DFLIW — Dragonfly Energy Holdings Corp.

Summary of Dragonfly Energy (DFLIW) Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Q4 2025 Performance:
  • Net sales increased by 6.9% to $13.1 million.
  • OEM revenue grew approximately 30% year-over-year, while DTC revenue declined to $4.7 million from $5.7 million.
  • Gross profit was $2.4 million with a gross margin of 18.2%, down from 20.8% in the previous year.
  • Operating expenses rose 29.9% to $12.6 million, influenced by one-time debt restructuring costs.
  • Net loss was $45 million, compared to a net loss of $9.8 million in Q4 2024.
  • Adjusted EBITDA was negative $3.8 million, worsening from negative $2.3 million year-over-year.
• Full Year 2025:
  • Net sales reached $58.6 million, a 16% increase.
  • Gross margin improved to 26.7%, and adjusted EBITDA loss narrowed to negative $11.4 million from negative $18.5 million.

2. Strategic Updates and Business Highlights

• Capital Structure: Successfully completed several capital-raising transactions and a significant debt restructuring to improve liquidity and simplify the balance sheet.
• Market Expansion: Significant progress in the heavy-duty trucking sector, highlighted by an initial order from Werner Enterprises after a successful pilot program.
• Product Development: Continued expansion of the intellectual property portfolio with nearly 90 patents, and introduction of new products in the Battle Born ecosystem, including solar offerings.
• Cost Structure Realignment: Implemented measures to reduce payroll expenses by approximately 20% and cut discretionary spending, aiming for annualized cost savings of $4.9 million.

3. Forward Guidance and Outlook

• Q1 2026 Expectations: Anticipated revenue of approximately $9.5 million and an adjusted EBITDA loss of $4.6 million, reflecting ongoing market pressures.
• Long-Term Goals: Aiming for positive adjusted EBITDA as revenue approaches an annual run rate of approximately $70 million, with a focus on expanding OEM partnerships and improving operational efficiency.

4. Bad News, Challenges, or Points of Concern

• Market Headwinds: The RV market faced challenges, particularly in January, leading to inventory adjustments by OEMs.
• DTC Revenue Decline: Continuous decline in direct-to-consumer revenue, indicating a strategic shift away from this segment.
• Net Losses: Significant increase in net loss compared to the previous year, raising concerns about profitability.
• Economic Environment: The broader economic environment remains challenging, particularly affecting the RV market and delaying capital expenditures in the trucking sector.

5. Notable Q&A Insights

• RV Market Recovery: Management noted a weaker start to the RV market in January but observed signs of recovery in February and early March, with expectations of expanded energy storage capacity among existing OEMs.
• Heavy-Duty Trucking Outlook: Positive sentiment about a potential pickup in the trucking market in the second half of 2026, driven by pent-up demand and new emissions regulations.
• Lithium Price Volatility: While the company has not yet faced significant impacts from lithium carbonate price fluctuations, there is caution regarding potential future increases.
• Cash Burn Management: Emphasis on reducing cash burn through cost-cutting measures and improved operational efficiency, with a focus on maintaining liquidity through 2026.

Overall, Dragonfly Energy is navigating a challenging market environment while strategically positioning itself for future growth, particularly in the OEM sector.