Flux Power’s FY 2021 Revenue increased by 56% to $26.3M; Gross Margins improved to 22.1%

Posted on Sep 22, 2021 in Nuts & Bolts

Flux Power Holdings, Inc., a developer of advanced lithium-ion battery packs for commercial and industrial equipment, today reported financial results for its fourth quarter (Q4’21) and fiscal year (FY‘21) ended June 30, 2021.

Financial Highlights:

• Q4’21 revenue grew 33% to $8.3M compared to Q4’20 revenue of $6.3M
• FY’21 revenue increased 56% to $26.3M vs FY’20 revenue of $16.8M
• Q4’21 gross margin increased to 21.0% compared to 17.5% in Q4’20
• FY’21 gross margin improved to 22.1% vs FY’20 gross margin of 13.0%

Strategic Highlights:

• Uplisted on the Nasdaq Capital Market under the symbol “FLUX.” Prior to the listing on the Nasdaq Capital Market, Flux Power’s common stock was quoted on the OTCQB. Raised $12.4M in equity capital, increasing its shareholder base, including institutional investors. Converted $5.2M of debt to equity, eliminating all debt, to strengthen the balance sheet and capital structure.
• Launched next-generation lithium-ion battery pack for end riders & center riders – feedback from customers has been positive with substantial orders.
• Initiated deliveries to the world’s largest meat processor and two major customers (paper products & chemicals manufacturer and a packaging manufacturer).
• Resumed deliveries that were deferred by a global airline during the travel disruptions caused by the COVID pandemic.
• Signed partnership agreement with CLARK Material Handling Company to supply lithium-ion batteries.
• Initiated deliveries of a new proprietary battery pack to a provider of “autonomous electric shuttle vehicles”.
• Announced three patents pending for advanced lithium-ion battery technology.
• Reached milestone of 9,000 battery packs in the field (surpassed by 10,000 battery packs in July – FY’22), while being challenged by global supply change disruption.
• Expanded into additional warehouse space to accommodate growth and allocate more space for inventory and production lines.
• Named to the Financial Times “Americas Fastest Growing Companies” List. Received the 2020 Supply & Demand Chain Executive Green Supply Chain Award. Named to Food Logistics’ 2021 Top Green Providers List.

“Our 2021 Fiscal Year was quite a challenge, with supply chain disruptions and continuing effects from the COVID pandemic,” Flux Power CEO Ron Dutt commented. “Despite these challenges, we delivered substantial revenue growth and gross margin improvements, while launching new products and obtaining UL listings.”

 Q4’21 Financial Results

Revenue: Q4’21 revenue increased 33% to $8.3M compared to $6.3M in Q4’20, driven by sales of larger LiFT Packs. Q4’21 represented the 12th consecutive quarter of year-over-year revenue increases.

Gross Profit: Q4’21 gross profit improved to $1.8M compared to a gross profit of $1.1M in Q4’20 principally reflecting higher sales volumes and benefits from Flux Power’s revenue growth and gross margin improvement program.

Selling & Administrative: Expenses increased to $3.4M in Q4’21 from $2.7M in Q4’20, principally reflecting increased staffing to support expanded operations and growth.

Research & Development: Expenses increased to $2.0M in Q4’21, compared to $1.1M in Q4’20 reflecting continued product range evolution and optimization, including high voltage battery packs (400 Volts), and developed adaptions of battery packs for “second sourcing” of battery cells.

Net Loss: Q4’21 net loss increased to $3.7M from a loss of $3.3M in Q4’20, principally reflecting higher operating costs and interest expense.

FY’21 Financial Results

Revenue: FY’21 revenues rose 56% to $26.3M compared to $16.8M in FY’20, reflecting the continued momentum rolling out a full lineup of large LiFT Packs and adding large new Fortune 500 customers with large fleets having multi-year ordering demands.

Gross Profit: FY’21 gross profit improved to $5.8M compared to $2.2M in FY’20, based on higher sales and improved gross margins reflecting the benefit of sourcing initiatives, lower prices from higher volume purchasing, and specific design cost reductions.

Selling & Administrative: Expenses increased to $12.6M in FY’21 from $9.8M in FY’20, principally due to additional cash and stock-based compensation expense related to new hires across the business to facilitate production and market growth, and legal fees supporting debt and equity issuances.

Research & Development: Expenses increased to $6.7M in FY’21 from $5.0M in FY’20, reflecting development costs supporting expanded product offering as well as third party certification efforts such UL Listing and UN38.3 (transportation) requirements.

Net Loss: Net loss decreased to $12.8M (a loss of $1.08 per share) in FY’21 from a net loss of $14.3M (a loss of $2.80 per share) in FY’20 mainly due to higher operating expenses and increased interest expense. Per-share results are based on 11.8M and 5.1M weighted average basic shares outstanding at the end of FY’21 and FY’20, respectively.

Capital Structure

Flux Power completed equity private placements during Q1’21 totaling $3.2M. Additionally, a total debt conversion to equity of $5.2M, combined with debt repayment of $2.6M was achieved resulting in a debt-free condition at year-end.

On August 18, 2020, Flux Power closed an underwritten public offering of its common stock priced at a public offering for gross proceeds of approximately $12.4 million, which included the full exercise of the underwriter’s over-allotment option to purchase additional shares, prior to deducting underwriting discounts and commissions and offering expenses payable by Flux Power. A total of 3,099,250 shares of common stock were issued in the offering, including the full exercise of the over-allotment option.

Flux Power raised additional gross proceeds of $12.7M in an ATM Offering, prior to deducting commissions and other offering-related expenses, and issued an aggregate of 978,782 shares of common stock at an average price of $12.93 per share in the offering.

The fiscal Year 2022 Outlook

Flux Power anticipates revenue growth to continue its FY’21 momentum in FY’22 reflecting: (i) acquisition of new Fortune 500 customers; (ii) launching new product innovations; (iii) and continued mitigation of supply chain challenges.

The supply chain disruption in the global marketplace has impacted Flux Power in past months reflecting delays in shipments from Asia, higher steel prices, scarcity of electronic components, and higher shipping costs. While Flux Power customer deliveries of battery packs have been delayed in some cases, no customer orders have been lost, only deferred. To that point, total backlog, or open sales orders, total $18M as of this date. Mitigation actions have been implemented to address the impact to supply chain disruption while anticipating continued impact but with a gradual recovery.

The first quarter (Q1’22) of the fiscal year is a seasonally slower revenue quarter, reflecting customers not purchasing or installing new equipment over the historically slower summer months of July and August. However, Flux Power anticipates significant year over year growth for the quarter, but a lower growth quarter compared with the prior two quarters Flux Power also expects to further enhance gross margins across its product lines through the implementation of pricing actions and a series of clearly defined initiatives to advance technology, design, production and purchasing efficiencies, as well as benefiting from growing economies of scale.