Flux Power Issues Shareholder Letter and Corporate Update

Rhea-AI Summary

Flux Power Holdings, Inc. (NASDAQ: FLUX) CEO Ron Dutt issues a letter to shareholders highlighting revenue and margin expansion, new product developments, strategic initiatives, and financial updates for the fiscal year 2023.

Insights

Financial Analyst

Flux Power Holdings' strategic initiatives and capital structure improvements are indicative of a company in transition, aiming to capitalize on the growing demand for lithium-ion energy storage solutions. The addition of new customers and expansion of gross margins suggest a positive trajectory for future profitability. The company's shift from a Silicon Valley Bank credit facility to a more favorable one with Gibraltar Business Capital, coupled with the termination of an ATM offering program, reflects a proactive approach to financial management. This could potentially reduce interest expenses and improve net income margins.

The reported customer order backlog of $31.1M and a pipeline of high probability orders of over $100 million are critical indicators of the company's financial health and future revenue streams. Investors should monitor the conversion rate of this backlog and pipeline into recognized revenue, as it will be a significant driver of the company's financial performance. The strategic supply chain and profitability improvement initiatives may further bolster the company's ability to achieve cash flow breakeven, a milestone that would be pivotal in assessing the company's long-term financial stability and growth potential.

Market Research Analyst

The global trend towards electrification and sustainability, particularly within corporate fleets, creates a favorable market environment for Flux Power's lithium-ion battery solutions. The company's expansion into new heavy-duty models and its OEM private label program aligns with industry demands for high-performance, environmentally friendly energy storage solutions. Flux Power's focus on Artificial Intelligence (AI) features for its SkyBMS® Telematics Platform suggests a commitment to innovation that could enhance its competitive edge by offering customers advanced asset management tools to optimize operational efficiency and minimize equipment downtime.

Flux Power's engagement with Fortune 500 customers and its ability to secure new customers while maintaining orders from existing ones demonstrates the company's growing market presence and brand strength. The company's strategic positioning and product development efforts should be closely observed, as they will likely influence market share and revenue growth. The adoption rates of their new product offerings and the extent to which these products meet market demands will be crucial in evaluating the company's market penetration and scalability.

Supply Chain Management Expert

The opening of a new Atlanta facility by Flux Power is a strategic move to enhance customer support services and response times across the nation. This expansion is likely to improve the company's operational efficiency and customer satisfaction, both of which are essential for maintaining a competitive advantage in the rapidly evolving energy storage market. Additionally, the company's initiative to automate the assembly of battery cells into modules could result in significant cost savings and inventory management improvements.

Flux Power's focus on strategic supply chain and profitability improvement initiatives, such as incorporating fast charging capabilities and expanding testing and product validation capabilities with on-site vibration tables, demonstrates a forward-thinking approach to supply chain management. These initiatives are expected to accelerate the path to cash flow breakeven and enhance the company's ability to respond to high customer demand. The effectiveness of these supply chain strategies in reducing lead times and costs will be instrumental in Flux Power's ability to sustain growth and profitability.

VISTA, Calif.--(BUSINESS WIRE)-- Flux Power Holdings, Inc. (NASDAQ: FLUX), a developer of advanced lithium-ion energy storage solutions for electrification of commercial and industrial equipment, today issued a letter to shareholders from Ron Dutt, CEO of Flux Power.

Dear Fellow Shareholders,

On behalf of the entire team at Flux Power, we hope you had a wonderful Holiday Season and wish you a Happy New Year!

Throughout the calendar year 2023, Flux Power continued revenue and margin expansion while diligently following our roadmap to achieve consistent profitability and an improved capital structure. The year was highlighted by new purchase orders from installed and new customers, ending 2023 with over 20,000 high performance battery packs in the field for lift trucks and other industrial equipment including airport ground support equipment (GSE), and stationary energy storage for EV charging. For our products, during the year we obtained UL Solutions List Status for our next-generation G2 series battery platform and began developing Artificial Intelligence (AI) features for the SkyBMS® Telematics Platform. Operationally we opened a new Atlanta facility to supplement customer support services and continued our strategic supply chain and profitability improvement initiatives.

2023 Initiatives Accomplished:

• Added 8 new customers in 2023, reflecting customers desire to fulfill long-term fleet needs of replacing lead acid battery packs with lithium-ion.
• Expansion of Gross Margins Leading to Profitability in FY2024
• Commenced development of Artificial Intelligence (AI) features for SkyBMS® Telematics Platform to drive more informed decision-making around asset management and maximize operational efficiency.
• Completed UL Solutions compliance testing to obtain third-party, safety and durability certification for high demand new heavy-duty models to be launched for 2024, reflecting our product line expansion.
• Launched initiative with technology partner to incorporate fast charging capability into our lithium-ion battery cells.
• Reached prototype stage for automation of battery cells into modules to support current high customer demand, while achieving purchasing simplification and reducing inventory.
• Expanded testing and product validation capabilities with on-site vibration table, to reduce time required from testing to certification.
• Opened a new Atlanta facility to supplement customer support services in response to growth in nationwide sales of lithium-ion battery packs, enabling faster response times to Flux Power’s nationwide customer base.
• Strategic Supply Chain & Profitability Improvement Initiatives continued to accelerate the path to cash flow breakeven.
• Secured a new $15 million credit facility, with expansion capability to $20 million, from Gibraltar Business Capital (“GBC”) to fund working capital and to repay its existing credit facility with Silicon Valley Bank (“SVB”).
• Secured a new $2.0 million subordinated line of credit with Cleveland Capital providing additional credit support with an extended duration to August 15, 2025.
• Terminated an at-the-market (“ATM”) offering program.
• Customer order backlog of $31.1M as of November 2, 2023.

Throughout the year, our increase in revenue mirrored the global trend of major corporations actively seeking ways to curtail emissions and address the challenges posed by climate change, particularly through the adoption of electric fleets. The escalating convergence of sustainability programs, financial efficiencies, and governmental regulations is compelling businesses to explore innovative solutions that not only cut carbon emissions but also align with their environmental, social, and governance objectives. In addition, our customers typically migrate to our lithium-ion packs to achieve higher performance and cost reductions, without government incentives.

To meet the demanding needs of our customers with cutting-edge solutions, we continued to innovate our products and capabilities and expand our reach into new applications. We began work to develop Artificial Intelligence features and capabilities into our SkyBMS Telematics platform, which delivers insight into equipment fleet’s usage so customers can make more informed decisions to maximize operational efficiency. Our telemetry system with AI assistance can help anticipate and resolve issues before they happen, addressing the number one driver in fleet management - minimizing downtime of the equipment. We completed UL Solutions compliance testing to obtain third-party, science-backed certification for our next-generation clean energy battery technology. We also began a staged launching of our updated product platform that includes the rollout of “heavy duty” models for more demanding performance, which is expected to provide added revenue opportunities.

Throughout the year we built on our growing list of new and diverse Fortune 500 customers and partners. We added on average two new major customers each quarter while maintaining orders from existing customers. Expanding revenues from these relationships helped drive new customers to our technology. We anticipate our new heavy-duty models and OEM private label program commencing early in calendar year 2024 will effectively meet the robust market demand. We expect our installed base of customers will continue to adopt our existing and new lithium-ion packs for their fleet needs. Our significant backlog of open orders supports our strategy, along with a pipeline of high probability orders of over $100 million ahead of us in 2024.

In 2023 we took significant actions to strengthen our capital structure while managing our business growth and margin expansion with careful priorities as part of our strategy to enhance shareholder value. We migrated from our Silicon Valley Bank facility to a new $15 million credit facility with Gibraltar Business Capital, which provides lower interest rates, a two-year term, and the potential to expand the facility to $20 million to accommodate higher working capital needs as our business grows. This facility, along with our improvement in operating cash performance, supports our current business growth. An additional $2.0 million subordinated line of credit with Cleveland Capital provides greater working capital optionality beyond our projected needs and continued confidence in our growth strategy from a long-term investor in Flux Power. As we look to the future, we believe it is good corporate practice to have replaced our previous shelf registration as this allows the Company maximum flexibility with respect to our capital management.

Looking ahead, we believe 2024 will be another year of progress and opportunity for Flux Power as we continue our growth trajectory with a focus on the advancement of our technology, capacity, customer and partnership relationships, and expanding into new markets. Taken together, we believe our strategy is leading us toward near-term profitability and positioning us to be the leading provider to large Fortune 500 material handling fleets. We thank all our shareholders for your ongoing support as we work diligently to build on the short and long-term value of our company. We wish you all the best for a happy, healthy and prosperous new year!

Best Regards,

Ron Dutt
CEO, Flux Power

About Flux Power Holdings, Inc.

Flux Power (NASDAQ: FLUX) designs, manufactures, and sells advanced lithium-ion energy storage solutions for electrification of a range of industrial and commercial sectors including material handling, airport ground support equipment (GSE), and stationary energy storage. Flux Power’s lithium-ion battery packs, including the proprietary battery management system (BMS) and telemetry, provide customers with a better performing, lower cost of ownership, and more environmentally friendly alternative, in many instances, to traditional lead acid and propane-based solutions. Lithium-ion battery packs reduce CO2 emissions and help improve sustainability and ESG metrics for fleets. For more information, please visit www.fluxpower.com.

Forward-Looking Statements

This release contains projections and other "forward-looking statements" relating to Flux Power’s business, that are often identified using "believes," "expects" or similar expressions. Forward-looking statements involve several estimates, assumptions, risks, and other uncertainties that may cause actual results to be materially different from those anticipated, believed, estimated, expected, etc. Such forward-looking statements include impact of COVID-19 on Flux Power’s business, results and financial condition; Flux Power’s ability to obtain raw materials and other supplies for its products at competitive prices and on a timely basis, particularly in light of the potential impact of the COVID-19 pandemic on its suppliers and supply chain; the development and success of new products, projected sales, deferral of shipments, Flux Power’s ability to fulfill backlog orders or realize profit from the contracts reflected in backlog sale; Flux Power’s ability to fulfill backlog orders due to changes in orders reflected in backlog sales, Flux Power’s ability to timely obtain UL Listing for its products, Flux Power’s ability to fund its operations, distribution partnerships and business opportunities and the uncertainties of customer acceptance and purchase of current and new products. Actual results could differ from those projected due to numerous factors and uncertainties. Although Flux Power believes that the expectations, opinions, projections, and comments reflected in these forward-looking statements are reasonable, they can give no assurance that such statements will prove to be correct, and that the Flux Power’s actual results of ‎operations, financial condition and performance will not differ materially from the ‎results of operations, financial condition and performance reflected or implied by these forward-‎looking statements. Undue reliance should not be placed on the forward-looking statements and Investors should refer to the risk factors outlined in our Form 10-K, 10-Q and other reports filed with the SEC and available at www.sec.gov/edgar. These forward-looking statements are made as of the date of this news release, and Flux Power assumes no obligation to update these statements or the reasons why actual results could differ from those projected.

Flux, Flux Power, and associated logos are trademarks of Flux Power Holdings, Inc. All other third-party brands, products, trademarks, or registered marks are the property of and used to identify the products or services of their respective owners.

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News: Flux Power News
Twitter: @FLUXpwr
LinkedIn: Flux Power

View source version on businesswire.com: https://www.businesswire.com/news/home/20240103786804/en/

Media & Investor Relations:

info@fluxpower.com

External Investor Relations:

Chris Tyson, Executive Vice President

MZ Group - MZ North America

949-491-8235

FLUX@mzgroup.us

www.mzgroup.us

Source: Flux Power Holdings, Inc.

FAQ

What is the ticker symbol for Flux Power Holdings, Inc.?

The ticker symbol for Flux Power Holdings, Inc. is FLUX.

What were the key highlights for Flux Power in 2023?

In 2023, Flux Power achieved revenue and margin expansion, obtained UL Solutions List Status for their G2 series battery platform, commenced development of AI features for the SkyBMS Telematics Platform, and secured new credit facilities.

What initiatives did Flux Power accomplish in 2023?

Flux Power added 8 new customers, expanded gross margins, developed AI features for the SkyBMS Telematics Platform, completed UL Solutions compliance testing, and secured new credit facilities in 2023.

What were the financial updates for Flux Power in 2023?

Flux Power secured a new $15 million credit facility, terminated an at-the-market offering program, and reported a customer order backlog of $31.1 million as of November 2, 2023.

What are the future expectations for Flux Power in 2024?

Flux Power anticipates commencing new heavy-duty models and OEM private label program, expanding revenues from existing customer relationships, and positioning themselves for near-term profitability in 2024.