Flux Power Holdings, Inc.

Good day and thank you for standing by. Welcome to the Flux Power first quarter 2022 financial results and company update conference call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to Justin Forbes. Thank you. Please go ahead.

Hi. Good afternoon, and welcome to FlexPower's financial results call. This is Justin Forbes, Director of Marketing and Investor Relations for FlexPower. I'm joined by Ron Dutt, CEO, and Chuck Shiwe, CFO, who will present results of operations for our fiscal year 2022 quarter one ended September 30th, 2021. Following, I'd like to read our safe harbor statement. Our discussions may include predictions, estimates, or other information that might be considered forward looking. While these forward looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. Your caution not to place undue reliance on these forward looking statements, which reflect our opinions only as of the date of this presentation. Please keep in mind we are not obligating ourselves to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. Throughout today's discussion, we will attempt to present some important factors relating to our business that may affect our predictions. You should also review our most recent Form 10-K and Form 10-Q for more complete discussion of these factors and other risks, particularly under the heading Risk Factors. A copy of our press release and financial tables can be viewed and downloaded on the Flux Power Investor Relations website at fluxpower.com slash investors. And with that, I'll now turn it over to Ron Dutt.

Good afternoon, and thanks, Justin, for the introduction. Our headline story this quarter is continued revenue growth yet again, and along with a $28 million increase. current order backlog, and that's more than all of last year's total revenue for the year which ended June 30th. So this $28 million backlog is as of November 10th, and it's about $2 million. It's less than $2 million due to the supply chain disruption. that's been affecting everybody. The backlog reflects orders principally in material handling sector, which is a multi-billion dollar addressable market. And then along with the remainder primarily from the airport GSE market, which is now back in gear. This represents our 13th consecutive quarter of year-over-year growth. We're growing current customers, and we added new customers in the quarter in material handling. And material handling industry, while it has typically a single-digit growth, but the adoption of lithium and our lithium is double-digit, and increasing its pace As I mentioned, there's renewal of the airport GSE activity and our packs for them, particularly to our key customer, who is one of the largest global carriers in the world. They are so pleased with our packs. They're also purchasing our packs for their warehouses. We're expanding Our relationship with Beam, Beam Global, we're an exclusive provider, and they have the mobile charging station platform for vehicles. For all this growth, we do have production capability for over $100 million in revenue annually, and we'll be ready to add a second shift in this coming spring with multiple assembly lines. And then our service, our service capability is expanding with server partners, a new call center, added training, videos, all of which to ensure maximum uptime for customers. Turning to profitability. We have begun a new broad-based initiative to develop a more efficient platform for our PACs. We're targeting cost reductions, fewer parts, driving lower inventory, faster assembly, easier service, and more flexibility to introduce other new related products. We begin rolling this out later on in next year, and that will be rolled out in phases going well into 2023. A big element of our cost is the battery cells that we source from China. We continue to look at suppliers on a regular basis. their costs their reliability their quality their risk china is producing a lot higher vendor sourcing than in the past we've in the process of this past year adding a new supplier we do not want a single source something that ranges from 30 to 50 percent of the bottom of our pack all of this is driving toward build building scale in this business our target market, the Fortune 500 companies, and being a vendor that can play at their level as they have many requirements to meet. Not only building scale, we've got to get profitability. We're targeting margins over 30% in the near term. In fact, we have a path with some of the things that I mentioned, along with some other projects, to target over 40%. We believe we've got to target that to ensure that we have healthy profitability in the near future. We now are beginning to see operating leverage with our infrastructure. We've built it for a number of years now, an infrastructure of production, service, ISO 9000, other elements to ensure that we can not only sell PACs, to these Fortune 500 companies, but we can be their vendor of choice as they order packs each year and every year. We also want to leverage technology for the benefit of our customers. We want to be a leader in this. I recently rolled out product last year, SkyDMS, which is a telemetry product, offers real-time reports. We understand from our customers They advise that ours is better than anybody else's, although there's a lot of telemetry out there. We see this as a platform for the future. And being able to offer one or more new features each year is based in the cloud and can serve many interests for the customer to help them manage their business. We're also engaged in building high-voltage capability. Packs that line up that we've had, they range from 24 to 80 volts and cover the industry sector we're in. There are also applications that require a higher voltage. So we have developed a 400-volt battery pack, and we're now beginning deliveries to an electric autonomous shuttle provider. These high-voltage products will open the door to many other opportunities as we build scale. As part of building scale, we've got to have the quality. We have ISO 9001 certification, had that for several years, and we're now aggressively implementing lane manufacturing to achieve these efficiencies for scale. And back to the customers. for timely deliveries to them. The other item I want to talk about is how we're doing building our brand and reputation. Our target audience, these Fortune 500 companies, really do their due diligence on who they're going to have as vendor because they're committing millions of dollars of business to managing these very large fleets, and they have just a regular cadence of ordering, new packs for new forklifts, and also replacement. And our packs do just drop in for replacement. We've won business with Fortune 50 and other Fortune 500 companies who are very disciplined in the demands from vendors and want to migrate to lithium. Most of the new customers we talk with are convinced of the value of lithium over other sources and are planning to convert their fleets on an ongoing basis into the future. Another element that we deal with is ESG. We've all heard a lot about it. It's in the news. Environmental, social, and governance related to sustainability, green, environmental, This is a hot topic and a high priority for groups like SEC, NASDAQ, and many Fortune 500 companies and institutional investors and funds. Our products kind of hit the sweet spot of this concern. It allows our customers to address many of the environmental concerns. Specifically, we have a paradigm shift that includes no required OSHA reporting for agitist acid spillage, a much higher efficiency of PACs drawing power from the grid, which saves tons of carbon dioxide for our customers. And this is often at a lifecycle cost, hard cost saving, and we do not rely on government incentives. Finally, another element that's extremely important to our brand and reputation, because that drives our ability to continue to add these large customers. And it's building, very seriously, a culture of trust. Not only with ourselves, but this really is offered to the customers as a value that we provide. Product quality, service, ease of doing business. for the complex requirements from large fleets, including their timeliness. With that, I will now turn it over to Chuck or Shadwee, our CFO, who will provide some more color on the numbers.