies for our customers I am very excited about this future we look forward to keeping our shareholders informed as we execute against our strategic initiative.
Krishna Vanka: We look forward to keeping our shareholders informed as we execute against our strategic initiatives and expand our leadership in this market supported by a growing diverse base of large enterprise Thanks for joining us today.
Krishna Vanco: And our leadership in this market supported by a growing diverse base of large enterprise customers. Thanks for joining us today I'll now turn the call back over to the operator for the Q&A session operator.
Operator: I will now turn the call back over to the operator for the Q&A session.
Operator: Operator?
Krishna Vanco: Yeah.
Operator: Ladies and gentlemen, we will now begin the question and answer session.
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the one on your Touchtone phone you will hear a pump, but your hand has been raised the Jewish did decline from the polling process. Please press star followed by the two.
Operator: Should you have a question, please press star, followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised.
Operator: Should you wish to decline from the polling process, please press star, followed by the two.
Operator: If you are using speakerphone, please lift the handset before pressing any key.
Krishna Vanco: Okay.
Krishna Vanco: If you are using speaker phone, please lift the handset before pressing and keys.
Craig Irwin: First question comes from Craig Irwin with the Roth Capital Partners. Please go ahead. Good evening and thank you for taking my questions.
Speaker Change: First question comes from Craig Irwin with Roth Capital Partners. Please go ahead.
Craig Irwin: Good evening and thank you for taking my questions Krishnan congratulations.
Craig Irwin: Krishna, congrats on a strong quarter out of the gates. It's nice to see accountability driving execution at Flux. So, congratulations there.
Speaker Change: Grant's on the on a strong quarter out of the gates, it's nice to see.
Speaker Change: Accountability driving execution at flux, so congratulations there.
Craig Irwin: The last several months, there have been positive developments in the airport ground support equipment space. It seems that both airport operators and airlines are looking to partner on ways to... to adopt environmentally responsible business practices.
Speaker Change: The last several months.
Speaker Change: There have been positive developments in the airport ground support equipment space.
Speaker Change: It seems that.
Speaker Change: Both airport operators and airlines are looking to partner on ways too.
Speaker Change: So adopt environmentally responsible business practices.
Krishna Vanka: Can you talk about the sensitivity of these customers to potential pricing actions from tariffs and some of the volatility we're seeing for other areas in clean technology like the withdrawal of subsidies? I know they generally weren't getting subsidies, but can you maybe talk about the commitment of these customers to their programs and their suppliers? Definitely. Thanks for the question. And yeah, as you mentioned, we are very closely working with our customers in the GSB, and they are well committed on a long term for their ESG goals and making the transformation. So it is very early for us to say, you know, the full impact of the tariffs or the broader reduction of subsidies.
Speaker Change: Can you talk about the sensitivity of these customers to potential pricing actions from tariffs and.
Speaker Change: You know some of the volatility we're seeing for other areas in clean type technology like.
Speaker Change: The withdrawal of subsidies and I know they generally werent getting subsidies, but can you can you maybe talk about the commitment of these customers to their programs and their suppliers.
Speaker Change: Definitely thanks for the question.
Speaker Change: And yeah. As you mentioned, we are very closely working with our customers and the GSC and they are very committed on a long term part of their ESG goals and making the transformation. So it is very early for us to say you know the full impact of the tariff or the broader reduction of subs.
Krishna Vanka: But at this point, I can say that, you know, it's almost business as usual and their commitment to do the transformation work with us is on a growing basis.
Speaker Change: Ladies and display and I can say that it's almost business as usual and their commitment to do the transformation work with us on the call and accruing basis.
Craig Irwin: Thank you.
Speaker Change: Thank you.
Craig Irwin: The second thing I wanted to ask about is your Sky BMS. So you have had systems out there with major customers in testing, customers that have partnered with Flux to maybe shape and inform the functionality that they would like. What sort of feedback do you have from these customers as far as the potential ROI that they're seeing on the adoption of this technology? And maybe if you could also comment as well as far as on the maintenance side and the overall lifecycle analysis, whether or not you think this technology can extend the functional life of the systems you're deploying at customers.
Speaker Change: The second thing I wanted to ask about is your Sky BMS. So you have had systems out there.
Speaker Change: With major customers and testing.
Speaker Change: Customers that have partnered with flux too.
Speaker Change: You know maybe shape and inform the functionality that they that they would like.
Speaker Change: What sort of feedback do you have from these customers as far as the potential ROI that they're seeing on the adoption of this technology and maybe if you could also comment as well as far as on the maintenance side and the overall lifecycle analysis.
Speaker Change: Whether or not you think this technology can extend the the functional life of the systems here deploying our customers.
Krishna Vanka: Definitely. Thanks for the question. And yeah, Sky BMS, moving forward, is going to be a very important component on how our customers realize the value of our solution. And as I mentioned earlier, we already have multiple customers that are working towards, you know, integrating this technology into their day to day operations. The ROI is definitely, you know, going to come back in the form of reducing the number of visits for us to go, you know, do any maintenance because the data is going to provide the intelligence for us to remotely take care of a lot of issues.
Speaker Change: Definitely.
Speaker Change: Thanks for the question and yes, Ibms moving forward is going to be a very important component on how our customers realize the value of our solution.
Speaker Change: As I mentioned earlier, we already have multiple customers that are working towards.
Speaker Change: Integrating this technology into their day to day operations.
Speaker Change: The auto I is definitely.
Speaker Change: Sorry to come back in the form of reducing the number of visits to go do any maintenance because that data is going to provide the intelligence products to remotely take care of a lot of issues. That's number one internally for us from a customer perspective, it's part of the ecosystem. This is van.
Krishna Vanka: That's number one internally for us. From a customer perspective, it's part of the ecosystem. This is where, you know, they already run their operations on different technologies and this is where our Sky EMS with the APIs and then what not is going to bring the integration data together. So, definitely a higher ROI than disconnected systems that they have today. The battery intelligence is going to be the central component, both with the charger on one side and the fleet telematics on the other side. Excellent.
Speaker Change: They already run data operations on different technologies, and this is where our sky a M at the Ada.
Speaker Change: And whatnot.
Speaker Change: The integration data to get there so definitely a higher ROI and disconnected systems that they have today. The battery until again is going to be the central component both with the charterer on one side and the fleet telematics on the other side.
Craig Irwin: Then my last question is related to the forklift market and the adoption of lithium-ion you're seeing with your customers. So, the short-term uncertainty we're seeing in the economy does not seem like it's really significantly disrupted capital plans or longer-term capital plans, I should say. You know, are you seeing any change or difference in the level of interest of these Tier 1 customers as far as adoption of lithium for their distribution centers over the next couple years? Is this potentially driving efficiency initiatives at these customers that might bring you new opportunities as people look towards the other side of this short-term uncertainty?
Speaker Change: Excellent and then my last question is related to the forklift market and the adoption of lithium ion youre seeing with your customers.
Speaker Change: So.
Speaker Change: The short term uncertainty, we're seeing in the economy.
Speaker Change: It does not seem like it's really significantly disrupted capital plans our longer term capital plans I should say.
Speaker Change: You know are you seeing any change or.
Speaker Change: Difference in the level of interest of these tier one customers as far as adoption of lithium for their distribution centers over the next couple of years.
Speaker Change: Is this potentially driving.
Speaker Change: Efficiency initiatives that these customers that might bring you new opportunities.
People look towards the other side of this short term uncertainty.
Krishna Vanka: Yeah, another great question, thank you. We are very early in this process, as you know, but we are actually hearing that certain of our competitors honestly altered shipments altogether because they are subjected to higher tariffs compared to where we are. And we believe this actually is providing us an advantage to take more market share. We are seeing this in terms of increased level of interest coming from these types of customers. And also we have seen an increase in the quotation activities as part of our sales. So, as Jeff mentioned, we are turning this into a greater Great.
Speaker Change: Yeah.
Speaker Change: Great question. Thank you.
Speaker Change: Early in this process as you know.
Speaker Change: We had actually hearing that certain of our pump it either.
Speaker Change: Honestly Arctic shipments altogether, because theyre subjected to highest static compared to where we are and we believe this actually is providing us an advantage to take more market share. We are seeing this in terms of increased level of interest coming from these types of customer and also we have seen an increase in the quotation.
Speaker Change: Activities as part of our sales force so as.
Speaker Change: Jeff mentioned, we are turning this into an accretive opportunity.
Craig Irwin: Well, thanks again for taking my questions. Congratulations on the strong results.
Speaker Change: Great well, thanks again for taking my questions. Congratulations on the strong results I'll go ahead and hop back in the queue.
Craig Irwin: I'll go ahead and hop back in the queue.
Speaker Change: Thank you. Thank you.
Speaker Change: Yes.
Eric Stine: Your next question comes from Eric Stine with Craig Held. Please go ahead.
Speaker Change: Your next question comes from Eric Stine with Craig Hallum. Please go ahead.
Luke: Hey, this is Luke on for Eric. Thanks for taking our questions. So first, we know that last quarter adding the new sales personnel was a big point of emphasis. Could you maybe just broadly talk more about some of the positive changes you've seen so far as a result of this new effort? And if you plan to make more additions to that team, maybe to target some more specific or under penetrated end markets? Thanks. Sure, definitely, good question.
Speaker Change: Hey, this is Luke on for Eric Thanks for taking our questions. So first we know that last quarter, adding the new sales personnel was a big point of emphasis could you maybe just broadly talk more about some of the positive changes you've seen so far as a result of this new effort and if you plan to make more additions to the team maybe the target some more specific or underpenetrated end markets. Thanks.
Speaker Change: Sure definitely good question actually just in light that backend leave Friday Alexey Ottawa to this room so Kelly.
Kelly Frey: I actually just invited Kelly Frey, our CRO, to this room.
Kelly Frey: So, Kelly, it's almost like the question came for you, but I'll let Kelly answer your question there. Yeah, the biggest thing that we've seen is that the market for lead-acid batteries, which is the first step towards electrification, very much is a commoditized product, because it's not a very intelligent product, if you will. It doesn't have a lot of data associated to it. When someone moves to lithium, you have an opportunity to take that data and use it to really fit into a larger solution that the client is trying to solve, in terms of their overall energy usage, the overall lifecycle of their equipment, be it in the ground support equipment market or in the material handling market.
Speaker Change: So I think the question gameplay is that I'll, let Kelly answer your question there yes.
Speaker Change: The biggest thing that we've seen is that the market for lead acid batteries, which is the first step towards electrification very much as they can.
Speaker Change: Commoditized products, because it's not a very intelligent.
Speaker Change: Product if you will it doesn't have a lot of data associated to it on some of the moves to lithium you have an opportunity to take that data and use it to really fit into a larger solution that the client is trying to solve.
Speaker Change: In terms of their overall energy usage, the overall lifecycle of their equipment be it in the ground support equipment market or in the material handling market. So I thought it was to put a bow around it I would say that the real change that we've seen in the first couple of months that I've been here is the opportunity to position us as a software.
Kelly Frey: So, if I was to put a bow around it, I would say that the real change that we've seen in the first couple of months that I've been here is the opportunity to position us as a software company that happens to have very good batteries, and that we fit into an ecosystem of telematics on the equipment, be it at the airport or in the material handling space, or how that equipment might interact with the over-the-road fleet, and the electrification of that. So, yeah, very exciting time. All right, very helpful. Thank you.
Speaker Change: <unk> company that happens to have very good batteries.
Speaker Change: And that we fit into an ecosystem of telematics on the equipment the would it be it at the airport or in the material handling space.
Speaker Change: Or where how that equipment might interact with the over the road fleet M B.
Speaker Change: Electrification of that so a very exciting times.
Speaker Change: Yes.
Speaker Change: Alright very helpful. Thank you and just for a follow up here. So last call you talked about some heavy duty models like looks like the June 96, now being introduced and deployed in the next few months can you maybe talk a bit more about how this timeline sort of trending for deployment and what sorts of end markets. You expect to serve your outside of airport GSE. Thanks.
Kelly Frey: And just for a follow up here. So last call, you talked about some heavy duty models like looks like the G96 now being introduced and deployed in the next few months. Can you maybe talk a bit more about how this timeline is sort of trending for deployment and what sorts of end markets you expect to serve here outside of airport GSE? Thanks. So that particular model is geared towards the airports and the GSEs with those types of trucks. That said, as you can see, we are evolving more and more into the higher voltage category here, which means it can open up, you know, new verticals eventually or even more domination into this GSE market as we support more and more models.
Speaker Change: So that particular model is that geared towards state courts and the GSE.
Speaker Change: It's those types of trucks.
Speaker Change: As you can see we are evolving more and more into the higher voltage category here, which means it can open up a new vertical eventually are even more domination into this GSE market as we support more and more models. So.
Kelly Frey: So the product that we announced is already with customer testing, validating, and also in production. So it's great news for us. We were able to move forward pretty quickly last quarter, and this is the pace at which we want to start developing and deploying new products. Great, that's helpful.
Speaker Change: The product that we announced it already with customer testing validating and also in production. So it's great News surprise you are able to move forward pretty quickly last quarter and this is the pace at which we want to start developing and deploying new products.
Speaker Change: Great. That's helpful I'll turn it over thank you.
Luke: I'll turn it over.
Rob Brown: Your next question comes from Rob Brown with Lake Street Capital Markets. Please go ahead. Good afternoon. Pretty good orders in the quarter. I just wanted to get a sense of what the order trends kind of are. I know the visibility is not as good now, but how do you sort of see the order trends? Do you continue to see a bit of a back end loaded order?
Rob Brown: Thank you. Your next question comes from Rob Brown with Lake Street Capital markets. Please go ahead.
Speaker Change: Okay.
Speaker Change: Hi, good afternoon.
Pretty good orders in the quarter I, just wanted to get a sense of what the order trends.
Speaker Change: Kind of I know the visibility is not as good now, but you sort of see the order trends do continue to see.
Speaker Change: A bit of a backend loaded order book at this point.
Krishna Vanka: Yeah, this is Krishna. And I'll also ask Kevin to add anything after my answer here. But fortunately, we have pretty good inventory in stock that is not subject to these full reciprocal tariffs. As a result, we are anticipating that Q4 will be very minimally impacted by the tariff increase. So the demand continues to continue and our commitment to deliver on time is also in the process.
Chris: Yeah. This is Chris nine allows us Kevin to add anything after my answer here, but Fortunately, we have a pretty good inventory in stock that is not subject to these full receipt Brooklyn Scotty is as a result.
Chris: We're anticipating that Q4 will be very minimally impacted by the tariff increase so the demand continues to continue and our commitment to deliver on time is also in.
Kevin Royal: Yeah, Rob, this is Kevin. As you can imagine, you know, the tariffs are a bit of a shock to the system. And we're working with our customers to really, you know, gauge demand, given, you know, an unnecessary increase in selling prices to cover those tariffs. I think, you know, as Krishna mentioned in an earlier answer, it is certainly true that, you know, we're feeling as though we could come out of this with a competitive advantage from a cost standpoint. And we are seeing, you know, early activity and quite a bit of incoming inquiries, resulting in our sales force, putting more quotations out to customers and potential customers.
Kevin Royal: And the profit Yeah, Rob This is Kevin as you can imagine the.
Speaker Change: The tariffs for a bit of a shock to the system and we're working with our customers to really gauge demand given.
Kevin Royal: Necessary increase in selling prices to.
Speaker Change: To cover those cover those tariffs I think.
Krishna Vanco: As Krishna mentioned in an earlier answer it is certainly true that we're feeling as though we could come out of this with a competitive advantage from a cost standpoint.
Speaker Change: And we are seeing.
Speaker Change: Early activity in quite a bit of incoming inquiries, resulting in our sales force.
Speaker Change: Putting more quotations out to customers and potential customers.
Speaker Change: Okay.
Speaker Change: Yeah.
Rob Brown: Great. Thank you. I'll turn it over.
Speaker Change: Okay great.
Speaker Change: Thank you I'll turn it over.
Operator: There are no further questions, please continue. Thank you, operator.
There are no further questions. Please continue.
Speaker Change: Thank you operator.
Krishna Vanka: I would like to thank each of you on this call for joining our financial results conference today. And we all here look forward to continue to update you on our progress quarter by quarter and the growth we are Thanks and have a great day.
Speaker Change: I would like to thank each of you on this call are dining or financial results conference today, and we all look forward to continuing to update you on our progress quarter by quarter and the growth we are making.
Speaker Change: And have a great day.
Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
Speaker Change: Okay.
Speaker Change: Yeah.