Flux Power FY ‘17 Revenues Increased 60% to $0.9 Million; Prepares Launch of Full Lithium-Ion Forklift Battery Product Line
09/22/2017 | 04:29pm CEST
VISTA, Calif., Sept. 22, 2017 (GLOBE NEWSWIRE) -- Flux Power Holdings, Inc. (OTCQB:FLUX), a developer of advanced lithium industrial batteries for electric forklifts and airport ground support equipment, today reported results for its fiscal year ended June 30, 2017 (FY ‘17) and outlined recent progress. Flux will host a conference call in October to provide a forum for investor questions, as discussed below.
Flux LiFT Packs
Ramped production capacity for UL Listed walkie pallet jack LiFT Packs to 150 units per month, starting in Q3 ’17. Commercial production now includes power capacities of 95, 135 & 250 Ahe (amp hour equivalents).
Delivered LiFT Pack prototypes for Class 3 End Rider forklifts to select customers in August 2017 for initial piloting.
Added 10 new major customers to our sales prospect pipeline. ° Flux is focusing sales resources on key large end-users, including Fortune 500 companies, with significant national or regional forklift fleets. ° Total addressable battery market for walkie pallet jacks and all electric forklifts is approximately $500M and $6B, respectively.
Made solid progress in improving gross margins, which effort should continue throughout FY 2018.
Standardized Flux LiFT Pack design for on-board battery chargers using Delta-Q Technologies, an industry leader in terms of design, durability and reliability.
Completed significant design improvements and production enhancements throughout FY 2017 including protective devices and enhanced wiring configurations. Recent developments include the addition of external charging and cold weather upgrade options.
New Products Targeting Larger Forklifts
During FY ’17 Flux made significant progress developing higher capacity LiFT Packs to power larger forklifts including Class 3 End Riders and Class 1 forklifts (up to 800 Ah capacity).
Customer evaluation of Class 1 packs to begin in October with commercial production and rollout targeted for January 2018. Class 2 packs under development based on Flux’s modular design, with rollout expected in early calendar 2018.
Airport Ground Support Equipment (GSE)
Launched flagship 72-volt lithium-ion battery for GSE applications to deliver between 300 and 600 amp hour capacity.
Sold two prototype units to leading U.S. airlines in Q3 ‘17 and have deployed four additional GSE packs for piloting with other potential major airline customers.
Large market opportunity in initial stages of conversion from lead acid and internal combustion equipment.
Sales & Marketing
Repositioned sales coverage into four geographic regions overseen by new national accounts sales director Tod Kilgore and three additional hires in the last six months.
Revised strategy to develop market “pull-through” by focusing Flux sales resources on key large accounts.
Each regional salesperson brings extensive experience and credibility in the materials handling industry and/or forklift battery sales, making them ideal resources for OEM’s, dealers and customers.
Flux has refined its product design through customer piloting and feedback; secured UL 2271 Listing and OEM technical approvals; and more recently built-out a scalable, high quality production capability to produce LiFT Packs for walkie pallet jacks, the workhorse of the Class 3 electric forklift market. Flux’s sales strategy utilizes strong working relationships with OEM’s, equipment dealers and battery distributors. More recently, Flux has begun marketing directly to end-users, primarily in the food and beverage industry, to expand the reach of its messaging on the performance and cost benefits of lithium power to a broader base of customer prospects.
Fiscal 2017 and Q4 ‘17 Operating Results Flux’s FY ’17 revenues rose 61% to $902,000 compared to $558,000 in FY ’16, reflecting growing production capabilities and rising interest in lithium storage solutions. Flux also invested in general engineering and design, developed battery packs for the Class 1 market and revitalized its sales blueprint, including direct introductions to certain large end-user accounts.
Cost of goods sold increased to $1,622,000 in FY ’17 from $1,119,000 in FY ’16, reflecting increased production volume and associated costs and the write-off of obsolete parts resulting from improvements made to the LiFT Packs. Selling and administrative expenses increased slightly to $2,404,000 in FY ’17 from $2,253,000 in FY ’16, principally due to an increased focus on sales and marketing and customer support, balanced with a reduction in external contractor costs.
Research & development expenses decreased approximately 20% to $1,052,000 in FY ‘17 from $1,256,000 in FY ’16, reflecting reduced UL certification expenses, design related LiFT Pack improvements and GSE Pack development expenses. Flux’s net loss declined slightly to $4.44M ($0.18 per share) in FY ‘17 from $4.57M ($0.31 per share) in FY ‘16 mainly due to lower interest expense. Per share results are based on weighted average basic shares of 24.5M and 14.9M at the end of Fiscal 2017 and Fiscal 2016, respectively, and have been adjusted to reflect the Company’s 1-for-10 reverse split implemented on August 18, 2017.
Q4 ‘17 revenue declined to $122,000 compared to $164,000 in Q4 ‘16, as a strategic repositioning of Flux’s go to market strategy focusing only on large fleets led to lower walkie LiFT Pack sales. Q4 ’17 was also impacted by the replacement of several sales team members with new hires and by the longer sales cycle prevalent among customers with large fleets relative to opportunistic small orders.
Q4 ‘17 cost of goods sold decreased to $325,000 compared to $331,000 in Q4 ‘16, reflecting lower production volumes but higher labor costs put in place to facilitate future growth. Selling and administrative expenses declined to $440,000 in Q4 ‘17 from $500,000 in Q4 ‘16, reflecting cost controls. Research & development expenses increased to $316,000 in Q4 ‘17, compared to $242,000 in Q4 ‘16 as Flux invested in developing higher capacity battery packs for larger equipment. Flux’s Q4 ‘17 net loss decreased to $830,000 from $1.17M in Q4 ‘16.
Flux has developed a range of design, production and procurement initiatives designed to substantially improve LiFT Pack gross margins, including those that impact lithium cells, pack enclosures and outsourced assembly. Flux is executing on its plan to increase margins to a target of 30% over the next 12 months, driven by cost reductions from design and sourcing improvements, as well as higher volumes.
Flux Financing and Capital Structure: Flux has funded its working capital through a combination of borrowings under a line of credit from Flux’s largest shareholder, Esenjay Investments, LLC, as well as through private placements of common stock. Flux raised $500,000 from a convertible note issued by an outsider shareholder in FY 2017 and had $5.2M outstanding as of June 30, 2017 under a $10M credit facility from Esenjay Investments, currently convertible into common stock at $0.60 per share.
CEO, Ron Dutt, commented, “Fiscal 2017 was a solid year for Flux in all respects. We expanded our base of LiFT Pack sales, further improved our LiFT Pack products and solidified our production capabilities. We also put in place a high caliber, experienced sales force to directly reach national accounts and to build upon pre-existing relationships with OEM’s, equipment dealers and battery distributors. Though our revenue was lower than we expected heading into Fiscal 2017, I am confident Flux has made important improvements in strategy, personnel and the breadth of our product line that will help us convert existing customer fleets and add new large accounts.
“Building on our roots in the Class 3 market, Flux is expanding its product reach to the entire forklift market, including larger Class 1 and Class 2 vehicles. Customers and OEMs seek providers with a full range of battery solutions, which we are able to address through our modular and scalable design and our success developing larger packs for airport ground support equipment. Given our industry experience, customer relationships, time-tested design and engineering, OEM approvals, UL Listing and breadth of customer piloting, we believe Flux remains an industry front runner and is well positioned to penetrate the market for both high and low capacity battery packs in Fiscal 2018 and beyond.”
Flux Investor Q&A: Flux will announce and host an investor conference call in October.
Submit questions in advance via email to [email protected] or call our investor relations firm 212 924 9800.
Flux will respond to questions on the call and in the interim, Flux will post questions and answers on its Flux blog along with social media links through its @FluxPowerIR Twitter account, referenced to $FLUX.
About Flux Power Holdings, Inc. (www.fluxpwr.com) Flux Power develops advanced lithium-ion batteries for industrial uses, including its first-ever UL 2271 Listed lithium-ion “LiFT Pack” forklift batteries. Flux solutions utilize its proprietary battery management system (BMS) and in-house engineering and product design. Flux batteries deliver improved performance, extended cycle life and lower total cost of ownership than legacy lead-acid solutions. Flux sells primarily to lift equipment OEM’s, their dealers and battery distributors. Current products include advanced battery packs for motive power in the lift equipment and airport ground support markets.
This release contains projections and other "forward-looking statements" relating to Flux’s business, that are often identified by the use of "believes," "expects" or similar expressions. Forward-looking statements involve a number of estimates, assumptions, risks and other uncertainties that may cause actual results to be materially different from those anticipated, believed, estimated, expected, etc. Such forward-looking statements include the development and success of new products, projected sales, the Company’s ability to timely obtain UL Listing for its products, the Company’s ability to fund its operations, distribution partnerships and business opportunities and the uncertainties of customer acceptance of current and new products. Actual results could differ from those projected due to numerous factors and uncertainties. Although Company believes that the expectations, opinions, projections, and comments reflected in these forward-looking statements are reasonable, Company can give no assurance that such statements will prove to be correct, and that the Company’s actual results of operations, financial condition and performance will not differ materially from the results of operations, financial condition and performance reflected or implied by these forward-looking statements. Undue reliance should not be placed on the forward-looking statements and Investors should refer to the risk factors outlined in our Form 10-K, 10-Q and other reports filed with the SEC and available at www.sec.gov/edgar.These forward-looking statements are made as of the date of this news release, and Company assumes no obligation to update these statements or the reasons why actual results could differ from those projected.
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Media & Investor Relations: Catalyst Global LLC Chris Eddy 212-924-9800 [email protected]