Q1 2026 Flux Power Holdings Inc Earnings Call
Speaker #1: Good afternoon and welcome to Flux Power's fiscal first quarter 2026 earnings conference call. At this time, all participants are in the listen-only mode. At the conclusion of today's conference call, instructions will be given for the question-and-answer session.
Speaker #1: As a reminder, this conference call is being recorded today. November 13, 2025. I would now like to turn the conference over to Joel Acromowitz of Shelton Group Investor Relations.
Speaker #1: Joel, thank you, and over to you.
Speaker #2: Good afternoon, and welcome to Flux Power's fiscal first quarter 2026 earnings conference call. I'm Joel Acromowitz, Managing Director of Shelton Group, Flux Power's investor relations firm.
Speaker #2: Joining me on the call today are Krishna Vanka, Flux Power CEO, and Kevin Royal, Chief Financial Officer. Now, before I turn the call over to Krishna, I'd like to remind our listeners that during the course of this conference call, the company will provide financial guidance, forward-looking statements regarding future market developments, the future financial performance of the company, new products, or projections, comments, and other other matters.
Speaker #2: These statements discuss in detail in our are subject to the risks and uncertainties that we specifically our 10-K and our most recent 10-Q, which cause actual results to differ materially from those contained in the forward-looking statements.
Speaker #2: Also, the company's press release and management statements during this conference call will include discussions of certain adjusted or non-GAAP financial measures. These financial measures and related reconciliations are provided in the company's press release and related current report on Form 8-K. Additionally, we identify important risk factors that could affect our results.
Speaker #2: Which can be found in the Investor Relations section of Flux, www.fluxpower.com. For those of you unable to listen to the entire call at this time, a recording will be available. It is my great pleasure to turn the call over to Flux Power's CEO, Krishna Vanka.
Speaker #2: Which can be found in the investor relations section of Flux www.fluxpower.com. For those of you unable to listen to the entire call at this time, a recording will be my great pleasure to turn the call over to Flux Power's CEO, Krishna Power's website.
Speaker #2: available via webcast on ahead.
Speaker #2: Krishna, please go the company's website. And now it's
Speaker #3: during the quarter and also due to the near-term
Speaker #3: caution regarding the At macroeconomic situation. With the uncertainty that tariffs had on pricing, customers held back on placing orders until there was more clarity.
Speaker #3: impacted our gross margins during the also temporarily second fiscal quarter, and this dollar orders from top material is highlighted by multi-million handling customers totaling 2.4 million dollars.
Speaker #3: We are seeing activity rebound in our orders. We also have a recent addition to our repeat service equipment. With this new customer, we now have another major airline, American Airlines, supplying to eight major North American airlines. This represents a doubling of our airline customer base, as we secured a large order compared to last year.
Speaker #3: As I have shared with you on the prior earnings calls, the leadership here has established five strategic initiatives to guide our execution and performance.
Speaker #3: As a reminder, these initiatives include profitable growth, operational efficiencies, solution products, and integrating value-added software across our battery portfolio to selling, building the right streams.
Speaker #3: Let me provide you with an update on the quarter, we made additional progress on the operational these initiatives. efficiencies. We achieved this by During implementing another limited workforce reduction.
Speaker #3: Since my arrival, we have reduced our headcount costs by a total of 20% while maintaining consistent production levels. In October, receive confirmation that we retained our listing on the Nasdaq so this is now behind capital markets us.
Speaker #3: We remain committed to maintaining the integrity of our listing for broad access to our common we were also pleased to announce that we have completed two capital raises totaling stock.
Speaker #3: 13.8 million in proceeds net of underwriters' discount fees and expense. These funds will be efficiently used for working capital needs and to accelerate our product development roadmap.
Speaker #3: product acceleration will create more opportunities and ultimately lead to better margins. We are excited that we recently I'm also thrilled to We believe this listing across our entire material received ULEE products.
Speaker #3: This will also open new market segments representing around a billion dollars in total addressable market. These new market segments include chemical, agriculture crossing, oil and gas, and pharma industries.
Speaker #3: During the quarter, we also achieved UL 1973 listing for our 80-volt intelligent batteries. This marks our first globally recognized certification for a mobile battery energy storage system, which unlocks new opportunities in the GSC industry as well as AGVs and AMRs.
Speaker #3: Overall, these key safety standards provide assurance to customers that our products are reliable and safe. Our batteries were also certified recently by a world-leading multinational industrial equipment OEM for use in their new lift truck models.
Speaker #3: This showcases our commitment to working closely with OEMs and our right products and solutions to meet partners as we continue to build the our customers' needs.
Speaker #3: Another key initiative is to expand our software offerings to improve recurring revenue. During the quarter, we graduated our Sky EMS 2.0 SaaS platform and converted a major airline from beta testing to a paying customer.
Speaker #3: strong interest. We also customers on this software new AI-driven operational features to Sky EMS that started working on adding you'll hear about on future calls.
Speaker #3: It is our goal that every battery shipped be cloud connected and we are working hard towards this goal. With that, let me now hand the call over to our CFO, Kevin Royal, to We now have multiple paying discuss our first quarter financial results in more detail.
Speaker #3: Kevin, please go ahead.
Speaker #4: Good everyone. Revenue for the fiscal first quarter of 2026 Good afternoon, was 13.2 million, compared to 16.1 million in the same quarter last year.
Speaker #4: As Krishna outlined earlier, the decrease in revenue was driven mainly due to a pause in customer orders as a result of the tariff uncertainty and macroeconomic concerns.
Speaker #4: Gross margin in the first quarter was 28.6%, compared to 32.4% in the prior year period. The decrease in gross margin resulted mainly from lower sales combined with a shift in mix to our lower energy capacity products, which have lower gross margins.
Speaker #4: Operating expenses 2026 were in the first quarter of 6.4 million in the first quarter of 2025. The decrease in operating expenses reflects the benefits of our cost reduction initiatives including operating levels.
Speaker #4: The net loss for the first quarter was 2.6 right-sizing the workforce to match current million, or 15 cents per share, compared to a net loss of 1.7 million or 10 cents per share, in the first quarter of 2025.
Speaker #4: Excluding costs associated compensation, first quarter with stock-based million, or 14 cents non-GAAP net loss of per share, compared to a 1.1 million or 6 cents per share in the prior year non-GAAP net loss was 2.4 Adjusted EBITDA for the first quarter was negative 1.7 period.
Speaker #4: million, compared to negative 0.4 revenue and margins in the quarter. million in the same quarter a year and cash equivalents of and 1.3 million in the prior 0.6 million a year ago quarter.
Speaker #4: Subsequent quarter-end, as ago. Reflecting the lower 1.6 million compared to Krishna highlighted earlier, we raised 9.2 million in proceeds net of Turning to the balance sheet, we fees and underwriters' discount from a secondary offering of common stock.
Speaker #4: And we also raised 4.6 ended the quarter with cash fees from a private placement of pre-funded warrants and common stock warrants. Proceeds will primarily be used for working capital and to accelerate the redesign of our product portfolio in order to lower costs and improve gross profits.
Speaker #4: call back over to Krishna for his final remarks. And then we will open it up for questions.
Speaker #4: Krishna? I will now turn the Thank you,
Speaker #2: Kevin. In closing, despite the challenges we faced during the quarter, I'm really proud of the progress we have made. This includes streamlining our cost structure, completing the capital raises that we need to support our business, regaining compliance with NASDAQ listing requirements, accelerating our product roadmaps, receiving key certifications with UL and an important OEM, delivering Sky EMS 2.0 with paying customers.
Speaker #2: With these actions and the new leadership in place, we are well positioned to achieve profitable growth in the coming quarters. With that, let's open the call to questions.
Speaker #2: Operator.
Speaker #3: Thank you. We will now begin the question-answer session. To join the question queue, you may press star, then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing any keys.
Speaker #3: To withdraw your question, please press star and then two. We will pause for a moment as the callers join the queue. We have the first question on the line of Rob Brown from Lake Street Capitals Market.
Speaker #3: Please go
Speaker #3: ahead. Hi, good
Speaker #5: Afternoon. I'm the first question. I'm kind of the order trends sort of post-quarter. You talked about some recovery in orders, I guess, and you've announced some bigger orders.
Speaker #5: But how are the order trends coming through, and are you seeing that strength continue into the fourth quarter?
Speaker #6: Yeah. So we are seeing some evidence of a rebound. We highlighted 2.4 million in orders from the material handling industry, as well as a significant airline order.
Speaker #6: We really are still seeing some headwinds, which we continue to attribute to recent tariffs as well as some impact in the quarter from the government shutdown.
Speaker #6: However, we are seeing more promising trends in the second half of the year, and in particular, we are seeing some strengthening in our third fiscal quarter, which is the first calendar quarter of 2026.
Speaker #5: Okay. Great. And then on the ground support equipment market, you've had good progress there in terms of adding customers and expanding penetration in the customers.
Speaker #5: How is that market sort of looking from an investment standpoint on their part in terms of rolling out product and what sort of further penetration can you get there?
Speaker #6: Yeah. They continue to adopt the clean energy solutions in the GSC. So I'm not seeing any pushback from the overall goal and how the airlines are thinking about going lithium.
Speaker #6: So that trend is very supportive. It was really this short-term tariff that paused some of the progress. But as Kevin mentioned, early next year, calendar-wise, we'll start seeing more activity.
Speaker #6: As you noticed, we doubled the airlines we now serve. And some of the airlines are just getting started, like the first order, literally, in that case, as I mentioned on the call.
Speaker #6: So we look forward to them taking more and more orders as they start deploying
Speaker #6: lithium. All right.
Speaker #5: Great. Thank you. I'll turn it over. Thank you. Participants who wish to ask a question may press star and one on your telephone keypad.
Speaker #5: Participants who wish to ask a question may press star and one on your telephone keypad. As there are no further questions, I would like to hand the conference over back to Mr. Krishna for closing remarks.
Speaker #6: Sure. Thank you again for joining us on the call today. We look forward to reporting our continued progress throughout the quarter and on our next earnings call in mid-February.
Speaker #6: Operator, you may now
Speaker #6: disconnect. Thank