Q1 2025 Expion360 Inc Earnings Call
Greetings and welcome to the X beyond 361st quarter 2025 financial results Conference call.
At this time all participants are in a listen only mode.
A question answer session will follow the formal presentation.
As a reminder, this conference is being recorded and will be available in the Investor Relations section of the company's web site at investors <unk> X beyond 360 Dot com.
Before we begin the formal presentation.
I would like to remind everyone that certain statements made on this call.
Throughout the webcast are forward looking statements within the meaning of the federal securities laws and are subject to considerable risks and uncertainties.
These forward looking statements are intended to qualify for the safe Harbor from liability established by the private Securities Litigation Reform Act of 1995.
All statements made on this call today other than statements of historical fact are forward looking statements and include statements regarding the company's beliefs plans and expectations about its operations growth prospects product development and pipeline and to speed the timing of commercial availability of its product.
Market size and opportunity the anticipated incremental revenue to be generated from new OEM partnerships and distribute us.
The potential partnership with Neo Volta and the anticipated use of proceeds from the company's recently completed public offering.
While these forward looking statements represent managements current beliefs and expectations. They are subject to risks and uncertainties that could cause actual results to differ materially.
The company has explained some of these risks and uncertainties in its SEC filings, including in the risk factors section of its annual report on Form 10-K.
You are cautioned not to place undue reliance on these forward looking statements, which reflect our expectations as of the date of this presentation.
Okay.
Except as required by law or the NASDAQ listing standards. The company expressly disclaims any intent or obligation to publicly update or revise any forward looking statements.
Your host today, Bryan Sheffield Chief Executive Officer, and interim Chief Financial Officer will present, the results of operations for the first quarter ended March 31st 2025.
A press release detailing these results crossed the wire. This afternoon at 405 P. M. Eastern time and is available in the Investor Relations section of the company's website at investors <unk> X beyond 360 Dot com.
Speaker Change: At this time I will turn the call over to X beyond 300, Sixty's CEO and interim CFO, Brian Schaff now.
Thank you operator, and good afternoon, everyone.
I am pleased to welcome you to today's first quarter 2025 financial results Conference call.
Speaker Change: But before I begin I apologize for any difficulties with the audio I am calling in from our nation's capital Washington D C, where I've been speaking with the elected officials and U S. Representatives about our onshoring efforts and tariff concerns, which I will address in more detail shortly.
Speaker Change: For those of you who might be new to our story I'd like to start by giving a brief overview of who we are.
Speaker Change: What we do.
Speaker Change: X me on 360 is focused on creating energy storage solutions for our customers utilizing our core values of safety through third party testing and you all certification quality offering an industry, leading 12 year warranty and service, we provide customer support for the entire system purchase.
Speaker Change: From us not just the X beyond 316 built components.
Speaker Change: X beyond 360 designs.
Speaker Change: Some balls and cells lithium iron phosphate or lifeboat for batteries and supporting accessories for rvs, and marine light EV and home energy storage applications.
Speaker Change: We believe our product offerings include some of the most energy dense and minimal footprint batteries available.
Speaker Change: We are also deploying multiple intellectual property strategies advanced research and development capabilities and innovative products to sustain and scale our business.
Speaker Change: Our customers consist of dealers wholesalers private label customers and original equipment manufacturers or Oems.
Speaker Change: Who are driving revenue and brand awareness nationally and we complement our wholesale channel with direct to consumer sales.
Speaker Change: Our management team and board of directors, our experienced across engineering technology and finance.
Speaker Change: We believe the combination of these factors positions us to execute our long term growth strategies.
Speaker Change: I'm extremely proud of the progress we made in the first quarter and remain excited about our future.
Speaker Change: Our E 360 product line as a preferred conversion solution for lead acid batteries as demonstrated by its sales growth.
Speaker Change: We currently have more than 300 customers across the United States, consisting of dealers wholesalers private label customers and Oems, who then sell our products to end consumers.
Speaker Change: In addition, we sell products directly to consumers through our E Commerce platform.
Speaker Change: We have sales relationships with major RV retails, Taylor's, including camping world, a leading RV retailer KZ recreational vehicles, a subsidiary of Thor industries admired distributing Inc, a leading national marketer and distributor of automotive and RV specialty products.
Speaker Change: We believe we have a strong reputation in the lithium battery space, which we plan to continue leveraging to broaden our distribution channels.
Speaker Change: Let me take a moment to highlight some of our accomplishments and milestones in the first quarter.
Speaker Change: We have continued our progress in our home energy storage solutions or H E. S. S vertical with shipments beginning in January 2025, we believe the <unk> product line will benefit from a fast growing battery energy storage market and consumer uptake can rapidly scale with the introduction of products that improve price.
Speaker Change: Flexibility and integration.
Speaker Change: We also anticipate anticipate that Hess will benefit from incentives available through California's self generation incentive program and federal tax credits available through the inflation reduction Act for home battery systems.
Speaker Change: Additionally, we are exploring a partnership with near Volta to combine our strengths towards a potential collaboration that aims to engineer a U S based state of the art battery manufacturing facility.
Speaker Change: And develop innovative lithium ion battery cell and module product designs.
Speaker Change: A formal engagement would enable us to contribute our expertise in design and engineering, while nivola plans to provide the necessary capital and manpower.
Speaker Change: The other we expect to bring high performance sustainable energy storage solutions to the market to address the growing demand for efficient energy management in both residential and commercial applications.
Speaker Change: Our anticipated partnership with near Volta, and our goal to onshore American made batteries has become increasingly timely with the recent implementation of tariffs.
Speaker Change: In addition to pursuing this partnership to mitigate risks associated with international manufacturing. We are actively working to complete a tariff exclusion request working with our resources in Washington.
Speaker Change: To ensure that tariffs have little if any impact on our business and our growth.
Speaker Change: In addition to strengthening our relationships with existing OEM partners. We continue to work towards additional OEM market penetration with new major partners newer relationships have included three announced new OEM customers scale campers, Alaskan campers and Casey recreational vehicles welcome.
Speaker Change: And we have secured several new OEM customers.
Speaker Change: Recently, we welcomed Carson Hagen as Chief operating Officer, Carsten brings over 10 years of leadership experience in operations Finance global supply chain management and ERP systems.
Speaker Change: Carson joined X beyond $3 60 in 2021 and has rapidly and deservedly risen from the director of finance.
Speaker Change: Two V P of operations and now our C O O.
Speaker Change: We closed a registered direct offering and concurrent private placement with institutional investors in January of 2025 aggregate gross proceeds from both transactions were approximately $2 6 million.
Speaker Change: We are using the net proceeds from the offering is working capital and for general corporate purposes to advance the commercialization of our home energy storage system and pursue other key growth initiatives like our onshoring.
Speaker Change: As I just mentioned I am in Washington, D C, where I had been speaking with elected officials and U S Representatives about our onshoring efforts and tariff relief.
Speaker Change: While monday's news about a reduction in tariffs on imports from China is a step in the right direction, we have nonetheless undertaken both short and long term strategies to address current and future uncertainties.
Speaker Change: Our tariff mitigation efforts include several initiatives to increase margins and reduce costs within the current line of batteries we.
We are also prepared for continued growth and tariff mitigation by building up 12% 12 to six to 12 months of inventory early in the quarter before the new tariffs were introduced one of our stated long term goals has been onshoring of manufacturing and production of our BMS sells communications and K.
Speaker Change: Mrs. This would not only tariff proof our products, but allow us to pursue opportunities in the government and defense space and I hope to be able to report some positive developments in the very near future.
Speaker Change: Our reputation for quality in the recreational and LTV markets is the driving force behind our development of home energy solutions that will be the foundation for our future growth as mentioned before we pride ourselves on servicing the entire system sold to a customer not just a battery and we are also a master Vic.
Speaker Change: Drawn distributor.
We believe we have strategically positioned our battery portfolio across multiple markets each of which I will now touch on.
Speaker Change: The RV market is recovering with healthy momentum driven by interest in outdoor activities and demand for vehicles that depend on batteries to power systems, our lithium battery support RV systems in appliances, while replacing noisy generators for off grid power and can be charged by engine or solar.
Speaker Change: The edge battery, which is now commercially available features a custom form factor that includes our patent pending innovations and other recently developed IP.
Speaker Change: The edge incorporates V. H C heating technology Smart talk Bluetooth and can bus communication, we began shipping the urge to customers in the third quarter of 2024.
Speaker Change: Our solutions are also employed in the marine market to support trolling Motors and operating cabin electronics.
Speaker Change: The third establish market. We serve is the L. EV market, such as golf carts, which are undergoing a transition from lithium to lead acid.
Speaker Change: These ltvs requires sufficient power generation or reliability, which our batteries in the liver.
Speaker Change: The fourth the newest market, we serve as the home energy storage market, including both home and commercial solar powered storage solutions I'll expand on our opportunity in home energy shortly.
Speaker Change: Finally, we see the industrial applications market as a future growth vertical for us driven by demand for additional capacities related to electric forklifts and industrial material handling.
Speaker Change: We continue to build a robust IP portfolio across all five of these markets and we currently have 11 patent spending.
Speaker Change: Yeah.
Speaker Change: Now I will focus on our market expansion with the <unk> hundred 60 home energy storage solutions or H E. S. S.
Speaker Change: With the introduction of our two LIFO for battery solutions to support home energy storage, we are targeting home and small commercial solar users and installers, who are interested in a high performance modular system was straightforward installation.
Speaker Change: The company moved up its home energy development timeline due to the downturn in RV sales in 2023, and we've seen the benefit of that even though we actually gained market share during the downturn our team knew that home energy was our future.
Speaker Change: Development was accelerated and we now have two systems that are in final stages of UL certification and testing prop.
Speaker Change: Property UL certification is vital as states such as California require a U L. 90, 540 certification of the battery and its inverter system to qualify for tax credits.
Speaker Change: Battery storage systems offer a way to capture ROI for consumer outside of a traditional solar system utilizing a draw power into the system during off peak hours and a discharge during peak hours.
Speaker Change: Our solutions provide scalability and versatility across market channels, including solar installers, electrical contractors residential and commercial builders and energy service providers.
Please visit a view of our home energy solutions at our website XP on 360 Dot Com Ford slashed pages forward slash residential dot com.
Speaker Change: In January we began distribution and fulfilling purchase orders of H U S. S. These order deliveries reflect a significant milestone in bringing <unk> hundred 60, <unk> to the market. We believe the H E. S. S product line will benefit from a fast growing market battery market and energy storage market.
Speaker Change: And consumer uptake can rapidly scale with the introduction of products.
Speaker Change: Okay.
Speaker Change: H S S improves price flexibility and integration we.
Speaker Change: We anticipate a T. S S will benefit from incentives available through California, self generation incentive program and federal tax credits available through the inflation reduction Act for home battery systems.
Speaker Change: We think the home energy market provides complimentary economics for our business model with an opportunity to generate recurring revenue streams, while enabling margin expansion in a market that is expected to surpass a 123 billion globally by 2029, according to market data forecast.
Speaker Change: We are using proceeds from our public offering to provide necessary funding to further develop our new <unk> hundred 60 home energy storage solutions, including completion of UL testing and certification processes. In addition to other requirements for various authorities having jurisdiction.
Speaker Change: I will now discuss our first quarter 2025 financial results.
Speaker Change: Revenue in the first quarter of 2025 totaled 2.0 million, an increase of 111% from 1 million in the prior year period the.
Speaker Change: The increase in net sales was due in part to a rebound in the RV market overall as well as completing our first sales in the home energy market.
Speaker Change: Gross profit in the first quarter of 2025 totaled <unk> 5 million or 24, 5% of revenue compared to <unk> 2 million or 22, 9% of revenue in the prior year period, and 25% of revenue for the full fiscal year ended December 31 2024.
Speaker Change: The increase was primarily attributable to the increase in sales and lower cost of goods sold as a percentage of ourselves.
Speaker Change: Selling general and administrative expenses in the first quarter of 2025 decreased 27, 24, 7% to $1 6 million compared to $2 2 million in the prior year period.
Speaker Change: The decrease was primarily due to decreases in salaries and benefits, including lower noncash stock based compensation as well as a reduction in head count.
Speaker Change: Legal and professional fees have also seen a significant decrease as did rent expense due to terminating the lease on our second warehouse.
Speaker Change: Net loss in the first quarter of 2025 totaled $1 2 million, a 47, 5% improvement from a net loss of $2 2 million in the prior year period.
Speaker Change: The decrease in net loss was primarily the result of higher net sales for the period ending March 31, 2025, combined with the decrease in selling general and administrative expenses.
Speaker Change: Cash and cash equivalents totaled $1 1 million as of March 31, 2025, compared to <unk> 5 million as of December 31, 2024.
Speaker Change: On January three 2025, our company closed a $2 6 million registered direct offering and private placement priced at the market under NASDAQ rules.
Speaker Change: Net cash used in operating activities totaled $1 2 million for the three months ending March 31, 2025, compared to $1 7 million in the prior year period.
Speaker Change: Receiving inventory that was prepaid during the prior period accounted for a large portion of the change for three months ending March 31, 2025, as well as making payments to decrease our suspended liability.
Speaker Change: In closing, we remain confident and enthusiastic about our growth trajectory for 2025 and beyond.
Speaker Change: Yeah.
Speaker Change: With substantial purchase orders already in hand, and additional new customers expressing interest across our product lines and we look forward to announcements of additional milestones in the months ahead.
Speaker Change: Customers are expressing interest across product lines, including our next generation G. C. Two group twenty-seven an edge batteries.
Speaker Change: Most importantly market tailwind are further strengthening our expectations for continued sequential growth moving forward.
Speaker Change: Our focus on safety quality and service is paying off.
Speaker Change: With our customers and this has been translated to the top and bottom lines.
Speaker Change: Underscored by the confidence from over 300, reseller network resellers and our network nationwide.
Speaker Change: Our customers know that we truly believe in our product quality and manufacturing capabilities.
Speaker Change: Results for the RV industry associations March 2025 survey of manufacturers found that total RV shipments increased 14% from the first quarter of 2025, and we believe the RV market will continue to gearing gal great gain ground.
Speaker Change: Through 2025 with shipments increasing traction throughout the year.
Speaker Change: We are focused on expanding our addressable market. Most recently with our E 360 home energy storage solutions, which began production and shipments in January of 2025.
Speaker Change: Operationally, we have take undertaken several initiatives to increase margins and reduce cost within the current line of our batteries.
Speaker Change: We are also actively invest gauged with resources in Washington to ensure that tariffs have little if any impact on our business and growth and we are working to diversify our supply chain with potential sourcing from additional free trade countries, such as South Korea to further avoid tariffs and increased volume and margin.
Speaker Change: We have also prepared for continued growth and tariff mitigation by adding two to four.
Speaker Change: Six to 12 months of inventory early in the quarter before new tariffs were introduced in fact, we believe there is a significant market disconnect in our current valuation as we now have more in inventory than our market cap.
Speaker Change: Our long term goal is to onshore the U S manufacturing of most of our components and assemblies, including cell manufacturing to that end, we continue to work with neo Volta to combine our strengths towards a potential collaboration that aims to engineer a U S based state of the art battery.
Speaker Change: Same facility and develop innovative lithium iron battery cell and module product designs.
Speaker Change: We continue to work towards additional OEM market penetration by adding features improving energy density and developing unique OEM centric form factors.
Speaker Change: Thank you all for attending and now I would like to hand, the call back over to the operator for additional questions operator.
Speaker Change: Thank you.
Speaker Change: We will now begin the question and answer session.
Speaker Change: To ask a question you May press Star then one on your telephone keypad.
Speaker Change: If you were using a speakerphone please pick up your handset before pressing the keys.
Speaker Change: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: Once again, you May press star and one to ask a question.
Speaker Change: We have no audio questions at this moment, ladies and gentlemen.
Speaker Change: And we'll now proceed to any questions from the webcast.
Speaker Change: Our first webcast question asks.
Speaker Change: How will the onshoring of our salt plants helped X beyond 360 financially.
Speaker Change: Well there are a couple of ways that will help us financially. One of them is is that we will have access to cells for our batteries at a cost plus basis, which should help us increase our margins with no threat of tariffs.
Speaker Change: For those high density cells that are currently made in Asia. We also benefit from economies of scale through shared administrative tasks.
Speaker Change: Finally, we would be receiving royalties from.
Speaker Change: From the sale of the of the battery cells and that would directly affect our cash and our bottom line.
Speaker Change: Our next question asked.
Speaker Change: What would your financial burden b shoot a domestic sell plant be constructed.
Speaker Change: Well, we provide the techs.
Speaker Change: Technology and the business partner in Asia.
Speaker Change: And our job is to bring the our trusted manufacturing partners and their IP to the table to onshore production in the U S and manage site construction equipment installation.
Speaker Change: The production ramp up and then the management of production going forward that is our job our partner bears the financial burden and responsibility of providing the necessarily the necessary capital to get that done.
Speaker Change: Yeah.
Speaker Change: And our last webcast question asks how did your meetings go in Washington, and can you provide any additional details.
Speaker Change: Well I can say that they were really incredible and they want very very well I am I'm greatly concern are encouraged by the support we're receiving.
Speaker Change: To make our onshoring efforts a reality.
Speaker Change: There is a great desire to increase U S manufacturing investment and jobs and that's what we plan on being part of and I come away from my meetings in Washington.
More encouraged than ever that this can become a possibility for us and we do look forward to sharing more with our valued investors and friends in the future.
Speaker Change: That concludes the webcast question and answer portion of the session.
Speaker Change: This concludes our question and answer session.
Speaker Change: I would now like to turn the call back over to Mr. Schaffner for his closing remarks.
Speaker Change: Thank you.
Speaker Change: Thank you for attending today's call.
Speaker Change: We are excited about where we're headed and look forward to continuing to engage with our investors throughout the remainder of 2025.
Speaker Change: If for some reason we're unable to answer any of your questions. Please do reach out to our IR firm MZ group, who would be more than happy to assist this.
Speaker Change: This concludes our call.
Speaker Change: Thank you for attending today's presentation you may now disconnect.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: [music].