Flux Power revenues up 109% on growing adoption of Lithium Batteries to power Forklifts
Flux Power Holdings, Inc., a developer of advanced lithium batteries for industrial applications including electric forklifts and airport ground support equipment (GSE), today reported results for its fiscal 2019 third quarter (Q3 ‘19) and nine months ended March 31, 2019.
Highlights:
- Q3 ’19 Revenue Rose 6% to $1.8M versus the prior year, driven primarily by sales of LiFT Pack batteries for Class 3 “walkie” pallet jack forklifts as well as Class 3 end riders, Class 1 counterbalance trucks, and Class 2 narrow aisle lift trucks. Flux continues to see accelerating commercial adoption of its lithium-ion batteries which provide a more efficient and cost-effective alternative to lead-acid chemistry, despite some variability in the timing of larger customer orders.
- FY 2019 First Nine Months Revenue Rose 109% to $6.3M, compared to $3.0M in the year-ago period and revenue of $4.1M for all of fiscal 2018. Flux’s year-to-date revenue increase was achieved by improving sales across Flux’s full product lines for forklifts and airport ground support equipment, versus year-ago sales principally from its initial LiFT Pack line for only walkie pallet jacks.
- Flux Remains on Track for FY 2019 Revenue to More than Double its performance in FY 2018 and expects to achieve continued gross margin improvements going forward. Flux’s fourth quarter ending June 30, 2019 is expected to include revenue from its full product line rollout.
- Flux is relocating this summer to a larger 63,000 square foot facility nearby, which is nearly three times the size of its current headquarters. We will initially occupy 46,000 square feet, with first right of refusal for an additional 15,000 square feet of warehouse which is anticipated to support future growth. The new facility is being designed to support increased production of multiple product lines as well as the Company’s expanded sales, marketing and customer support teams.
- In March, Flux announced a relationship with a leading forklift manufacturer, pursuant to which it will supply lithium-ion batteries, on a private label basis, for the forklift OEM’s walkie pallet jack product line. Flux has already received initial orders from the OEM in the current quarter ending June 30th.
- Additional UL Listings – Flux is near completion of testing for UL Listing for its Class 1 counterbalance truck LiFT Packs which debuted earlier this year. It also recently completed testing for UL Listing for its proprietary, next-generation battery management system BMS 2.0 which provides a range of “industry leading” new capabilities and significant performance enhancements in the new design. The new BMS 2.0 utilizes a smaller footprint and a more efficient design which should provide a meaningful gross margin benefit as it rolls out in scale. Flux remains one of the industry leaders in securing this respected confirmation of quality, safety and reliability for its solutions. Flux secured its first UL Listing in 2016 for its Class 3 Walkie LiFT Packs.
Flux CEO, Ron Dutt, commented, “Our quarterly performance shows solid growth in both breadth of our customer base and new business prospects. Timing of major customer orders, and their decision-making processes, has impeded the improvement we anticipated. These delays in some orders held our third quarter revenue growth over prior quarter to 6%, and our pipeline and year-to-date performance confirm that we are well on track to achieve our goal of more than doubling revenue in our fiscal year ending June 30th.
“Last month the Flux team returned from ProMat 2019, the global materials handling industry’s largest convention held every other year, with strong confidence and new customer leads. Lithium power was one of a few prominent themes at Promat this year, with widespread evidence of substantially expanded awareness and engagement in the performance, energy efficiency and cost benefits of lithium battery solutions as an alternative to lead-acid chemistry. This growing engagement in lithium solutions, combined with our full offering of lithium-ion solutions across all forklift classes, positions Flux well to continue our growth trajectory in the coming fiscal year.”
Financial Results:
Q3 ‘19 revenue rose 6% to $1,751,000 compared to $1,666,000 in Q3’18, principally due to continued solid demand for Flux’s walkie LiFT Pack solutions and initial shipments of Class 2 narrow aisle LiFT Packs.
Q3 ‘19 cost of sales decreased 7% to $1,690,000 compared to $1,816,000 in Q3 ’18, principally due to improved workforce efficiencies and to bill of material cost reductions. Flux’s gross profit rose to $61,000 in Q3’19 from a gross profit loss of ($105,000) in Q3’18, reflecting increasing purchasing and production efficiencies resulting from Flux’s ongoing margin enhancement plan. The plan involves staged improvements in design, production, procurement and pricing initiatives, in addition to expected efficiency improvements through higher production volumes, that should drive ongoing improvements in gross margins over the next several quarters.
Selling and administrative expenses increased to $2,421,000 in Q3 ‘19 from $909,000 in Q3 ’18, primarily due to the addition of sales and support staff required to develop and service both our full product line rollout and significantly higher customer activity, which includes a $1.0M increase in stock-based compensation related to option grants for both new and existing employees.
Research & development expenses increased to $1,364,000 in Q3 ‘19, compared to $483,000 in Q3 ‘18, as Flux invested in completing development of its larger Class 1 and Class 2 battery solutions and comprehensive UL certification processes for both its Class 1 LiFT Pack and next generation BMS. R&D expenses are expected to remain significant as Flux addresses specific partner and customer design requests supporting customer demand, develops solutions for other potential motive power markets, and invests in new capabilities and features to strengthen margins and customer demand.
Flux’s Q3 ‘19 operating loss increased to $3.7M from $1.5M in Q3 ‘18, principally due to higher operating expenses supporting future growth and its full product line rollout, including $1.1M in stock based compensation. Net loss in Q3 ‘19 increased to $3.8M, or ($0.08) per basic share, from $1.8M, or ($0.07) per basic share, in Q3 ‘18, reflecting the higher operating loss offset by a decrease in interest expense due to lower average borrowings.
Financial Position:
In support of its operations, growth and new product initiatives, Flux raised a total of $4.4M from the private placement of common stock at $1.10 per share, with closings in December 2018 and January 2019.
On March 28, 2019, Flux entered into an amended and restated credit facility agreement with Esenjay Investments, LLC, owned by the Company’s largest shareholder, and Cleveland Capital to extend the maturity date from March 31, 2019 to December 31, 2019 and to increase the maximum principal amount available from $5M to $7M. Total borrowings outstanding under this credit facility were $3.4M at March 31, 2019.
