But the upbeat earnings report wasn’t enough to satisfy Wall Street, which pummeled FLUX shares after the company also announced a 2.1 million-share direct offering.
The direct offering to a group of institutional investors priced the company’s shares at $7 − and also included warrants to purchase an additional 1 million shares. CEO Ron Dutt said the move is expected to generate approximately $15 million.
FLUX shares closed at $5.89 − down 22% − the day the offering was announced.
Dutt said he wasn’t surprised by Wall Street’s reaction. “We were expecting exactly what happened. In another month, our stock should be higher. Honestly, with the stock market, we don’t pay too much attention to the day-to-day movements. We’re in this for the long game.”
While yet to turn a profit – the company lost $12 million in FY21 – Dutt said Flux continues to grow steadily, supplying marquee customers like Delta Airlines, Pepsi, Frito Lay and Caterpillar. “We’re not yet profitable but we’re on that track,” Dutt said.
As for the timing of the direct offering, the CEO explained that “supply chain disruptions caused us to need to go out and get some more working capital.”
The direct offering increased Flux’s outstanding common share count to 15,987,502.
Strong Insider Ownership
Insiders still control a large block of FLUX shares, with founder Michael Johnson currently owning 31% of the company, according to Dutt.
Flux’s CEO since May 2013, Dutt started his careers at Ford Motors in Dearborn, Michigan, and has held a number of high-profile financial leadership roles at area companies including Famgro Farms in Carlsbad and EV startup Aptera Motors.
In August 2020, Dutt helped engineer Flux Power’s up listing from the OTC market to the NASDAQ. Since then, the company’s shares have been on a rollercoaster, rocketing from $4 to $18 at the end of 2020 before settling back in the first three quarters of 2021 to trade in the $8-$12 range.
Dutt said that during a busy fourth quarter, the company resumed deliveries “deferred by a global airline” during the travel disruptions caused by COVID. “But supply chain issues continue,” he added. “Everybody we know, including our competitors, are also experiencing the delays. But we have indications that over the coming months, the situation should improve.”
Going forward, Flux plans to introduce a next generation lithium-ion battery pack for end rider and center rider forklifts and start deliveries to the world’s largest meat processor and two other major customers – a paper products/chemicals manufacturer and a packaging manufacturer.
“Our 2021 fiscal year was quite a challenge, with supply chain disruptions and continuing effects from the COVID pandemic,” said Dutt. “Despite these challenges, we delivered substantial revenue growth and gross margin improvements while launching new products.”
Analyst Allen Klee at Maxim currently has a buy rating on FLUX. “They’re a solid company and their numbers for the quarter were ahead of consensus,” Klee said.
“The demand outlook [for Flux battery packs] is very good but the company did note in the earnings report some ongoing supply chain constraints, “said Klee, who cautioned rising materials costs, including higher lithium prices, could negatively impact Flux’s business going forward.
Dutt sees the company’s momentum carrying into FY’22. Flux recently signed a new partnership agreement with CLARK Material Handling Co. and Dutt reported the company’s partnership is “going well” with San Diego-based Beam Global (NASDAQ: BEEM). Flux supplies the lithium-ion battery packs that store solar energy for Beam’s EV recharging stations.
When Dutt arrived at Flux, the company had only 13 employees. In the past year, the headcount at its 65,000-square-foot manufacturing facility has spiked from 80 to 130 -- and Dutt said Flux is poised to make some acquisitions. “Nothing is imminent but we’re definitely in growth mode.”
CEO: Ron Dutt
Revenue: $26.25 million (FY’21)
Ticker: NASDAQ: FLUX
Contact: (877) 505-3589
Notable: Flux battery packs include computer telemetry for remote performance tracking