VISTA – The company’s quarter revenue was flat for the first time in years and market uncertainties loom ahead, but the head of Flux Power Holdings told investors he sees a bright future, with a first-ever profit in sight.
CEO
Flux Power Holdings
“We’re ready for Flux 2.0,” company CEO Ron Dutt told the invited guests at their Vista headquarters on Aug. 7 during the third annual investors day.
Dutt was referring to the company’s plans to double revenue in coming years. Invitations to the day were sent to representatives of nine investing groups, and the day included a tour of the plant, updates on marketing and new products, details about a new mobile station at San Diego International Airport and other upcoming projects.
Flux specializes in lithium-ion batteries for forklifts, similar industrial equipment, airport service tractors and other small vehicles. Large clients include Frito-Lay, Pepsico, Toyota, United Airlines, Gallo Wine and many other companies.
Flux Power’s revenue for fiscal year 2023 was $66.3 million, a year-to-year increase of 57%, and the company will release its fourth quarter financial report in September.
Its financial report from May showed revenue at $14.5 million for the third quarter, down from $15.1 from the third quarter of 2023. The drop ended a streak of uninterrupted quarterly increases since the company’s founding.
Gross profits were at $4.4 million for the quarter, down from $4.7 million in 2023. Gross margin decreased to 30% in the fiscal third quarter of 2024 as compared to 31% in the fiscal third quarter of 2023.
In May, Flux reported its backlog of orders were $18.5 million, down from $30.1 million as of Dec. 31.
Interest Rates Disruption
“There’s a lot of people in the industry down significantly,” Dutt said. “We’ve gone flat.”
One of the indicators of the downswing was the drop in back orders, which Dutt attributed to high interest rates.
“We sell batteries to put on a forklift that a customer ordered,’ he said. “But they were deferring the purchase because of interest rates. They’re saying, ‘we think the Fed’s going to lower rates, so let’s wait.’ And in some cases, they’re still waiting, and that affected us.”
On a positive note, the December quarterly report of $18.2 million in revenue marked the largest increase in the company’s history.
That report was especially encouraging because in that quarter Flux did not have to rely on its working capital line, which it uses to buy material before it collects revenue from its finished product. Flux has relied on a working capital line since its inception.
“We’ve got to the point where we’re getting really close to break even,” Dutt said. “I think we’ve said publicly, ‘we anticipate getting to profitability within the year.’”
The company also is moving an assembly plant from China to Tijuana, which will save on working capital. As Dutt explained, the company takes possession of battery packs once they leave China, but it can be a three- or four-week journey before they arrive in the United States. Now the products will be just over the border.
With other plans in place, Dutt said revenue can double in two or three years and hit up to $150 million before they will need additional space for assembly.
Marketing and Branding Plans
Flux Marketing Manager Maria Rico told guests that the company’s strategy involves rebranding, strengthening its digital footprint and innovative product marketing.
“And we’re doing research and development,” she said. “What emerging new markets should we be looking into?”
Rico said the company also will work to enhance its brand identity.
“We have grown so much over the last decade,” she said. “Who we were back then is not who we are now.”
Rico said the company wants to be known as technology leaders, not just battery manufacturers.
“We want that to be our brand identity, especially now that we’re working on new product development in our telematics and making that more of a bigger focus,” she said. “So, we’re really just trying to create more of a brand that resonates more with our new mission vision and values here.”
The company also will make a bigger splash when marketing new products.
“What we’d usually do in the past is, whenever we come out with new products, we kind of just do a little soft launch,” she said. “But I think it’s time we start trying to really advertise and make it more of a bigger marketing deal.”
Flux Power Holdings
FOUNDED: 2009
CEO: Ron Dutt
BUSINESS: Manufacturer of lithium battery packs for commercial vehicles
HEADQUARTERS: Vista
EMPLOYEES: 125
STOCK: FLUX (Nasdaq)
REVENUE: $66.3 million (FY 2023)
WEBSITE: www.fluxpower.com
NOTABLE: Flux battery packs include computer telemetry for remote performance tracking.
