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DATE

Monday, March 16, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer — Denis Phares
  • Chief Revenue Officer — Wade Seaburg

TAKEAWAYS

  • Annual Net Sales -- $58.6 million, an increase of 16%, primarily from OEM channel growth.
  • OEM Revenue Growth -- 34% year over year, reflecting expanded integration with RV manufacturers and the trucking order from Werner Enterprises.
  • Q4 Net Sales -- $13.1 million, up 6.9%, led by a 30% increase in OEM revenue.
  • DTC Revenue -- Declined to $4.7 million from $5.7 million, attributed to continued market headwinds and strategic shift away from this channel.
  • Gross Profit and Margin (Q4) -- $2.4 million with an 18.2% margin, compared to $2.5 million and 20.8% margin previously; management cited the impact of restructuring costs on margins.
  • Annual Gross Margin -- Improved by 370 basis points to 26.7% with higher manufacturing utilization.
  • Adjusted EBITDA (Q4) -- Negative $3.8 million, down from negative $2.3 million, while full year adjusted EBITDA improved to negative $11.4 million from negative $18.5 million.
  • Net Loss (Q4) -- $45 million, compared to $9.8 million, driven by one-time restructuring expenses; net loss per share was $14.92, up from $13.89 per share.
  • Cost-Saving Initiatives -- Targeted payroll and discretionary spending adjustments, including executive and board pay cuts of approximately 20%, projected to produce $4.9 million in annualized savings plus an additional $4 million expected from rental space consolidation.
  • Adjusted EBITDA Target -- Management expects positive adjusted EBITDA at an annual revenue run rate of approximately $70 million.
  • Heavy-Duty Trucking Expansion -- Werner Enterprises placed the first major fleet order for the Battle Born DualFlow power pack, marking the largest commercial deployment to date; management emphasized "validation of the technology in real-world commercial operations."
  • Patent Portfolio -- The company now holds nearly 90 issued or pending patents, supporting proprietary technology and integration.
  • First Quarter 2026 Guidance -- Revenue expected at approximately $9.5 million, with adjusted EBITDA loss of $4.6 million, reflecting continued macro pressure in RV and a slower trucking ramp.
  • OEM Relationships -- Battle Born batteries are now standard in select Airstream, Awaken RV, and Ember RV models, signaling cemented market position with key manufacturers.
  • Rail Sector Entry -- After AREMA approval of a lithium battery standard, Dragonfly has begun partnership-driven deployments through National Railway Supply for signaling infrastructure.
  • Marine Market Progress -- World Cat expanded Battle Born system integration across additional platforms following earlier successful deployments.
  • Leadership Compensation Shift -- As of April 1, 2026, executive and board cash compensation reduced by 20% and replaced with equity, aligning incentive structure with share price performance.
  • Environmental Impact -- The Battle Born DualFlow enables fleets to "reduce idling, lower fuel costs and improved driver comfort," with deployments reportedly cutting idle time by nearly 70% and avoiding an estimated 10-12 metric tons CO2 emissions per vehicle annually at scale.
  • DTC Channel Outlook -- Management confirmed a "steady decline" in direct-to-consumer sales and will continue to deprioritize this area in favor of commercial and OEM segments.

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RISKS

  • Net loss widened to $45 million in the fourth quarter due to one-time restructuring and ongoing operating losses.
  • Continued market headwinds in the core RV segment pressured sales, especially in January, with management noting the sector remains "flat" overall.
  • The timeline for "meaningful revenue contribution" from the heavy-duty trucking segment has extended, with management stating this is "not yet reflected in our guidance."
  • Volatile raw material prices, particularly lithium carbonate, may result in increased input costs, which management acknowledged could lead to "some fluctuation over the next 12 months."

SUMMARY

Dragonfly Energy Holdings Corp. (DFLI +5.79%) reported 16% annual sales growth led by a 34% surge in OEM channel revenue, but remains challenged by widened net losses and negative adjusted EBITDA in the fourth quarter due to one-time costs and restructuring. Management detailed a significant shift in commercial focus—deemphasizing direct-to-consumer and intensifying pursuit of OEM and industrial partnerships—while executing payroll, expense, and leadership compensation reductions expected to yield $8.9 million in annual benefits. The first commercial fleet deployment to Werner Enterprises in heavy-duty trucking marks a critical validation milestone, though management cautions that broader trucking revenues remain slow to materialize. Early 2026 guidance signals persistence of macro volatility, notably in RV orders and trucking, with Q1 revenue expected at $9.5 million and continued negative adjusted EBITDA.

  • Management stated that new product offerings, especially integrated systems and accessories, contribute to improved per-unit economics and cross-segment upsell potential.
  • Industry approvals such as AREMA's lithium battery standard have unlocked initial deployments for rail market adoption, further diversifying potential revenue streams.
  • Company leadership indicated that these changes are intended to position the company to reach positive adjusted EBITDA as annualized revenue approaches $70 million, establishing a defined operational target.
  • Management addressed shareholder alignment by implementing broad equity-based incentives for executives and employees, moving away from cash compensation structures.

INDUSTRY GLOSSARY

  • OEM (Original Equipment Manufacturer): A company that produces parts and equipment which are marketed by another manufacturer, used here for RV and commercial vehicle integration.
  • DTC (Direct-to-Consumer): Sales strategy targeting end-users rather than intermediary companies or resellers—a channel now deprioritized by Dragonfly Energy.
  • Adjusted EBITDA: A non-GAAP financial measure reflecting earnings before interest, taxes, depreciation, amortization, and certain other nonrecurring items like restructuring costs, giving a clearer view of baseline operating performance.
  • AREMA (American Railway Engineering and Maintenance-of-Way Association): Industry body responsible for technical standards in U.S. rail infrastructure; its approval often precedes widespread technology adoption in the rail sector.

Full Conference Call Transcript

Denis Phares: Thank you, Szymon, and thank you, everyone, for joining us today. First, I'd like to take a moment to reflect on the meaningful progress Dragonfly Energy has made in 2025. Throughout the past year, we focused on strengthening our financial foundation, expanding our commercial footprint and validating our technology across multiple industries. We believe these efforts have positioned Dragonfly Energy to capitalize on the opportunities we see ahead. A key priority is strengthening our balance sheet and capital structure. During 2025, we completed several capital raising transactions, including a significant debt restructuring that materially improved our liquidity position and simplified the balance sheet.

Importantly, these actions provided the financial flexibility needed to focus on operational execution and support our commercial growth initiatives. For the full year, net sales increased 16% to $58.6 million, primarily driven by growth in our OEM channel, where revenue grew 34% year-over-year. This performance was driven by continued integration of our lithium power systems across a growing number of RV OEMs despite ongoing pressure in the broader market. One of the most notable developments during the year was our progress in the heavy-duty trucking industry. After an extended pilot program, Werner Enterprises one of the largest fleets in North America placed its first order of our Battle Born DualFlow power pack in the fourth quarter.

We believe the transition from pilot testing to a commercial order represents a meaningful validation of the technology and highlight the operational benefits our system can deliver to fleet operators. While this market has not yet contributed material revenue, the progress we have made positions us well to benefit as truck orders begin to normalize. At the same time, we continue to expand our reach into adjacent industries including industrial, marine and rail, while introducing new products that extend the Battle Born ecosystem. Wade will discuss these developments in more detail in a moment.

Alongside this commercial progress, we also advanced our intellectual property portfolio, which now includes almost 90 issued or pending patents across battery technology, system integration capabilities and proprietary software. This growing IT foundation supports the long-term development of our advanced battery technology and reinforces our position as a provider of integrated power solutions. As our customer base has continued to evolve toward OEM trucking and industrial markets, we felt it was important to also align the company's cost structure with these growth priorities while ensuring that incentives across the organization remain closely aligned with long-term shareholder value. Earlier this month, we implemented a series of actions to strategically realign our cost structure. The initiative includes several key elements.

At the leadership level, members of Dragonfly's executive leadership team and Board of Directors have agreed to reduce their cash compensation by approximately 20% for the remainder of fiscal 2026 effective April 1, 2026. In lieu of cash compensation, they have received equity-based incentives directly aligning leadership compensation with long-term share price performance and reinforcing our commitment to creating value for shareholders. This action underscores the confidence we have in our ability to drive long-term shareholder value. We are also implementing targeted workforce and compensation adjustments designed to reduce overall payroll expenses. These actions include a combination of selected workforce reductions and salary adjustments which are expected to reduce our overall payroll expense by approximately 20%.

Nonexecutive employees have received equity-based compensation, again, better aligning our employees with shareholders. Third, we are reducing discretionary spending across the organization as we shift resources toward OEM, trucking and industrial markets, areas where we see the strongest commercial opportunities. This includes a reduction in DTC focused marketing spend. Taken together, these actions are expected to generate annualized cost savings of approximately $4.9 million. We also expect an additional expense reduction of $4.0 million through consolidation of rental space. Collectively, this results in an annual increase in adjusted EBITDA of $8.9 million. Importantly, we believe the organization is now appropriately sized while still retaining the resources needed to support disciplined growth as the business scales.

As outlined in our release, we believe these changes help position the company to reach positive adjusted EBITDA, which we expect to achieve as the business approaches an annual revenue run rate of approximately $70 million. Ultimately, the actions we have taken, including strengthening the balance sheet, expanding our commercial partnerships and aligning our cost structure are intended to support our path toward achieving positive adjusted EBITDA as the business continues to scale while also aligning the entire organization with shareholders of our company. With that, I'll turn the call over to Wade.

Wade Seaburg: Thank you, Denis. I'd like to spend a few minutes discussing the progress we're seeing across our commercial markets. particularly in heavy-duty trucking and the adjacent industries where Dragonfly Energy continues to expand its presence. Starting with trucking. As we have highlighted in previous calls, we believe the heavy-duty trucking market represents one of the most compelling long-term opportunities for Dragonfly Energy. Fleets are increasingly focused on reducing fuel consumption, lowering operating costs and improving driver comfort while navigating tightening emissions regulations. The commercial opportunity we have been building remains intact. Though the time line for meaningful revenue contribution has extended beyond what we initially anticipated.

While this revenue is not yet reflected in our guidance for Q1 2026, fleet engagement continues to progress. We are now beginning to see larger commitments emerge as fleets move beyond evaluation phases. As we progress through 2026, several fleets are working toward deployments involving hundreds of trucks per fleet, reflecting growing confidence in lithium-powered auxiliary power systems as a practical solution for reducing idling and improving operational efficiency. In the fourth quarter of 2025, we announced a major commercial milestone with Werner Enterprises. Following a successful long-term pilot, Werner Enterprises placed an initial production order for our Battle Born DualFlow power pack solutions.

This represents the largest fleet deployment of our systems to date and provides important validation for the technology in real-world commercial operations. The program demonstrates how fleets can reduce idling, lower fuel costs and improved driver comfort while maintaining uptime. Importantly, this order was placed during a prolonged freight recession, in which many carriers are delaying capital spending, reflecting the real-world value our systems deliver. The Battle Born DualFlow power pack, which is one of our key products for this industry, also received external recognition during the year when it was honored with the Seal Sustainable Product and Innovation Awards, which highlight innovative technologies delivering measurable environmental impact.

This recognition highlights the operational and environmental benefits the system is designed to deliver. Our solutions significantly reduced diesel idling during driver rest periods and in many deployments, fleet have seen idle time reduced by nearly 70%, preventing an estimated 10 to 12 metric tons of CO2 emissions per vehicle annually when deployed at scale. Turning to the RV market. We ended 2025, having notably expanded our OEM footprint with Battle Born batteries now standard across select model lineups, Airstream, Awaken RV and Ember RV. These partnerships reflect growing OEM recognition of the value our integrated lithium power systems deliver, and we expect these relationships to continue deepening in 2026.

Beyond RV and trucking, we are seeing encouraging traction in several adjacent markets. A notable example is the rail sector, where the American Railway Engineering and Maintenance of Way Association, AREMA, recently approved the industry's first lithium battery standard. This development is important because it provides rail operators with a clear framework for evaluating lithium-based energy storage systems across communications and signaling infrastructure, an area that has historically relied on legacy battery technologies. Following this milestone, our partnership with National Railway Supply has begun introducing Dragonfly Energy's lithium battery systems into the rail market, positioning us to support the industry's transition toward more advanced and reliable energy storage solutions.

We are also seeing progress in the marine market through our partnership with World Cap, a leading manufacturer of power catamaran. Following successful deployments across earlier models, World Cat expanded the integration of Battle Born Power Systems into additional platform, reinforcing the reliability of our technology and demanding marine environments. More broadly, we continue to expand the Battle Born ecosystem through new solutions designed for commercial applications, including industrial power stations and integrated solar offerings that complement our energy storage systems. Across these markets, we are seeing a consistent theme. Customers are looking for reliable, efficient power solutions that integrate seamlessly into their operations.

We believe Dragonfly Energy's ability to combine battery technology, system integration and domestic manufacturing positions us well to serve those evolving needs. With that, I'll turn the call back to Denis.

Denis Phares: Thank you, Wade. Turning now to our fourth quarter preliminary financial results. Net sales in the quarter grew 6.9% to $13.1 million, driven by strength in our OEM channel. OEM revenue increased approximately 30% year-over-year as manufacturers continued integrating our lithium power systems at the factory level, and we continue to expand our customer base. DTC revenue declined to $4.7 million from $5.7 million, reflecting continued market headwinds and our changing corporate focus. As we have discussed previously, our long-term growth strategy increasingly centers on OEM partnerships where we can deliver integrated solutions at scale.

Fourth quarter gross profit was $2.4 million with a gross margin of 18.2% compared to gross profit of $2.5 million with a gross margin of 20.8%. Operating expenses increased 29.9% to $12.6 million, which includes onetime expenses due to the debt restructuring. Net loss was $45 million versus a net loss of $9.8 million and net loss per share was $14.92 compared to a net loss of $13.89 per share. Adjusted EBITDA was negative $3.8 million compared to negative $2.3 million. For the full year, net sales increased 16% to $58.6 million, driven by 34% growth in OEM revenue.

Gross margin improved 370 basis points to 26.7% as higher production volumes supported better utilization of our manufacturing operations and adjusted EBITDA improved to negative $11.4 million from negative $18.5 million. Looking ahead to 2026, our priorities remain consistent. We plan to continue expanding OEM partnerships, pursuing opportunities across our commercial markets and improving operational efficiency across the organization. In the near term, First quarter results will reflect continued pressure from the broader economic environment, which has been particularly evident in our core RV market, especially in January as well as a slower than anticipated ramp in our Trucking segment. Since then, activity has shown signs of stabilizing.

As a result, we expect the first quarter revenue to be approximately $9.5 million and adjusted EBITDA loss to be $4.6 million. As the year progresses, we expect to see improved operating leverage across the business as we continue to work towards achieving positive adjusted EBITDA. While near-term market conditions remain challenging, we believe the actions we have taken over the past year have meaningfully strengthened our foundation and positioned Dragonfly Energy for improved operating leverage as our commercial channel scale. These initiatives also support our path towards positive adjusted EBITDA and more closely align the company's leadership and all of our employees with our shareholders. With that, operator, we can now open the line for questions.

Operator: [Operator Instructions] Your first question comes from Chip Moore of ROTH Capital.

Alfred Moore: Denis, I wanted to ask maybe if you could expand on RV OEM market, I think you called out a weaker January, but some more encouraging signs after that. Maybe you can speak to what you're seeing in that market here through the start of March.

Denis Phares: Yes. Thanks for your question, Chip. I think I'll let Wade take that one.

Wade Seaburg: Yes. No problem. Thanks, Chip. Happy to answer. Yes, we saw a less -- and this is reflected in RVIA's numbers that they put out for January as well. So we saw a demand not as strong as OEMs had thought going into January, which necessitated them to rightsize their inventory a little bit and get it more in line with where demand numbers were for January. However, in February and the first half of March, we've seen some recovery in that. The other thing that I would add is we're seeing a lot of interest in expanded capacity, energy storage capacity for model year change. So we anticipate expansion within our existing OEMs.

So it's -- I think they're projecting a flat market RVIA on a whole with regards to RVIA or with regards to the overall demand. However, we're going to see expansion within our energy storage footprint in RV.

Alfred Moore: That's helpful way. I appreciate it. And maybe for my follow-up, on heavy-duty trucking, that market obviously has been weak for some time. But I think most forecasters are looking for a bit of a pickup and probably some pent-up demand as well in the back half of the year. if that's what you're anticipating? And what you would expect in terms of a revenue ramp sort of more back-half weighted? Any color there?

Denis Phares: Yes. That sentiment aligns very much with what our conversations are with our largest and midsized fleets. We're seeing capital expenditures start to happen again when they've gone through years of just not buying capital equipment. And then the other thing that, I mean, in that market is the 2027 engines are being released for the new NOx emissions, and those engines are showing higher idle rates, which is making our product even a stronger relevancy to their capital expenditures. So I anticipate a very exciting second half of the year for duty truck.

Alfred Moore: Great. Sorry, one last one. Just maybe the -- it sounds like you're deemphasizing or deprioritizing the DTC business. Just should we think about that as sort of declining modestly from here? Or how would you think about that side of the...

Wade Seaburg: Yes, Chip, we've seen pretty much a steady decline in our DTC revenue for several years now actually. So it really is just a continuation of that steady decline. And because we've seen so much growth with our systems, the fleets, the OEMs, it just makes more sense to really put a lot of our focus, both in terms of marketing spend and product development spend in those buckets.

Operator: Your next question comes from Leanne Hayden from Canaccord Genuity.

Leanne Hayden: To start, I was hoping you could just elaborate a bit on some early customer feedback you've received on your expanded product lines, the Battle Born solar panels came out more recently, but any color there that you could provide would be helpful.

Denis Phares: Thanks for the question, Leanne. Yes, we've been moving in the direction of full systems, both in terms of our industrial customers and our RV OEM customers. So it really helps us to expand the per unit cost because now we're providing not just the batteries but the entire system in terms of the accessories, that's where that has really paid off. But Additionally, we do see some uptick in revenue in most of our segments because of these new products. Some people -- some customers buy them individually. But I would say the biggest boon for us is the incorporation in full systems.

Leanne Hayden: Got it. Okay. Yes, that's very helpful. Just as a follow-up, curious if you could speak on your exposure to the recent lithium carbonate price volatility. I understand that you have kind of a unique battery chemistry and manufacturing process. So maybe to what degree those might insulate you from recent cost increases?

Denis Phares: Well, the industry as a whole is susceptible to increases in the raw components, including lithium carbonate. To date, we have not experienced that, but it's not certain that we won't have potentially a slight increase moving through the year. But it is something that we feel we'll be able to incorporate as lithium carbonate in general, is a relatively small component of the battery pack as a whole. Nevertheless, the raw component materials have been volatile. And so it's likely that the entire industry is going to see some fluctuation over the next 12 months.

Leanne Hayden: Yes. Yes, that's really makes sense. I'll just sneak in one more, if I could. I appreciate all the color you provided on cost down initiatives. That's great. Curious if you could help us think about cash burn throughout 2026 a bit more?

Denis Phares: Well, these cuts certainly help with that. So we've been obviously very cognizant as to our cash levels for some time now. We managed to address the balance sheet issues late last year when we raised when we raised the funds. But moving forward, we really are focused on our P&L. We're focused on making sure that our spend continues to reduce. And we do see a significant increase moving forward in some of these adjacent markets. And as Wade noticed, even in our RV OEM markets, a greater uptake of our systems. And therefore, we do see some improvement for sure in terms of our cash flow going through the year.

Operator: There are no further questions at this time. I would hand over the call to Denis Phares for closing remarks. Please go ahead.

Denis Phares: Thank you, everyone, for joining us today. We look forward to sharing additional details with you in the coming quarters. Have a great day.

Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect.