Flux Power Holdings Q1 2027 Earnings Call Transcript

Flux Power Holdings (NASDAQ:FLUX) reported first-quarter financial results on Tuesday. The transcript from the company’s first-quarter earnings call has been provided below.

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Summary

Flux Power Holdings reported fiscal first-quarter 2027 revenue of $6.8 million, down from $8.2 million in the prior quarter and $13.2 million a year ago due to lower customer spending and economic conditions.

The company is focusing on strategic initiatives, including supply chain optimization, enhancing OEM relationships and launching a direct go-to-market campaign targeting large end-user accounts to drive future growth.

Flux Power Holdings plans to leverage its S Series products to expand into new OEMs and dealer networks through white-label solutions, aiming for increased scalability and profitability.

Despite a first-quarter net loss of $3.2 million, the company expects improved revenue in the next quarters, forecasting $7 to $8 million in Q2 and $9 to $10 million in Q3.

Management highlighted the resumption of orders from key customers and the potential for strategic partnerships or financing to enhance financial flexibility.

Full Transcript

OPERATOR

Good afternoon and welcome to Flux Power Holdings’ fiscal first quarter 2027 earnings conference call. At this time, all participants are in listen-only mode. At the conclusion of today’s conference call, instructions will be given for the question-and-answer session. As a reminder, this conference is being recorded today, November 3, 2026. I would now like to turn the call over to Leanne Sievers of Shelton Group Investor Relations. Leanne, please go ahead.

Leigh Ann Sievers (President)

Good afternoon and welcome to Flux Power Holdings’ fiscal first quarter 2027 earnings conference call. I’m Leigh Ann Sievers, President of Shelton Group, Flux Power Holdings’ investor relations firm. Joining me today from Flux Power Holdings are Krishna Vanka, CEO, and Kevin Roos, Chief Financial Officer. Before I turn the call over to Krishna, I’d like to remind our listeners that during the course of this conference call, the company will provide financial guidance, projections, comments, and other forward-looking statements regarding future market developments, the future financial performance of the company, new products, or other matters.

These statements are subject to the risks and uncertainties that we discuss in detail in our documents filed with the SEC, specifically our 10-K and our most recent 10-Q, which identify important risk factors that could cause actual results to differ materially from those contained in the forward-looking statements. Also, the company’s press release and management statements during this conference call will include discussions of certain adjusted or non-GAAP financial measures. These financial measures and related reconciliations are provided in the company’s press release and related current report on Form 8-K, which can be found in the Investor Relations section of Flux Power Holdings’ website at www.flexpower.com. For those of you unable to listen to the entire call at this time, a recording will be available via webcast on the company’s website.

And now it’s my pleasure to turn the call over to Flux Power CEO Krishna. Please go ahead.

Krishna Vanka (Chief Executive Officer)

Thank you, Lian, and thanks everyone for joining our call today. This quarter, we continue to make meaningful progress according to our key business and sales initiatives, while executing with discipline and positioning the company for accelerated growth. Let me start with a significant win that captures the commercial momentum we are building. I am very excited to announce that the significant customer who had placed orders with us for the last few quarters has placed an order this quarter through our OEM. Although it’s too early to predict how future orders will trend with this customer, we are very excited to see their commitment to use Flux Power products as they continue their journey towards clean energy.

Notably, we had not forecasted this business until the first quarter of calendar 2027; securing it now pulls meaningful revenue forward. It also speaks to the accelerating pace of lithium-ion adoption among large fleet operators and their confidence in our products. In addition to this order, we also received 25 orders through our OEM partners from first-time Flux Power customers representing approximately $750k in new revenue. Each new customer broadens our base and gives us a foundation for future fleet expansion and replacement business.

I also want to share with you additional updates on several strategic fronts. As you know, under the new management team, we have lowered product and operating costs while also optimizing our supply chain by creating a modular design. We also refreshed our sales leadership that have expanded our OEM relationships and launched new marketing programs aimed at diversifying our customer base. Our business today looks very different from a year ago. Let me talk more about how we are transforming the business through supply chain optimization. Instead of the traditional way of working with existing vendors and trying to get more margin with individual components, we are now extending our reach to other global partners, allowing us to move to a more integrated approach. That means combining key components into fewer, more unified assemblies and delivering a combination of components folded into one unit.

That provides us with the benefit of scale and buying power. This will help us stay competitive among market pricing pressures and allow us to use our S Series products as an anchor product to win new OEMs with our white-label initiative. With our existing infrastructure, this model will help us to move from producing hundreds of units to thousands at a better cost per unit, allowing for higher volume at higher gross margin and a faster path to profitability.

Our goal always remains the same: Flux Power owns the engineering, the design, and the quality standards and the world-class support we are known for. I would also like to highlight early momentum across our sales channels that is translating into commercial traction. Nine months ago we hired a Director of OEM Business Development to expand into new OEMs and strengthen our long-standing partnerships. OEM partnerships typically take time, but the progress has been remarkable. Three large OEM programs are advancing, including one OEM preparing to formally test that could lead to certification. Another OEM has our batteries in an accelerated test cycle and has authorized us to begin outreach to its dealership network within the highest rail network.

We have held five meetings with a major Midwest dealer in just the past two weeks and presented to the full sales team of a major Canadian dealership network. This matters because dealer adoption scales. Once leadership commits, Flux Power gets in front of every branch, fleet manager, and salesperson in that network. One relationship becomes dozens of points of sale, and that multiplies our reach without adding to our cost structure. We are also seeing this in our installed base. Seven years ago we replaced the incumbent lead battery solution across the nationwide operations of a multinational earth moving and mining equipment manufacturer. That fleet is now entering its replacement cycle, and we have received the first second-round order valued at well over half a million dollars, with an additional million-dollar plus anticipated in 2027. These orders are being driven directly by SkyEMS, which lets us identify, battery by battery, which units are ready for replacement.

Rather than competing for the replacement cycle, we anticipate it with data. To complement our OEM and dealer partner efforts, our new VP of Sales has launched a go-to-market campaign targeting the 500 largest end user accounts in North America. This initiative addresses a structural opportunity in our model. Historically, Flux Power has reached end users primarily through OEM and dealer partners. This campaign adds a direct enterprise-level dialogue with the operators of the largest fleets. These are organizations where standardization decisions are made centrally and where a single relationship can translate into deployments across many sites.

Importantly, it is designed to complement our dealer and OEM partners, not to compete with them. We expect this campaign to contribute meaningfully in the back half of our fiscal year. We are also pursuing new avenues for growth. As I mentioned earlier, we are using the S Series as an anchor product to open doors with new OEMs and dealer networks through white-label solutions tailored to their use cases. Today, five OEMs are evaluating Flux Power white-label programs and two major dealers are exploring white-label partnerships. We have also extended the platform with two new S24 configurations. One of our leading OEM partners added the S8 to its dealer CRM system, which we expect to generate approximately a million dollars in new business over the next two quarters.

I also discussed last quarter that we are converting early wins in high-growth new verticals, most notably robotics. Our customer, a global technology platform, is continuing field tests of their new robots with our C48 batteries. Both engineering teams are working very closely in optimizing the batteries for their use case, and we anticipate seeing production-level orders next year. We are also looking at other potential use cases in this new and exciting vertical.

Robotics is a compelling growth opportunity that sits squarely at the intersection of Flux Power’s core strengths: lithium-ion powered systems, battery intelligence, and fleet performance. As industrial operations become more increasingly automated, it extends our capabilities into one of the fastest-growing segments of autonomous material handling. Alongside the S Series expansion, we are also growing through product innovation. Last week we announced two additions that raise the value of every battery we sell. First, integrated gas detection for our airport GSE batteries, developed with a major airline. Safety drives buying decisions on the ramp, so this strengthens our competitive position in GSE. First shipments to an airline customer are expected in the first quarter of calendar 2027. We also plan to offer a retrofit program, which creates a new revenue opportunity across batteries already in the field.

Next, SkyWalks, which adds battery location and charging alerts to our fleet intelligence platform. SkyWalks adds content to each battery sale and connects more customers to SkyEMS, the same data platform that is already helping us anticipate replacement orders. Shipments for SkyWalks begin this quarter. Growing Market Demand. With all of this progress taken together, these developments reflect a commercial strategy that is beginning to compound as macroeconomic headwinds ease. We expect to capitalize on pent-up demand, and leading indicators suggest that demand is beginning to release. One of our long-standing OEM partners recently reported second-quarter bookings of $680 million, more than double the prior year and its fourth consecutive quarterly increase.

Led by the Americas, its management has described the first half of 2026 as the bottom of the cycle. Industry analysts at Interact Analysis forecast U.S. forklift orders to grow 3% to 5% this year, with global orders up to 6%. Battery decisions follow truck orders, so the trucks being booked today become battery opportunities for Flux Power in 2027. At the same time, customers are also prioritizing safety, space optimization, and sustainability, and the labor equation increasingly favors lithium.

The industry loses more than 30 million labor hours a year changing lead-acid batteries at a time when operators are hard to find. We are seeing proof that lithium-ion will become the dominant battery technology in the coming years, and we are building a scalable framework to capture that opportunity. We are encouraged by our pipeline entering the second quarter and remain focused on disciplined execution. With that, I will now turn the call over to our CFO, Kevin Royal, who will review our first quarter financial results in more detail. Kevin, please go ahead.

Kevin Royal (Chief Financial Officer)

Good afternoon, everyone. Revenue for the first fiscal quarter of 2027 was $6.8 million, down from $8.2 million in the prior quarter and compared to $13.2 million in the same quarter a year ago. The decrease was primarily driven by lower spending by one of our key customers and broader economic conditions, including higher interest rates and higher fuel prices that are impacting the order patterns of our customers. Gross margin for the first fiscal quarter of 2027 was 24.8%, compared to 27.4% in the prior quarter and 28.6% in the first quarter of 2026. The decrease in gross profit as a percentage of revenue was largely due to changes in product mix, a loss in operating leverage due to lower volumes resulting in higher unabsorbed labor and overhead, and an increase in warranty expense as a percentage of revenue. Operating expenses in the first quarter were $4.6 million, a decrease from $5.9 million in the same quarter a year ago and an increase from $4.4 million in the prior quarter.

The 22% year-over-year decrease in operating expenses primarily reflects the benefit of our previous actions to reduce headcount and streamline our operating model. Net loss for the first quarter was $3.2 million, or $0.15 per share, compared to a net loss of $2.3 million, or $0.11 per share, in the prior quarter and a net loss of $2.6 million, or $0.15 per share, in the first fiscal quarter of 2026. On a non-GAAP basis, excluding stock-based compensation costs, the first quarter net loss was $3.0 million, or $0.14 per share, compared to a net loss of $2.1 million, or $0.10 per share, in the prior quarter and a net loss of $2.4 million, or $0.14 per share, in the same quarter a year ago.

Adjusted EBITDA for the first quarter was negative $2.6 million compared to negative $1.6 million in the prior quarter and negative $1.7 million in the prior year period. Turning to the balance sheet, we ended the quarter with cash and cash equivalents of $0.4 million compared to $0.3 million in the prior quarter. We are currently evaluating potential financing alternatives and strategic partnerships to ensure the company has the financial flexibility necessary to continue executing on its operating strategy. We expect to provide additional updates over the coming weeks.

Before turning the call over to Krishna, I want to provide some insight around our near-term revenue expectations. Based on the improved order activity that Krishna highlighted in his comments, we expect fiscal second quarter revenue to be in the range of $7 to $8 million, and we expect our fiscal third quarter revenues to be in the range of $9 to $10 million. To reiterate my earlier comments, we continue to experience lower order volumes as a result of broader economic conditions, including higher interest rates and higher fuel prices that are impacting the order patterns of our customers.

Now I’ll turn the call back to Krishna for closing comments before we open it to your questions.

Krishna Vanka (Chief Executive Officer)

Thank you, Kevin. I’m proud that the team was able to achieve $6.8 million as we committed to you on the last call. This was accomplished even in the face of the capital freeze at our most significant customer, tariffs, and a war that has resulted in higher fuel prices. This was not easy considering these three factors, but the future is looking stronger and momentum is building. As I detailed today, there is a lot of great progress happening on our OEM partnerships and with our sales acceleration programs. These are the areas where our supply chain optimization is going to be a real game changer for this company and will be an important lever for improving gross margin and scaling efficiently.

As we look to the future, our team is focused on executing our strategy to reposition the company towards profitability, supported by the following four factors. Number one, transforming the business: we have lowered product and operating costs, improved operating efficiencies, and are optimizing supply chain to improve margins and manufacturing scalability. We also refreshed sales and OEM leadership, expanded OEM relationships, and launched aggressive new marketing programs aimed at diversifying our customer base.

Number two, early momentum: we have achieved certification with a new major OEM, increased our addressable market within electric material handling with the new models, and made a significant platform leap with the launch of AI-driven Skyems 3.0, further positioning Flux Power Holdings as a differentiated technology provider. Number three, new avenues for growth: we have also developed and are currently executing a strategy to leverage our S Series as an anchor product to approach new OEMs and dealership networks.

By providing unique white label solutions for their use cases, we are creating new avenues for accelerated and predictable growth engines. Number four, growing market demand: and lastly, we are seeing the proof that lithium-ion will become the dominant battery technology in the coming years. This is happening while Flux Power Holdings continues to build a scalable framework to capture this potentially significant market opportunity. With that, let’s open the call to questions. Operator.

OPERATOR

Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question today comes from Amit Dayal with HC Wainwright.

Please go ahead.

Amit Dayal (Analyst)

Thank you. Good afternoon, everyone. Thank you for taking my questions. Just on the outlook, first the $7 to $8 million and $9 to $10 million for Q2 and Q3. Is that based on some concrete backlog, or is that just the visibility you have based on discussions you’re having with customers?

Kevin Royal (Chief Financial Officer)

Yes. So it’s based on our sales forecast, which is developed from a bottoms-up technique using the discussions that our sales force are having with their customers and applying probability to the pipeline in order to make its way into that forecast for Q2 and Q3. For the numbers that we provided, it would have a very high level of probability of actually closing.

Amit Dayal (Analyst)

Understood. And is this mostly with some existing customers, or are there some new customers as a part of this mix?

Kevin Royal (Chief Financial Officer)

It’s really a combination of new and existing customers.

Amit Dayal (Analyst)

Okay, thank you. And then maybe just last question for me. You know, the balance sheet — is the cash you have sufficient to sort of meet, you know, various operating needs and investment needs, etc.? Like, how are you managing, you know, that side of the story? You also said, you know, you could be looking for strategic partnerships in the press release. Can you just give us any sense of, you know, what options are in front of you to sort of address this kind of overhang on the story?

Kevin Royal (Chief Financial Officer)

Sure. So we recently filed an 8-K where we disclosed that our lending partner is requiring that we raise at least $4 million net capital. And as I mentioned in my prepared remarks, we are working through that process, and we have good options ahead of us to fulfill that requirement.

Amit Dayal (Analyst)

Thank you. That’s all I have. I’ll take the rest of my questions offline.

Kevin Royal (Chief Financial Officer)

Great, thank you.

OPERATOR

The next question comes from Rob Brown with Lake Street Capital Markets. Please go ahead.

Rob Brown (Analyst)

Good afternoon. Just wanted to follow up again on the resumption of the customer ordering patterns. And I think that helps your kind of outlook, but how much visibility do you have now in the resumption of ordering activity at that customer? And is this sort of a kind of an ongoing resumption, or do you have visibility beyond this quarter?

Krishna Vanka (Chief Executive Officer)

So, Rob, as I mentioned, this came as a surprise for us — a pretty good surprise — that they came forward and placed an order for this quarter. This sort of helps us build the confidence that this customer is willing to work with us once they resume the order patterns next year. As I mentioned, we are not 100% sure on how much and the regular ordering pattern, but we are getting a sense that they are resuming to place the orders and that they would like to move forward with Flux Power Holdings when they are ready to go.

So it’s more of a confidence builder for us and the visibility that we are their chosen partner as they resume placing the orders.

Rob Brown (Analyst)

Okay, great. Thank you. And then on your white label efforts, I think you said you had three large programs going. How does that ramp, and when do you expect to see kind of revenue from those efforts?

Krishna Vanka (Chief Executive Officer)

Yeah, thanks. Great question. So, yeah, we expanded our OEM reach and, yeah, we are working with three major OEMs. One of them, as I mentioned, is testing the battery. The other one put us in their accelerated cycle. The third one is the heist rail where we are now working with the dealerships. The first two I would say are halfway through the process, testing being the critical component of an OEM saying, yes, we want to use your batteries. Once we pass the test phase, then we’ll be working closely with the OEM.

And we actually got one of those two OEMs where we are already socializing with the dealership networks our products, our solutions. So we are trying to do this as fast as we can, obviously. But generally I would anticipate towards the later part of, towards the end of the fiscal year, we’ll start seeing some orders coming from these OEMs.

Rob Brown (Analyst)

Okay, thank you. I’ll turn it over.

OPERATOR

The next question comes from Craig Irwin with Roth Capital Partners. Please go ahead.

Craig Irwin (Analyst)

Good evening, and thanks for taking my questions. First, I should say congratulations on the resumption of orders from your major customer. It’s a very nice development, and I guess we’re all rooting for them to take lots of product going forward. Krishna, my question I wanted to ask you is, about a year ago you made the difficult decision to retrench — to reduce your frictional costs, your cost structure — with the falloff in demand that you saw in your end market.

Can you maybe talk to us about the recent expense burden, SG&A and R&D, how this could change? You’re guiding for gentle growth over the next couple quarters, but do you expect the changes that you made to be more structural or variable as we look at the impact on the financial model?

Kevin Royal (Chief Financial Officer)

So, Craig, this is Kevin. As revenues pick up, there will be a few select additions that we would need to make in order to support that growth. But we’re talking about, you know, very few. We, in large part, are sized for growth that would go on an annual basis up to $60 million. But again, with the exception that we’d probably have to add three to five personnel in the operating expense categories, which we wouldn’t see as significant.

Craig Irwin (Analyst)

Okay, fantastic. So I like the conversation about all of the different things you’re doing with OEM customers both directly and with the dealerships. You know, when I step back from that, I look at the OEM channel as often not as lucrative on a gross margin basis versus the direct sale channel. You know, there are elements of variability, and obviously lithium-ion is quite different to lead acid. But can you talk through around margin expectations over the next few quarters and sort of longer-term potential of these OEM customers?

Is it feasible for us to see margins back in the mid-30s the way they were a year and a half ago?

Krishna Vanka (Chief Executive Officer)

Yeah, definitely. So again, what you are seeing, quarter over quarter, the margin variation is really because of the mix. Our approach with OEMs is actually twofold. One is obviously to get new OEM business, but as I also informed, we are working on supply chain optimization where we are able to work with global partners in bringing higher value components together which will give us further margins on the same products. So while it is true that OEM would probably reduce the margin, as I said, the volume increases there which can nicely offset if we optimize our supply chain. So that’s the strategy we are taking, is to get more OEMs, get to a more scalable supply chain. More importantly, we don’t add any extra resources to be able to supply in thousands of units compared to the hundreds of units and ultimately bring back those margins to what you said, 30 plus points.

Kevin Royal (Chief Financial Officer)

Yes, I would say the latter. That, you know, there is a need, you know, and we’ve recognized that. We’ve worked with our lender. We’ve got a plan, you know, moving forward to raise some capital. You know, we currently have an equity line of credit, a committed equity facility and you know, we plan to lean on that. That’s fully, you know, fully disclosed and you know, it’s a way for us to raise much needed capital as we move forward. Thank you.

OPERATOR

This concludes our question and answer session. I would like to turn the conference back over to Krishna Vanka for any closing remarks.

Krishna Vanka (Chief Executive Officer)

Thank you all again for joining today’s call. We really enjoyed speaking to you, giving you the updates and we look forward to the fiscal Q2 call in February 2027. Operator. You may now disconnect.

OPERATOR

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.