Dragonfly Energy Holdings Corp

Good afternoon. My name is Jenny, and I will be your operator today for Dragonfly Energy's fourth quarter and full year 2023 earnings call. The call can be accessed along with the earnings press release and SEC filings on the investor section of the Dragonfly Energy website found at www.dragonflyenergy.com. As a reminder, This conference call is being webcast and recorded. All attendees are in a listen-only mode at this time. During this call, the company will be making forward-looking statements based on current expectations. Actual results may differ due to factors noted in the press release and in periodic SEC filings. Management will reference some non-GAAP financial measures. Reconciliation to the nearest corresponding GAAP measure can be found in today's release on the company's website. I will now turn the call over to Dr. Dennis Fares. Please go ahead.

Thank you, and thank you to everyone joining us today. 2023 was a difficult year for our core markets, which are highly dependent on consumer discretionary spending. The RV market in particular, which accounted for the majority of our revenue in 2023, continued a steady decline, which began in late 2022. Importantly, we believe that this market has bottomed and we are finally beginning to see a recovery, not only in RV shipments, but in the reincorporation of lithium as the preferred energy storage solution for the industry. And as we noted last quarter, we continue to gain share in the market with both new customer wins and new program and model wins with existing customers. So as the industry begins to recover in 2024, we expect the RV market will return as an important growth driver for the company. Our diversification into the heavy duty trucking market continues with an expanded pipeline of fleets that have either initiated pilot projects using our electric auxiliary power unit or that have committed to its incorporation. The significant return on investment combined with the resulting compliance with anti-idling regulations has made our solution highly visible in the industry. The product was even recognized as one of the top 20 products of 2024 by the trade publication Heavy Duty Trucking. We expect that the deployment of our EAPU in long haul trucking fleets, combined with the application of our mobile storage solutions in liftgate applications and refrigerated trucks, will result in the heavy duty trucking market providing a significant contribution to our revenue. We have begun to take purchase orders and expect continued growth in this sector throughout the year. In the last quarter of 2023, we began shipping batteries equipped with our proprietary Dragonfly Intelligence feature, which represents a significant advancement in wireless monitoring and communication in storage systems. The stability associated with wireless mesh networking is well documented in other industries, and its application to storage far supersedes the existing Bluetooth standard that is typically applied for wireless battery monitoring. We are working closely with our OEM partners to further specify the information to be transmitted over the vehicle communication network so that the storage system will be stable and robust for consumers and technicians. We expect that Dragonfly Intelligence will be included in RV models in the new model year among new and existing customers. Our direct-to-consumer, or DTC, business has been flattish, yet trending towards our more differentiated products such as our larger capacity GC3 battery, which have higher average sales prices. We expect that when we release the intelligent systems for consumers, the product differentiation will allow us to expand our DTC business, primarily on larger stationary systems and marine systems, where monitoring and system health are critical to the user. What has set Dragonfly Energy apart from our inception is our dual focus on product development for consumer and OEM markets and fundamental research and development. Our primary R&D focus is our proprietary dry electrode cell manufacturing process and the unique cells and chemistries that can be applied using the process, such as the solid state cell we have previously discussed. Last year, we announced that we completed our pilot line for anode and cathode production. We have since received inbound interest from large customers in the consumer electronics, data center backup, and automotive markets. The greatest inbound interest we have had in terms of potential scale has been from automotive. As a result of that interest, we calibrated our deposition and subsequent manufacturing processes, such as formation and aging, to meet customer requirements in the EV and propulsion sector. Notably, our discussions with both a large consumer electronics company and large automotive companies has revealed some unique benefits of our process that had eluded our focus to date. More specifically, it turns out that our dry deposition process is capable of producing both anode and cathode films that are PFAS-free. PFAS chemicals, para- and polyfluoroalkyl substances, often referred as forever chemicals, are commonplace in lithium-ion batteries today. The European Union has begun taking steps to ban these substances altogether. Current slurry-based processes and dry extrusion-based processes rely on these chemicals to bind the electrodes. We have demonstrated the at-scale production of electrodes that are PFAS-free. Moreover, we have produced coin cells and pouch cells using these electrodes that have matched the performance characteristics of conventional electrodes containing PFAS chemicals. Concurrently, we commissioned a third-party study to evaluate the benefits of our manufacturing process in terms of cost and sustainability as we continue to scale. We have therefore begun evaluating processing technology for gigawatt hour annual production. The study has demonstrated that even with domestic manufacturing, we will be cost competitive with Asian manufacturers without the need of government subsidies. The study showed a 25% reduction in energy usage, a 22% reduction in factory area, and most notably a 5% reduction in overall manufacturing costs for full production in Nevada. This is before the effects of tariffs and the Inflation Reduction Act. As the EV industry continues to look to dry deposition as a potential solution to a host of environmental issues associated with current cell manufacturing processes, the fact that we are also deploying American innovation on American soil is becoming an increasingly attractive proposition for prospective customers and partners. I will now turn the call over to John to provide a review of our fourth quarter and full year 2023 financial results, as well as a more detailed outlook for the first quarter of 2024.

Thank you, Dennis.