Dragonfly Energy Holdings Corp. Common Stock (NV) 2026 Q2 Earnings Call

Thank you, Simon. Thank you everyone for joining us today. We are pleased to report solid second quarter results with net sales in line with our guidance. Adjusted EBITDA came in better than our expectations, improving $3 million from our prior quarter, reflecting the cost actions we implemented earlier this year. The quarter also marked our first meaningful revenue contribution from the heavy-duty trucking market. We have invested in this market over several years through pilot programs and product validation work, and we are pleased to see the foundation start to translate into financial results. I'll let Wade walk through our commercial markets in more detail shortly. First, I'd like to briefly discuss our acquisition of Dakota Lithium's assets. Dakota brings an established brand, an existing customer base and distributor network, and a complementary portfolio of products across marine, outdoor recreation, powersports, golf cart, and other specialty markets.

Dragonfly already has the commercial, operational, fulfillment, and customer support infrastructure needed to support the business. By bringing Dakota's products and revenue through that existing platform, we believe we can restore availability, grow the brand, and increase revenue with limited incremental operating expense. We believe this creates meaningful operating leverage and broadens the customers, markets, and price points we can serve. Dakota generated approximately $12 million in net revenue in 2025, despite working capital and inventory constraints that drove performance materially below prior year levels. With an established customer base and demonstrated historical demand, we see a clear opportunity to recover and grow that revenue. The total purchase price was $4 million, consisting of $1 million in cash and $3 million in Dragonfly common stock, issued at $2 per share and subject to a 12-month lockup.

In connection with the transaction, we amended our term loan agreement. Our lenders reduced our minimum cash covenant, allowed us to pay the next two quarters of interest in kind, and deferred compliance with our senior leverage ratio and fixed charge coverage ratio covenants until September 2027. We believe these amendments preserve near-term liquidity and provide additional financial flexibility. We anticipate Dakota Lithium will begin contributing meaningful revenue and be accretive to adjusted EBITDA in the fourth quarter. Ultimately, this acquisition adds an established revenue-generating brand, materially expands our product and market reach, enhances operating leverage by placing a larger portfolio through infrastructure and relationships we already have with no distraction to our existing operations. These factors support our goal of achieving positive adjusted EBITDA at an annualized net sales run rate of approximately $70 million.

Before I turn the call over to Wade, I also want to highlight two important recent additions to Dragonfly. First, we are pleased to welcome Robert Keller as our Director of National Fleet Sales. Robert brings nearly four decades of experience across fleet operations, commercial vehicle sales, and transportation technology. Over his career, he has built relationships with many of the country's largest commercial fleets. We believe that experience will be a real asset as we continue to expand national fleet adoption of our power systems. In June, we welcomed Dr. Lukas Lutz to our board of directors. Lucas co-founded Sphere Energy, a technology company focused on applying advanced data science and artificial intelligence to battery engineering.

Prior to joining our board, Sphere Energy conducted an independent third-party evaluation of our dry electrode manufacturing process, giving Lucas a first-hand view of the technology and contributing to his confidence in its capabilities and long-term potential. His experience at the intersection of battery science and advanced data modeling aligns well with our focus on advancing dry electrode manufacturing and next generation battery technologies. We look forward to his contributions as we continue building on that foundation. Alongside these additions, we continue to strengthen our intellectual property position. Most recently, I'm pleased to announce that we received another Japanese patent allowance supporting our solid-state battery technology. It covers systems and methods for applying dry powder coating layers within an electrochemical cell, an important part of our unique dry electrode manufacturing approach.

Together with our recent U.S. and European patent allowances, this expands the global protection surrounding our cell manufacturing technology and supports our work toward the scalable production of non-flammable, all solid-state battery cells. We look forward to sharing more about our progress in this area in the coming months. With that, I'll pass the call over to Wade.

Thank you, Denis. I'd like to walk through what we are seeing across our commercial markets, starting with heavy-duty trucking, where the work we have done over the past several years validating our technology and building credibility with fleets began to show up in our results. Heavy-duty trucking generated approximately half a million dollars in revenue in the second quarter. Based on current orders in hand, we expect that revenue to more than double to approximately $1.3 million in the third quarter and continue growing sequentially in the fourth quarter and beyond. This marks an important commercial inflection point for Dragonfly. After several years of pilot programs, field validation, and customer development, we now have a proven foundation converting into ongoing fleet revenue. These initial deployments are with large fleet customers, each representing meaningful expansion potential as programs progress from initial orders to broader rollouts and larger follow-on orders.

We believe the engine we have been building is now working, we believe this foundation can support sustained growth as existing customers expand and additional fleets advance through our pipeline. During the quarter, we began shipping against the Stevens Transport purchase order. Those shipments include the complete set of products we offer, the Battle Born DualFlow Power Pack, all electric APU, and our inverter. This is the first phase of Stevens' plan to move their full fleet of 2,500 trucks onto our solutions, and we expect shipments to build through the remainder of the year. Beyond Stevens, our fleet pipeline continues to broaden. We are engaged with several additional carriers at various stages of evaluation and deployment, including Werner Enterprises, where we are working closely on implementation of its initial production order and see meaningful potential for broader adoption over the coming quarters.

Additional pilot programs are underway this summer. Successful results could support further expansion beginning in the fourth quarter and into 2027. The broader trucking environment is also improving. Fleets have spent several years operating through an extended freight recession that constrained capital spending. As conditions stabilize and equipment demand improves, the economic case for our systems remains compelling, particularly as fleets look to reduce idling, fuel consumption, maintenance, and driver comfort challenges. The economic case for our solutions also continues to benefit from elevated diesel prices, which are further improving the payback of our solutions, as well as the 2027 engine transition, as fleets are pre-buying 2026 trucks ahead of the more expensive NOx compliant engines, which are also showing higher idle rates. Turning to the RV market, the overall environment remained soft in the second quarter. Through mid-year, RVIA reported shipments down 14.2% from the prior year.

Against that backdrop, we continue to strengthen our position with our OEM partners. We are being included across additional model lineups, and we continue to see increased energy storage content within existing models as OEMs look to deliver more capable power systems. The majority of our significant OEM customers continue to support our products and expand their work with us based on their own field experience. We are also seeing encouraging progress in industrial applications, including potential programs with large national customers. Although we are not including these opportunities in our current expectations, they represent another meaningful avenue for revenue diversification. Finally, from a commercial standpoint, I share Denis's enthusiasm for the Dakota Lithium acquisition. Dakota brings established customer and distributor relationships across markets that are highly complementary to our business. Our commercial and fulfillment teams are already focused on restoring product availability and re-engaging those customers.

We also see meaningful opportunity in leveraging these two complementary product portfolios. Dakota's lineup, including cranking, dual purpose, and higher energy density batteries, expands the solutions our B2B customers can offer their customers. The multi-brand approach significantly expands the customers and price points we can serve. With that, I'll turn the call back to Denis.