Flux Power reported a mixed QQ3 2024 performance characterized by a modest sequential revenue decline and a continued negative bottom line, underscored by a 30% gross margin and a -$3.0 million net loss. Revenue for the quarter was $14.57 million, down 4% YoY and 21% QoQ, with gross profit of $4.03 million and a gross margin of 30.0%. The company posted an EBITDA loss of $1.94 million and a net loss of $3.01 million (EPS -0.18). Backlog stood at $18.5 million as of May 6, 2024, signaling a level of demand visibility even as near-term revenue prints remained lumpy due to seasonality and higher interest rate headwinds affecting order timing. Cash burn persisted, with net cash used in operating activities of $0.23 million for the quarter and a nine-month cash burn of $4.3 million, leaving cash on hand of $1.25 million at quarter-end and relying on revolver availability under Gibraltar’s credit facility (remaining $3.2 million on the line) and a $2 million subordinated facility. Management emphasizes revenue growth and profitability as primary priorities and points to a string of catalysts designed to lift margin and growth, including private-label OEM programs, heavy-duty product introductions, expanded field sales, and the roll-out of SkyBMS telemetry and second-life deployments. The management commentary also signals a potential improvement in the macro backdrop in the second half of 2024, though the company maintains no formal guidance.
Key thematic takeaways include (1) ongoing margin normalization driven by cost-out initiatives (notably lower battery-pack costs and lean manufacturing) with a long-term target of >40% gross margin, (2) multi-channel topline expansion via a larger direct and partner sales force, private-label OEM programs, and new product launches (80V high-power packs for larger fleets, heavy-duty variants, and Class II/Class I offerings), and (3) strategic bets on adjacencies (DoD opportunities, second-life deployments, and nationwide telemetry rollouts) to build scale and customer loyalty. While the near-term financials remain cash-flow negative, Flux emphasizes that the underlying demand for lithium-ion migration is intact and that the revenue trajectory should improve in H2 2024 as these initiatives scale.
Investment implication: Flux is at a critical transition point where gross margin leverage and operating leverage could unlock a path to cash-flow breakeven if the planned sales expansion, OEM partnerships, and cost-out programs translate into higher volumes and improved mix. However, investors should monitor liquidity, covenant flexibility with lenders, and the pace of backlog conversion as real near-term liquidity and profitability take shape.